Corzine’s Ever-Shifting Story

We’re not sure what Corzine thought testifying in front of Congress would be like. You’d think that his experience in Congress and as a Senator would have prepared him. We actually thought he’d simply take the fifth. Instead, as we pointed out last week, we got an exercise in plausible deniability. It might have worked- except he changed the strategy mid-stream (a mistake he seems to make a lot).

Today he amended his ambiguous statement to the Senate Agriculture committee. Reuters reports:

Former MF Global chief Jon Corzine corrected his earlier statements about the hundreds of millions of dollars in missing customer money, telling lawmakers on Tuesday there was no way to confuse anything he said as an authorization to raid those funds.

He also conceded there were “break the glass” contingency plans at the now-bankrupt futures brokerage, but under questioning denied that tapping customer funds was recommended.

This was a subtle shift in the testimony; he had previously testified that he “couldn’t recall” directing anyone to raid client accounts, and that he never “intended” for it to happen.  The more declarative statement here, in theory, would be a strengthening of his defense, as deafening silence from the rest of his company has done nothing to shed more light on the situation.

Except, as it turns out, not everyone was silent. Zerohedge reports (emphasis ours):

… here comes the CME Executive Chairman Terry Duffy, under oath, with what Roberts said “is a bomb” statement which basically says that Corzine lied under oath. Specifically, according to Duffy’s remarks during the Q&A, an MF Global employee advised the CME that Corzine had been aware of a loan made to Euro affiliates just days prior to the bankruptcy: a loan which effectively was that of commingled customer accounts.

If this was the case, we can hope that this money will be traced back to the originator of the loan and recovered. Unfortunately, we aren’t convinced that will be the case. Duffy further asserted that it was made very clear to him that searching for an accounting error was worthless- which, in our opinion, sounds like a roundabout way of saying that MF Global and Corzine broke the law.

The silver lining coming out of this testimony is an important distinction that Duffy makes in this case, arguing that it was not a failure of the system, but a violation of the law. While we will caveat that statement by saying there are still reforms that need to be made, his comments echo what we have said about the wider universe of FCMs available to those interested in doing business in the futures industry.

However, should the proof of Corzine perjuring himself solidify, not only will he face potential criminal charges for the false testimony and his actions at MF Global, but he may also provide those seeking to hold him personally responsible for their losses with all the ammunition they need. Testimony today has concluded- we’ll have to wait to see what this soap opera brings next.


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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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