Jon Corzine, the former Goldman Sachs executive and former governor of New Jersey, has seen his career turn in circles. Corzine left government to return to the financial world but now he is scheduled to return to Washington, but this time will not be rosy for the former MF Global leader. The government will question Corzine on the collapse of the company; a brokerage that went broke and then relieved its entire staff. For some experts, this might be one of the scariest bankruptcies since the collapse of the Lehman Brothers.
A court-appointed trustee and regulators are searching for missing money from MF Global, believed to be in the range of $600 million and $1.2 billion in missing funds. The reason for the attention to the case is the fact that farmers who utilized the firm to hedge against losses are pressing politicians for action. MF Global is considered a small fish in the sea but its collapse could have catastrophic effects on the economy.
The collapse of MF Global has been in the news for quite some time now, but we have not heard from its former head, Corzine. Corzine has the option to refuse testimony, but he would then face a subpoena from the governmental panel. The panel said that Corzine will focus on “the decisions and events leading to the collapse of MF Global, the effectiveness of regulators in overseeing MF Global’s activities and the impact MF Global’s bankruptcy will have on its customers.”
Also being called to testify is Bradley Abelow, the president and chief operating officer for MF Global. Abelow worked previously at Goldman Sachs and worked as the treasurer and chief of staff to Corzine during his tenure as governor of New Jersey. The relationship between Abelow and Corzine seems to be crumbling, as the two will have a chance to tell their sides of the story once in front of a panel.
“It’s too early to say exactly where this is going but we will have a clearer idea after this hearing,” said Robert Mintz. Mintz is a former federal prosecutor who now works at New Jersey law firm McCarter & English.”There may have been criminal wrongdoing, there may not. But as long as these sizeable amounts of money are missing, that’s a question that is going to keep getting asked.”
A person of financial power appearing before a government panel is nothing new in the United States, where in 2002 the chairman of Enron pled the fifth. Kenneth Lay refused to answer questions for nearly two hours as senators kept firing them at him.
“Mr Lay, I’ve concluded that you’re perhaps the most accomplished confidence man since Charles Ponzi,” said senator Peter Fitzgerald. “I’d say you’re a carnival barker, except that wouldn’t be fair to carnival barkers.”