The limits reflect events at MF Global that unfolded after Corzine became chief executive officer in 2010. Seeking to boost trading revenue, he employed the firm’s capital plus leverage to make at least $6 billion in proprietary bets on European sovereign debt.
When the firm got hit by a cash crunch tied to the trades in 2011, some $1 billion in client funds went temporarily missing and MF Global was forced to file for bankruptcy. The Commodity Futures Trading Commission later filed suit against MF Global and Corzine, stating that the use of client cash to cover the firm’s obligations violated customer protection rules “on a scale never previously seen in the U.S. futures market.”
Corzine in January 2017 settled allegations that he failed to properly supervise the firm by paying a $5 million penalty and consenting to the lifetime ban from the futures industry. He didn’t admit or deny wrongdoing.
The CFTC didn’t block Corzine from other parts of Wall Street, providing him with the leeway to start his hedge fund. Now he has to win SEC approval to expand it.
“If Corzine wants people to give him money, he will do what he has to do to make sure that happens,” Scharfman said.
This article was provided by Bloomberg News.