Hundreds of millions of dollars of customer’s money has gone missing from the brokerage firm run by former New Jersey governor Jon Corzine, sources told The New York Times. The New York-based company, MF Global, filed for bankruptcy Monday following bad bets on euro zone debt. The discovery of the missing millions stopped a last-minute deal to sell a major part of MF Global to another brokerage firm from going ahead, The New York Times reported.
Corzine, 64, who once ran Goldman Sachs before becoming a U.S. senator and then governor of New Jersey, had been trying to turn the more than 200-year-old MF Global into a mini Goldman by taking on more risky trades. But once regulators forced it to fully disclose the bets on debt issued by countries including Italy, Portugal and Spain, it rapidly unraveled with no buyers willing to step in.
MF Global’s meltdown in less than a week made it the biggest U.S. casualty of Europe’s debt crisis, and the seventh-largest bankruptcy by assets in U.S. history. MF Global files for bankruptcy protectionThe Times, citing “people briefed on the matter,” said it was initially thought some $950 million was missing, but this figure dropped to less than $700 million.
The paper said that MF Global and Corzine had not been accused of doing anything wrong. Regulators are trying to establish if customer funds were misallocated. The company’s main exchange regulator, CME, said Tuesday that MF did not separate its customers’ accounts from the firm’s funds as required by law, Reuters reported.
“CME has determined MF Global is not in compliance with Commodity Futures Trading Commission and CME customer segregation requirements,” CME Group Inc Chief Executive Craig Donohue said. Futures brokers must keep customer accounts separate from each other and from the firm’s own money.
Hmmmm….something sounds fishy to us, but hey if no one’s accusing this guy of wrongdoing, then good for him.