CEO Corzine Steps Down At MF Global
He set out to create a mini-Goldman Sachs. In the end, he built a mini-Lehman Brothers. Former New Jersey Gov. Jon Corzine's resignation Friday from the securities firm he led capped a week of high drama and swift failure.
Less than a week ago, Corzine had expected to sell his firm, MF Global. By week's end, it had collapsed into bankruptcy. And Corzine had hired a criminal defense lawyer in the face of an investigation of the firm by the FBI and federal prosecutors.
MF Global's collapse points to the risks it took and the extent to which it fed on investors' trust. Its fall, after Corzine had bet big on European debt, revived memories of the 2008 banking crisis and the ruin of the much bigger Lehman.
Regulators and the FBI are investigating what happened to hundreds of millions in missing client money at the firm. As Corzine, 64, stepped down as chairman and CEO, he said he felt "great sadness about what has transpired at MF Global."
Corzine, who ran the investment firm Goldman Sachs years before joining MF Global, said his resignation was voluntary, and called it "a difficult decision."
Regulators say more than $600 million in client money is still missing. They say MF Global apparently moved the money out of client accounts in mere days as the company's cash dried up.
The criminal investigation of MF Global appeared to be moving forward. Corzine hired criminal defense lawyer Andrew Levander of Dechert LLP, according to a person familiar with the situation. The news that he retained a lawyer was reported earlier by The Wall Street Journal.
The FBI was examining whether MF Global's actions violated criminal laws, two people familiar with the situation had told The Associated Press this week. They spoke on condition of anonymity because they are not authorized to discuss the matter publicly.
The New York Post reported that U.S. Attorney Preet Bharara in New York City also is investigating. Securities firms such as MF Global are supposed to keep client money separate from company money. That way, clients can claim their assets easily if the company fails.
MF Global admitted to regulators early Monday that it could not find about $1 billion in customer money. The company has maintained that the money is being held up by trading partners that froze its accounts as it teetered last week.
The collapse of MF Global has begun to shine a spotlight on the top federal regulator investigating the matter. Gary Gensler, head of the Commodity Futures Trading Commission, is leading the inquiry into how hundreds of millions vanished last week from client accounts at MF Global.
He built close ties to Corzine -- and eventually worked for him -- as they rose through the ranks of Goldman Sachs. Later, they collaborated on Capitol Hill to pass an anti-corporate fraud law.
Corporate governance experts said Gensler's ties to Corzine posed an apparent conflict of interest that could taint the probe's findings. And on Wednesday, Republican Sen. Charles Grassley of Iowa, who sits on the committee that oversees Gensler's agency, said "it's hard to see how the chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm."
MF Global says lead director Edward Goldberg and president and Chief Operating Officer Bradley Abelow will continue in their current positions.