Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

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

Back to Top

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.