MF had a history of futures trading violations - its main business. And they were awful record keepers.
“In 2007, MF and one of its executives paid a combined $77 million to settle CFTC allegations of mishandling hedge-fund clients’ accounts, as well as supervisory and record-keeping violations. In 2009, the commission fined MF $10 million for four instances of risk-supervision failures, including one that resulted in $141 million of trading losses on wheat futures. Suffice it to say, Pricewaterhouse should have been on high alert.”
While its auditor, PWC, was blessing the firm’s books. How were the books?
“Their books are a disaster,” Scott O’Malia, a commissioner at the Commodity Futures Trading Commission, told the Wall Street Journal in an interview two weeks ago. The newspaper also quoted Thomas Peterffy, CEO of Interactive Brokers Group Inc., saying: “I always knew the records were in shambles, but I didn’t know to what extent.” Interactive Brokers backed out of a potential deal to buy MF last month after finding discrepancies in its financial reports."
(Same source)
Who really lost the money? When? What is the motive of Congress - political again?
PWC seems to be far more at fault than Corzine.
Corzine owned/purchased about 3 million shares of MF and never sold a single share. He bought as late as August.
Forensic accounting will take many months. Is there a civil or criminal case against Corzine?
I’ve not followed the details of this all that closely, but absent concrete evidence I’m generally sympathetic to Corzine. There’s a general tendency to assume that the top guy is always to blame for everything, and both the media and prosecutors (not to mention grandstanding politicians) tend to adopt this attitude. But it’s not realistic, and the top guy can only be on top of so much.
From what I’ve read, Corzine’s bets on European debt were fundamentally good ones, but they brought down the firm anyway simply because creditors lost confidence and called in their debt. That doesn’t get him completely off the hook for the collapse, because that’s part of the job, but that part of the job is harder to predict. (I understand that this is separate from the issue of the comingled funds.)
[FWIW, my cousin worked under Corzine at Goldman Sachs and has a very high opinion of him as a person. That said, I was not a supporter as NJ governor, and was pleased when Christie defeated him.]
From what I’ve read a problem was that they were excessively leveraged, were told so, and continued on. People make bad bets, but the bad bets should not take down the company.
The disappearance of client funds seem to have happened in the run up to the collapse, and under his watch. As for the rest, did he do anything to try to correct a problem that predated his tenure?
I don’t think his owning stock means anything. That is a symptom of overconfidence in his own abilities, which was also demonstrated by him tell his driver to speed and not wearing a seat belt - and making the bets he did. I don’t think anyone has accused him of fraud. He lost money the old fashioned way.
What I find amazing is how he (Corzine) can stand up and say:"I don’t know where 1.2 billion was lost".
Granted, he doesn't know everything, bt he has a staff, who (presumably) advise him. Plus, he was paid a multi-million salary-IT IS HIS JOB to know.
Seems to me that MF Clobal might well be another Madoff-type scam.
I only hope that we (the taxpayers) won’t be made to bail them out.
True on the responsibility. And I am not implying he was even an average CEO. But financial chicanery tends to be systemic in a corporation and I argue Corzine bit into a bad apple unwittingly.
And now the media and Congress wants to make an example of him.
I think we’re safe on that regard. Even better, remember he was going to get a golden parachute if he was able to sell the company before it went bust - but he didn’t, and he wound up without a parting bonus.
This is what SarbOx is all about - forcing CEOs to actually know what is going on in their companies. I don’t know if it applies to this kind of company, but I wonder if he signed off on their books.
And nothing I’ve seen makes me think it is a scam. They may have been behind on recording their trades, but they sure made trades.
Corzine may not be “to blame”, but he definitely is the one to be held responsible, because that is part and parcel of his job description. He’s they guy who has to say it, “I make sure everything is kosher”. The job is too tough? If a guy wants to claim that his brilliance and talent is worth multiple millions per year, let him by God prove it, or get out of the way for someone who can.
Your subject title says that he is being framed. There is a difference is framing someone and making an example of him. I imagine that any CEO who goes down first would feel that she or he is being made into an example. I take it that Corzine received a reasonable salary for accepting the responsibilities of his position. Maybe he meant well.
Which specific members of the media are framing him? What charges have been made that are not true? Are you claiming a media conspiracy? What reason would various members of the media have for going after him in particular?
Which members of Congress have broken stride long enough to go after someone wealthy? I need to keep up better. Are Congress and the media actually working together on this? Now there’s a thought.
Anybody catch the video clips O’Reilly showed about Corzine? Joe Biden was praising the guy as a “financial genius”, and Obama was unstinting in praise.
Yet here we have a multi-billion$ investment group, which claims its is unable to account for a vast ($1.2 billion) sum of money!
Hint to JC: Excel has things called “spreadsheets”-you can actually use them to track money flows!
I think I’ll stop paying my mortgage-and I’ll tell the bank: “gee, I don’t know what happened to the money-I think its lost”.
Think they will believe me?
I’m in the same boat as Ralph124c, which is a strange place for me. It ultimtely doesn’t matter why Corzine failed: his did in fact fail. Whether it was malice or gross incompetence is not really a debate he can exit gracefully, although it would explain his tenure as governor of New Jersey…
Anyway, I think he’s at least accountable for the goings on. If he took over and didn’t clean up their accounting for 1.5 years, that’s really his fault. Criminally liable? Maybe – it depends on securities laws that I don’t know the details of, and what representations he signed under SarbOx.
I don’t understand how Corzine isn’t being burnt in effigy by the Occupy Wall St. crowd.
Former Goldman Sachs executive? Check.
High level government official? Check.
Leveraged former experience into leadership role of a financial firm that committed massive fraud and lost Main Streeters’ money while making huge, leveraged bets? Check.
I mean, could there be a more perfect embodiment of The Bad Guy?
There is over $1 billion of customermoney unaccounted for. This would be like Bank of America making bad bets, and you finding the money in your checking account has gone missing.