'There was a gas smell at MF Global, and no one checked the stove'

Money On Hook

Jon Corzine, former CEO of bankrupt futures brokerage MF Global, has said he never ordered any misuse of customer funds to help his firm stay afloat as it dealt with margin calls on bad bets.

Bloomberg News reports that for the Commodity Futures Trading Commission, which said last week that Corzine 'bears responsibility for MF Global’s unlawful acts', that defense is irrelevant.

The CFTC sued Corzine, 66, for failing to oversee the company properly while it spiraled toward failure in 2011 as $1.6bn in customer funds went missing. The CFTC alleged he did nothing about inadequate controls over misuse of customer funds, that he was aware of the firm’s extreme shortage of cash and that he didn’t ask any questions about where the money was coming from to make transfers he ordered.

'That’s what all of this is about', said Gary DeWaal, who served as general counsel for Newedge Group, one of the largest futures brokerages, for 17 years before starting his own consulting firm. 'There was a gas smell at MF Global, and no one checked the stove'.

In effect, the CFTC claims in its complaint that the one who truly knew what the gas smell was about was Edith O’Brien, MF Global’s former assistant treasurer. Her job was to move client assets between the firm’s accounts as needed.

Unlike O’Brien, who Corzine ordered to move funds to cover an overdraft to JPMorgan Chase, Corzine didn’t invoke his Fifth Amendment right to remain silent.

Hit the link to access the complete Bloomberg article:

Corzine Defense to Misuse of Customer Cash Is Off Point

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