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From Securities Regulation Daily, January 5, 2017

Corzine to pay $5M fine to settle CFTC charges over MF Global collapse

By Brad Rosen, J.D.

Jon Corzine, the former CEO of MF Global, Inc., settled all outstanding CFTC charges today stemming from the firm’s monumental collapse in 2011 by paying a $5 million civil monetary penalty and agreeing to a lifetime ban from the futures industry. In a consent order filed in federal court, southern district of New York, Corzine was found to have violated the control person liability provisions of the Commodity Exchange Act and Commission regulations requiring diligent supervision. In a companion consent order, Edith O’Brien, MF Global’s former assistant treasurer, is required to pay a $500,000 fine for aiding and abetting MF Global’s violations and is barred from associating with an FCM or registering with the CFTC in any capacity for eighteen months.

Corzine took over the helm at MF Global back in March 2010 after serving as chairman and CEO of Goldman Sachs (1994-1999), a stint as senator from New Jersey (2001-2006), and serving as New Jersey’s governor (2006-2010). In October 2011, MF Global collapsed in swift and startling fashion which resulted in the firm filing for Chapter 11 bankruptcy and another court order requiring the firm and its affiliates to pay customers $1.212 billion in restitution.

Today’s orders reflects earlier court proceedings where MF Global was found to have violated the Act and Commission regulations for unlawfully using nearly one billion dollars of customer segregated funds to support its own proprietary operations and the operations of its affiliates. Specifically, today’s orders find that O’Brien directed, approved and/or caused seven transfers of funds from customer segregated accounts to MF Global’s proprietary accounts totaling hundreds of millions of dollars, which was more than MF Global had in excess segregated funds as last reported to O’Brien. In so doing O’Brien aided and abetted MF Global’s violations. Corzine, by his control and conduct during the firm’s worsening liquidity crisis, was found liable for these violations as a control person.

As of April 2014, MF Global and it affiliated entities had paid restitution to satisfy all customer claims as required by court orders. Aitan Goelman, the CFTC’s Enforcement Director, observed: “This resolution demonstrates the importance that the Commission attaches to customer protection, which has long been a hallmark of our mission.”

The case is No. 11-cv-7866.

Attorneys: Brian C. Kerr (Brower Piven, a Professional Corporation) and Jeffrey Craig Block (Block & Leviton LLP) for Joseph Deangelis. Andrew J. Levander (Dechert LLP) for Jon S. Corzine.

Company: MF Global, Inc.

MainStory: TopStory CFTCNews CommodityFutures Enforcement NewYorkNews

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