WASHINGTON, November 15 (RIA Novosti) US congressional investigators said Wednesday that Jon Corzine, the former governor and senator from the state of New Jersey and ex-CEO of investment bank Goldman Sachs, was squarely to blame for last year’s collapse of brokerage giant MF Global that saw an estimated $1.6 billion in customers’ money vanish.
In a preview of a Congressional report on the MF Global collapse to be released Thursday, Republican members of the US House of Representatives delivered a stinging assessment of Corzine’s role in the debacle during his 19 months as chief executive of the brokerage, which filed for bankruptcy in October 2011. Corzine resigned last fall.
The case is seen by many as another example of Wall Street misdeeds going unpunished.
The report by the House Financial Services Subcommittee on Oversight and Investigations said risky decisions by Corzine led to the company’s downfall, as did an “authoritarian atmosphere” he created at the brokerage in which “no one could challenge” him.
MF Global placed a $6.3 billion bet on European sovereign debt that eventually sparked a run on the brokerage by worried investors in October 2011, and company executives later admitted that hundreds of millions of customers’ dollars were used to help cover up the extent of the losses when the gamble went south.
This failure “to maintain the systems and controls necessary to protect customer funds rests with Corzine,” the House committee concluded in its report.
The collapse revealed “a $1.6 billion shortfall in customer funds,” the committee added.
“Farmers, rangers and other customers may never get back over $1 billion of their money as a result of [Corzine’s] decision,” the House committee said.
Corzine testified before Congress in December that he does not know what happened to customers’ money in the wake of the MF Global meltdown.
“I simply do not know where the money is, or why the accounts have not been reconciled,” he said.
Until his downfall last year, Corzine was widely seen as one of the most powerful men on Wall Street. Critics of the political influence wielded by America’s financial elite say the failure of the US Justice Department to press criminal charges against Corzine is indicative of Washington’s unwillingness to crack down on Wall Street excesses.
Citing people briefed on the matter, The New York Times reported Wednesday that federal US investigators do not expect to file criminal charges against top executives at MF Global.
The House committee says in its report that it will be “up to prosecutors and regulators to determine whether MF Global or its employees violated laws or regulations when these withdrawals of customer funds were made.”