Freeh blamed Corzine and his management team for bungling an expansion of the company’s traditional business model while ignoring deficiencies in its risk controls. Corzine hired Chief Operating Officer Abelow, who was once his chief of staff as governor, and favored Steenkamp over then-CFO Randy McDonald, the lawsuit said.
Corzine, a Democrat, has testified before Congress that he never gave any instruction to misuse customer funds. He also said he didn’t believe anything he said could reasonably have been interpreted as an instruction to misuse customer funds.
Interest Rates
Corzine joined MF Global in March 2010, when it was already suffering as it depended on interest rates for revenues at a time when rates were declining. As Corzine moved to convert it into a full service broker dealer and investment bank, setting up a proprietary trading desk, he didn’t improve already deficient controls, according to Freeh’s complaint against Corzine.
Under his leadership, MF Global’s position in European investments increased from $400 million in mid-September 2010 to $8.3 billion at the end of August 2011. The company’s struggles were exacerbated by MF Global’s method of accounting for such trades, according to Freeh’s report.
Before joining MF Global, Corzine spent 24 years at New York-based Goldman Sachs, becoming co-head of the firm with Henry Paulson, who later became the U.S. Treasury secretary. He also spent five years in Washington, and served as New Jersey’s governor from 2006 to 2009.
Whether he can return to Wall Street after MF Global may come down to whether he faces a trading ban as a result of the CFTC’s action, Weinstein said.
“People reinvent themselves on Wall Street all the time,” Weinstein said. “It’s about whether you can make money.”