Former Chief Risk Officer at MF Global told a Congressional panel that he was let go from the firm in early 2011 for having raised red flags about the firm's aggressive trading bets.  Michael Roseman said he was concerned about the firm's exposure to European sovereign debt as far back as October 2010 - one year prior to the firm's 10/31/11 collapse. Before MF Global's collapse, then CEO Jon Corzine pushed the firm to take on a more aggressive trading strategy, including a $6.3bn bet on European debt, executed through  repo-to-maturity transactions.  Corzine, once CEO at Goldman Sachs and former NJ Governor and U.S. senator, also was pushing the futures brokerage to evolve into something closer to an investment bank. Roseman said such a strategy required a lot of capital and a lot of liquidity and he thought, "the strategy maybe exceeded the ability of the resources." MF Global filed for bankruptcy after investors and customers began to flee, alarmed by the firm's massive bet on European sovereign debt. As it is, investigators believe that some $600mn of customer money, for which they just traced the path, probably will never be recovered. This Congressional session was part of a series of hearings held in House and Senate subcommittees to determine whether MF Global was transparent about its risk-taking, and whether regulators should have reined the firm in and better protected customer money. Roseman appeared alongside Michael Stockman, who was brought in to replace him as CRO.  Lawmakers pressed Stockman if he was brought in as a "yes" man, after Roseman got ousted following his warnings to Corzine and the board. 

"Did you ever think that maybe they ran off Mr. Roseman and brought you in to be kind of the guy that doesn't see, tell, know?  Did that ever occur to you?" Republican Steven Pearce asked Stockman.  Stockman replied, "No sir."

Pearce also laid into Stockman about his testimony that he was "deeply saddened" by MF Global's collapse and its impact on shareholders and customers.  "Have you suggested that maybe you ought to give your pay back and put it into a scholarship fund for these kids that aren't going to go to college? Sitting out there, some hog farmer who is trying to make ends meet. My dad raised pigs. I know what it's like. He's trying to pay for the next sack of feed," Pearce said. Stockman was reluctant to speculate on what specifically doomed MF Global.  Roseman, however, opined that MF Global would have been on a very different path if it had not ramped up its European debt exposure. saying, "In my opinion, they would still be here." MF Global bankruptcy:  In Re MF Global Holdings Ltd, in the same court, No. 11-15059 [Reuters, 2/2/12]