Never miss Christian news that matters to you. facebookLike twitterFollow
pop up close

Ex-N.J. Governor’s Firm Facing Bankruptcy Over Misuse of Client Funds?

0
Sign Up for Free eNewsletter ››
By Paul Stanley, Christian Post Reporter
November 1, 2011|5:16 pm

MF Global, the firm headed by former U.S. Senator and New Jersey Governor Jon Corzine, has admitted to using client funds as it found itself in financial dire straits, said an anonymous federal official.

MF Global filed for bankruptcy protection Monday as a result of insufficient cash flow following multibillion-dollar bets on European debt. The meltdown took less than a week to unfold and is to date the biggest U.S. casualty of Europe’s ongoing debt crisis.

Corzine and a team of investment bankers worked furiously over the weekend to avert a shutdown by trying to line up potential buyers, but after one prominent buyer walked away from the table over a discrepancy of hundreds of millions of dollars, the fledging firm was left with no options other than to seek Chapter 11 bankruptcy protection on Monday.

Last week the company’s shares dropped sharply, losing over 66 percent of their value and its credit ratings were reduced to junk. On Monday, the Securities and Exchange Commission and the Commodity Futures Trading Commission issued a joint statement:

“Early this morning (Monday), MF Global informed the regulators that the transaction had not been agreed to and the reported possible deficiencies in customer futures segregated accounts held at the firm. A bankruptcy proceeding led by the Securities Investor Protection Corporation would be the most prudent course of action to protect customer accounts and assets.”

As news of the discrepancies was first revealed, the amount in question was close to $1 billion, however, by late Monday the number in question had been reduced to less than $700 million.

Follow us Get CP eNewsletter ››

Aside from having to take bankruptcy, the company could have even bigger problems if client firms were co-mingled with company assets. However, federal regulators still have not determined if the discrepancy in funds is due to misuse or just sloppy accounting. Neither case is good.

MF Global, like Goldman Sachs of years past, was known to take big risks and produce big returns for their investors. For example, the firm made substantial bets on European bonds in countries such as Spain and Italy. But as Europe’s financial picture decreased, so did the firm’s value.

Prior to his tenure as New Jersey’s governor, Corzine made his personal fortune as head of Goldman Sachs before he was ousted in 1999. Having made hundreds of millions after years of working in the financial services sector, Corzine “invested” $62 million of his own money to win a Senate seat in New Jersey.

Setting his sights on being New Jersey’s “CEO,” Corzine ran and was elected governor in 2005, but served only one term after he lost the seat to Chris Christie in 2009.

How the bankruptcy and ongoing investigation of client funds will impact Corzine’s future is unknown.

“I think Jon is a very able and effective businessman,” former New Jersey banking and insurance commissioner Steven Goldman told the New York Daily News. “This is obviously an unfortunate turn of events for the company, but I think Jon is still quite a capable person.”

As of Tuesday, MF Global has been delisted by the New York Stock Exchange.

 

Videos that May Interest You

‘Son of God Preview: Evangelical Leader Geoff Tunnicliffe on Last Supper Scene; Christian Apologetics Tool?

Advertisement