Jon Corzine, the former New Jersey senator who ran the derivatives broker-dealer MF Global Holdings as its chief executive leading up to its historic failure on Oct. 31, told a congressional panel on Thursday that he does not know what happened to an estimated $1.2 billion in missing customer funds.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he said in prepared testimony before the House Agriculture Committee. MF Global failed because it over leveraged itself and made bad bets on European sovereign debt. Regulators have said it invested with customer funds that were supposed to be segregated.
“I do not know which accounts are unreconciled or whether the unreconciled accounts were or were not subject to the segregation rules,” Corzine said in his prepared remarks.
Corzine apologized in his testimony and said he was “stunned” the day before the firm collapsed when he learned that the firm could not account for hundreds of millions of dollars in client funds.
He said that as CEO he takes “responsibility for the firm,” but he readily admitted he did not involve himself deeply or understand the complexities of its day-to-day operations.
“I did not, however, generally involve myself in the mechanics of the clearing and settlement of trades, or in the movement of cash and collateral,” he said. “Nor was I an expert on the complicated rules and regulations governing the various different operating businesses that comprised MF Global. I had little expertise or experience in those operational aspects of the business.”
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