CEO Jon Corzine Steps Down At MF Global
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WASHINGTON (AP) — Jon Corzine stepped down Friday from running the securities firm that collapsed after his disastrous bets on European debt. The move was announced as a criminal probe of the company appeared to be intensifying.
The firm, MF Global, said Corzine has resigned as chairman and CEO and will decline payments from a severance package worth $12.1 million, including cash and benefits.
MF Global filed for bankruptcy protection on Monday after its bets on European debt spooked investors and trading partners.
The company is under investigation by regulators and the FBI because hundreds of millions disappeared from customer accounts as it slid toward bankruptcy.
Corzine ran the investment firm Goldman Sachs and was governor of New Jersey before joining MF Global.
He said in a statement that he feels “great sadness about what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others.” He said he will continue to assist the company and its board as they continue to sort out what happened in the firm’s final days.
Corzine 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 attorney Andrew Levander of Dechert LLP, according to a person familiar with the situation who spoke on condition of anonymity because he was not authorized to discuss it. 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 on Tuesday. 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.
(Copyright 2011 by The Associated Press. All Rights Reserved.)