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MF_Global

MF_Global

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Published by DealBook

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Published by: DealBook on Nov 15, 2012
Copyright:Attribution Non-commercial

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08/15/2013

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 STAFF
 
REPORTP
REPARED FOR
 R
EP
.
 
R
ANDY
N
EUGEBAUER
,
 
C
HAIRMAN
 S
UBCOMMITTEE ON
O
VERSIGHT
&
 
I
NVESTIGATIONS
 C
OMMITTEE ON
F
INANCIAL
S
ERVICES
 112
TH
 
C
ONGRESS
 N
OVEMBER
15,
 
2012
 
 
“The goal here is not to be a prop trader. … I don’t think that we will be in a risk-taking position, substantial enough to have it be the kind of thing that the ratingagencies would say ‘holy cow, these guys got a different business strategy’ thanwhat we told them we had.”
-Jon Corzine, May 20, 2010
 
 
Contents
 
Preface ............................................................................................................................................. 1
 
The
 
Subcommittee’s
 
Investigation
 
...........................................................................................................
 
3
 
MF Global Prior to Jon Corzine’s Arrival ...................................................................................... 5
 
Company
 
Origin
 
and
 
Growth
 
....................................................................................................................
 
5
 
The
 
Man
 
Group
 
Spins
 
Off 
 
MF
 
Global
 
........................................................................................................
 
6
 
Unauthorized
 
Trading
 
Incident
 
Shatters
 
Investor
 
Confidence
 
.................................................................
 
7
 
Efforts
 
to
 
Restore
 
Investor
 
Confidence
 
Falter
 
..........................................................................................
 
9
 
A
 
New
 
Strategy
 
Stalls
 
..............................................................................................................................
 
12
 
A
 
Flawed
 
Business
 
Model
 
Revealed
 
........................................................................................................
 
16
 
The
 
End
 
of 
 
an
 
Era
 
....................................................................................................................................
 
18
 
The Jon Corzine Era...................................................................................................................... 20
 
Corzine
 
Appointed
 
CEO
 
of 
 
MF
 
Global
 
.....................................................................................................
 
20
 
A
 
New
 
Environment
 
for
 
a
 
Wall
 
Street
 
Veteran
 
.......................................................................................
 
21
 
Corzine
 
Creates
 
Strategic
 
Plan
 
for
 
MF
 
Global
 
.........................................................................................
 
27
 
Corzine
 
Begins
 
Implementing
 
His
 
Strategic
 
Plan
 
....................................................................................
 
28
 
Corzine
 
Expands
 
European
 
Sovereign
 
Debt
 
Portfolio
 
.............................................................................
 
36
 
MF
 
Global’s
 
Independent
 
Auditor
 
Advises
 
the
 
Company
 
to
 
Enhance
 
Disclosures
 
about
 
its
 
European
 
RTM
 
Trades
 
.............................................................................................................................................
 
42
 
Mounting
 
Liquidity
 
Strain
 
.......................................................................................................................
 
47
 
Dispute
 
with
 
FINRA
 
.................................................................................................................................
 
50
 
The Collapse of MF Global .......................................................................................................... 54
 
FINRA
 
Imposes
 
Capital
 
Charge
 
................................................................................................................
 
54
 
Media
 
Reports
 
Capital
 
Charge
 
................................................................................................................
 
56
 
MF
 
Global’s
 
Final
 
Days
 
............................................................................................................................
 
57
 
Monday,
 
October 
 
24,
 
2011
 
.................................................................................................................
 
57
 
Tuesday,
 
October 
 
25,
 
2011
 
.................................................................................................................
 
58
 
Wednesday,
 
October 
 
26,
 
2011
 
............................................................................................................
 
60
 
Thursday,
 
October 
 
27,
 
2011
 
................................................................................................................
 
61
 
Friday,
 
October 
 
28,
 
2011
 
.....................................................................................................................
 
63
 

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