Federal Judge Orders MF Global to Pay $1.2 Billion to Customers

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MF Global Corzine
Susan Walsh/APFormer MF Global Holdings Chairman and CEO Jon Corzine.
By Dunsten Prial

MF Global, the bankrupt brokerage firm led by former New Jersey Gov. Jon Corzine, has been ordered by regulators to pay $1.2 billion in restitution to its customers.

In a consent order entered on Nov. 8 by a federal judge in New York, MF Global, which collapsed in 2011, was also ordered to pay a $100 million fine.The Commodities Futures Trading Commission announced the order in a statement Monday.

According to the order, the fine will be paid after MF Global covers the losses of its former clients and repays certain creditors that received priority in MF Global's bankruptcy proceedings.

The restitution order and fine stem from civil charges filed by the CFTC in June in which MF Global was accused of improperly using customer funds to pay off its rapidly escalating debts.

The CFTC charged former CEO Corzine and former assistant treasurer Edith O'Brien with illegally using segregated customer funds in an effort to cover losses incurred on bets tied to the European debt crisis.

The regulator's civil cases against Corzine and O'Brien have yet to be resolved, despite the larger consent order.

The CFTC charged that during the last week of October 2011,
as MF Global struggled to cover losses on bad bets related to the European debt crisis, the firm illegally used customer segregated funds to support its own proprietary operations and the operations of its affiliates.

In addition to misusing customer funds, the CFTC alleged that MF Global failed to notify regulators immediately when it knew of deficiencies in its customer accounts.

MF Global also made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts, according to the complaint, and used customer funds for "impermissible investments" in securities that were not considered readily marketable or highly liquid, all in violation of CFTC regulations.

Finally, MF Global executives "failed to diligently supervise" the handling of commodity interest accounts carried by the brokerage firm and the activities of its partners, officers, employees, and agents.

Corzine and O'Brien's actions "harmed thousands of customers and violated fundamental customer protection laws on an unprecedented scale," the CFTC said at the time the charges were filed.

Corzine, also a former U.S. Senator who led Goldman Sachs (GS) before going into politics, joined MF Global as CEO in March 2010 with the intention of transforming the firm from a mid-sized futures broker into a major investment bank.

"Corzine's strategy called for making increasingly risky and larger investments of the firm's money," the CFTC said.

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11 Comments

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jwavitable

Jon was also a financial advisor to Obama.

November 19 2013 at 4:23 AM Report abuse +1 rate up rate down Reply
rondonit

Symbolic Guesture? How does a Company that is truly Bankrupt, pay a $100M fine?

November 18 2013 at 11:27 PM Report abuse +1 rate up rate down Reply
edwbiker

Aptly named company.

November 18 2013 at 11:27 PM Report abuse +1 rate up rate down Reply
dickbambam

Power corrupts. Fast and lose with other peoples money. How arrogant to think they wouldn't get found out.

November 18 2013 at 11:17 PM Report abuse +1 rate up rate down Reply
ohogwash

Bernie Madof and Jon Corzine will be lovers soon. Two ex govt employees sharing the same toilet and sheets …… sweet deal !!!!!

November 18 2013 at 7:21 PM Report abuse +2 rate up rate down Reply
Ted

Maybe to make sure that debt is paid, all presidents, CEOs, management personnel who helped get huge paychecks while bilking people out of their monies, should forfeit all of their own monies and properties, and sell or whatever to recoup what these rich jerks gained. Turnabout is fair play, is it not?

November 18 2013 at 7:20 PM Report abuse +1 rate up rate down Reply
stevemontani

and corzine will join countrywide's angelo mozillo as one of the great untouched

November 18 2013 at 6:58 PM Report abuse +1 rate up rate down Reply
jrb359

Couldn't of happened to a more deserving guy than former Progressive Governor Jon Corzine! When he left office NJ was $10 billion in debt thanks to his failed liberal agenda. The only governor that supported state unions so as he would get their votes.

November 18 2013 at 6:37 PM Report abuse +1 rate up rate down Reply
1 reply to jrb359's comment
Frankie

Liberal agenda's do not fail, conservative ones do. You forgot what happened in 2008?

November 19 2013 at 3:47 AM Report abuse rate up rate down Reply
2 replies to Frankie's comment
jrb359

Ask Barney Frank and Chris Dodd!

November 19 2013 at 5:54 AM Report abuse rate up rate down
jrb359

Have you heard about the crash and burn obamacare?

November 19 2013 at 5:54 AM Report abuse rate up rate down