Corzine is screwed, email shows gave "direct instructions" to transfer $200 mill

[jimmy olsen]

Dude's fucked!

http://bottomline.msnbc.msn.com/_news/2012/03/23/10833344-corzine-approved-money-transfer-mf-global-email-shows

Corzine approved money transfer, MF Global email shows

By msnbc.com staff and news services

As MF Global was in the final throes of a fatal cash crisis, CEO Jon Corzine gave "direct instructions" to transfer $200 million of customer funds to cover an overdraft, according to a congressional memo released Friday.

The memo cited an October 2011 memo from assistant treasurer Edith O'Brien, who is scheduled to testify next week at the latest in a series of congressional hearings into the collapse of the firm.

The bankruptcy trustee overseeing the liquidation of the company's brokerage subsidiary has estimated at $1.6 billion in customer funds is missing.

Corzine, a former senator and governor of New Jersey, has testified before Congress that he had no specific knowledge of how customer funds may have been misused.

Steven Goldberg, a spokesman for Corzine, said Corzine did ask for the overdrafts to be corrected but "never gave any instruction to misuse customer funds."

"He never directed Ms. O'Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose," Goldberg said in a statement.

Corzine has not been formally accused of any wrongdoing. Days after the request to transfer customer funds to cover the overdraft in a JPMorgan account in London, MF Global collapsed and was forced to file for bankruptcy.

According to a footnote in the congressional memo, broker-dealers like MF Global sometimes do deposit excess brokerage funds in segregated customer accounts, but there were clearly questions about the appropriateness of the requested $200 million transfer, which was reviewed by the firm's top lawyer.

The memo says JPMorgan chief risk officer Barry Zubrow called Corzine directly to seek assurances that the funds being transferred belonged to MF Global and did not include customer funds.

The bank followed up with a letter requesting written assurances that all MF Global transfers -- "past, present and future" -- complied with Commodity Futures Trading Commission rules about keeping customer money separate from the broker's own, according to the memo.

Laurie Ferber, MF Global Holding's general counsel, balked at the request as being too broad and instead wanted to narrow the written assurance to only the Oct. 28 transfer, the memo said.

When MF Global collapsed, the firm said it could not account for $600 million in customer funds. The figure has ballooned to $1.6 billion.

[Scipio]

Wow.

[chipwich]

What sort of penalty is there for whatever this is?

[KRonn]

If actually true that he screwed all those investors, he's a total sleezeball. The people of NJ should be happy he's gone; I'm sure he was screwing them too.

[DGuller]

What sort of penalty is there for whatever this is?

Ten hours of investment community service.

[The Brain]

Was it a wire transfer?

[The Minsky Moment]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

[DGuller]

Sigh.  The legal cases would be so much more fun without damn lawyers mucking things up. 

[jimmy olsen]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

From what I saw on TV, the woman who wrote this email was defended in Congress by Corzine as someone who was extremely reliable and knew all about his business dealings.

[DontSayBanana]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

Given the condition of the company, would it be reasonable to expect $200 mil of surplus funds?

In addition, wasn't it also mentioned that the bank asked specifically for verification that these weren't customer funds?

[MadImmortalMan]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

Given the condition of the company, would it be reasonable to expect $200 mil of surplus funds?

In addition, wasn't it also mentioned that the bank asked specifically for verification that these weren't customer funds?

And they took it, so he must have provided them with something that looked convincing. I don't know if "I had my underlings do it" is going to be an effective defense.

[Scipio]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

Given the condition of the company, would it be reasonable to expect $200 mil of surplus funds?

In addition, wasn't it also mentioned that the bank asked specifically for verification that these weren't customer funds?

And they took it, so he must have provided them with something that looked convincing. I don't know if "I had my underlings do it" is going to be an effective defense.

Zey vere just followink orders!

[The Minsky Moment]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

From what I saw on TV, the woman who wrote this email was defended in Congress by Corzine as someone who was extremely reliable and knew all about his business dealings.

Her reliability is not the issue.  The email does not prove corzines knowledge of fraud.

[jimmy olsen]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

From what I saw on TV, the woman who wrote this email was defended in Congress by Corzine as someone who was extremely reliable and knew all about his business dealings.

Her reliability is not the issue.  The email does not prove corzines knowledge of fraud.

Isn't it credibility issue? She said he gave "direct instructions". Now, maybe she's lying, but it'll be hard for Corzine to denounce her as a liar given the glowing defense of her credibility he previously gave.

[The Minsky Moment]

Hardly a smoking gun.  There is no proof cited showing that Corzine knew the funds weren't excess.

Given the condition of the company, would it be reasonable to expect $200 mil of surplus funds?

In addition, wasn't it also mentioned that the bank asked specifically for verification that these weren't customer funds?

The company could be in poor condition overall, yet still have surplus funds in particular accounts.  Indeed that would be exactly the reason a company might transfer monies from such an account.

JPM did ask for verification and MF gave it.  But for that to be fraud by Corzine he would have to have known the funds were not excess.  There is nothing in the O'Brien email that indicates such knowledge.