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Corzine Denies Knowing That MF Global Was Tapping Client Funds

December 16, 2011
MF Global's Jon Corzine has denied claims that he had known the brokerage firm was improperly tapping customer funds to stave off collapse. Corzine told the oversight subcommittee of the House Financial Services Committee that he had received assurances, “both orally and in writing,” that the firm followed federal laws about keeping customer money separate from firm funds. After the firm transferred about $175 million to JP Morgan Chase to shore up an overdrawn account, the bank contacted Mr. Corzine to ensure that the money was not customer cash, according to testimony Thursday by the former chief executive. Mr. Corzine told lawmakers that a back-office employee in MF Global’s Chicago headquarters had affirmed that the funds came from the firm and not customers. “I don’t know of any loan that was backed by customer funds,” Mr. Corzine said on Thursday before the panel. “I wouldn’t have authorized it.” But some lawmakers suggested that MF Global might have breached those rules on Oct. 28, three days before it filed for bankruptcy. The hearing was the third appearance by Mr. Corzine — before a Congressional panel in just over a week.  As in the previous hearings, lawmakers gained little insight on Thursday into the whereabouts of some $1 billion that vanished from MF Global. But the House committee did offer Mr. Corzine his first chance to rebut claims that he knew all along about some of the missing money following testimony by Terrence Duffy, executive chairman of the CME Group, the exchange where MF Global did business. In a somewhat testy exchange with lawmakers, Mr. Corzine challenged Mr. Duffy’s assertion that he had been aware of the loans using customer money. At one point, Representative Steve Pearce, Republican of New Mexico, wondered aloud what it would take for staff members at MF Global to bring information to Mr. Corzine. “When do they have to come to you?” he asked. “Your day-to-day knowledge is not very thorough. "  For more,  go to [Dealbook - 12/15/11]