MF Global sought bankruptcy protection on Halloween after an effort to sell the troubled firm unraveled. The firm is now in liquidation.
In his prepared testimony submitted before the hearing, Corzine said he could not explain what happened to “many hundreds of millions of dollars” that the firm was holding for customers. He said he was “stunned” to learn shortly before the firm sought bankruptcy protection at the end of October that MF Global could not account for the money.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony.
The firm was required to keep clients’ money separated from its own. But more than $1.2 billion might be missing, the trustee overseeing the firm’s liquidation said last month. An attorney for the trustee confirms that assessment in testimony submitted for for hearing.
The FBI, the Commodity Futures Trading Commission and other authorities are investigating and trying to determine what happened to the missing funds.
Meanwhile, the firm’s collapse has become a major disruption for customers and others who depended on MF Global.
The Republican-led House Agriculture Committee, whose jurisdiction includes agricultural commodities and one of the federal agencies that regulates MF Global, subpoenaed Corzine to testify on the firm’s bankruptcy. The committee turned down Corzine’s request to testify voluntarily in January, he said.
Corzine began his testimony Thursday with an apology, saying that he was “devastated by the enormous impact” the firm’s bankruptcy has had on many people’s lives.
“As the chief executive officer of MF Global at the time of its bankruptcy, I truly apologize to all those affected,” he told the House members.
Questioned first by committee chairman Frank D. Lucas (R-Okla.), Corzine — wearing a gray suit, white shirt and dark tie and flanked by his lawyer — gave some strained and cautious answers.
Asked why there was a shortfall in customer funds, Corzine said that “many transactions… occurred in those last chaotic days.” He said he was not aware of all of those transactions and that “as a consequence it would be very hard for me to speculate why or where that shortfall took place.”
Asked if he authorized a transfer of customer funds, Corzine responded, “I never intended to break any rules, whether it dealt with the segregation rules or any of the other rules that are applicable.”
When Lucas asked if Corzine was aware of any transfers, authorized or unauthorized, out of customer accounts, Corzine said, “I’m not in a position, given the number of transactions, to know anything specifically about the movement of any specific funds.”