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Corzine’s Testimony

I watched the first half hour or so of Jon Corzine’s testimony yesterday, ready to catch him in double speak, as I have before.   I am definitely biased. I have not liked the man since the day I met him at the Sea Gulls Nest  when he was running for U.S. Senate in the summer of 2000.

The former governor, senator and master of the universe did not disappoint.  He blamed the collapse of MF Global on market conditions.  He blamed his inability to answer questions on the committee not giving him enough time and the fact that he didn’t have access to MF Global records, noting that he offered to testify voluntarily in January rather than under subpoena yesterday.  He painted his willingness to testify, rather than invoke the fifth amendment as his attorneys undoubtedly advised him to do, as a noble gesture rather than another reckless bet on his brilliance.

Corzine said, “I simply don’t know where the money is,” referring to the $1.2 billion in customer cash missing from the MF Global coffers.  Of course you don’t know where it is now, I thought, did you know where it was in October?

When asked directly by House Agriculture Committee Chairman Frank Lucas if he had authorized the transfer of customers’ funds, Corzine dodged the question and talked about his intentions.  He was obviously well prepared and coached. 

I had seen enough, so I thought.

Then I read Capitol Quickies’ account of Commodities Futures Trading Commissioner Jill Sommers’  and bankrupty counsel James Kobak’s testimony which preceded Corzine’s:

Sommers said the Commodity Futures Trading Commission is untangling complicated client accounts and “tens of thousands” of transactions to learn the whereabouts of “every single penny.”

She added that commodity brokerages are barred from using client money for their own investments, and there’s no evidence MF Global did that. If firms do use “segregated” client funds — which they may do for a small number of legally authorized purposes — they should immediately replace the money, she said.

Companies can’t “take money out of a segregated account, invest it, and  then return the money … at some later  time,” she testified.

Kobak testified that the bankruptcy trustee hasn’t found evidence of illegal activities by MF Global – yet.

“I would say we have suspicions, but we don’t have the knowledge” that client funds were illegally used, he said.

I was willingly rushing to judgement. 

Corzine speculated that maybe the money was owed to the firm by other banks or brokerages that hadn’t returned it as agreed.  That sounds like wishful thinking, but I wouldn’t put that past some bankers.  Hopefully that is that case and the farmers and investors can get their money back as a result of the investigation.

It feels weird to be rooting for Corzine.

Posted: December 9th, 2011 | Author: | Filed under: Jon Corzine, MF Global | Tags: , , , , , | 4 Comments »