Chapter
Chapter 2 THE COLLAPSE OF MF GLOBAL
MF GLOBAL PRIOR TO JON CORZINE’S ARRIVAL
Company Origin and Growth
The Man Group Spins off MF Global
Unauthorized Trading Incident Shatters Investor Confidence
Efforts to Restore Investor Confidence Falter
A Flawed Business Model Revealed
Corzine Appointed CEO of MF Global
A New Environment for a Wall Street Veteran
Corzine Creates Strategic Plan for MF Global
Corzine Begins Implementing His Strategic Plan
Corzine Expands European Sovereign Debt Portfolio
MF Global’s Independent Auditor Advises the Company to Enhance Disclosures about its European RTM Trades
Mounting Liquidity Strain
THE COLLAPSE OF MF GLOBAL
FINRA Imposes Capital Charge
Media Reports Capital Charge
Tuesday, October 25, 2011
Wednesday, October 26, 2011
Thursday, October 27, 2011
Saturday, October 29, 2011
Monday, October 31, 2011 and Tuesday, November 1, 2011
Bankruptcy Filing and Liquidation
Ongoing Criminal and Civil Investigations and Litigation
FINDINGS AND RECOMMENDATIONS
Jon Corzine Caused MF Global’s Bankruptcy and Put Customer Funds at Risk
The SEC and the CFTC Failed to Share Critical Information about MF Global with One Another, Leaving Each Regulator with an Incomplete Understanding of the Company’s Financial Health
MF Global Was Not Forthright with Regulators or the Public about the Degree of Its Exposure to Its European Bond Portfolio, nor Was the Company Forthright about Its Liquidity Condition
Moody’s and S&P Failed to Identify the Biggest Risk to MF Global’s Financial Health
MF Global’s Use of the “Alternative Method” Allowed the Company to Use Some Customer Funds as a Source of Capital for the Company’s Day-to-Day Operations, Which Subjected Customers to the Risk that MF Global Would Not be Able to Return Those Funds to Customer Accounts upon the Company’s Insolvency
The New York Fed Should Have Exercised Greater Caution in Determining whether to Designate MF Global as a Primary Dealer, Given the Company’s Prior Risk Management Failures, Chronic Net Losses, and Evolving Business Strategy
Differences between Foreign and U.S. Law Gave Rise to the Potential That MFGI Global Customers Trading on Foreign Exchanges Would Experience a “Shortfall” in Funds Owed to Them, Despite the Fact That Such Funds Were Set Aside in Accounts Designated as Secured Accounts
Chapter 3 STATEMENT OF JON S. CORZINE, FORMER CEO OF MF GLOBAL. HEARING ON “THE COLLAPSE OF MF GLOBAL”
MF GLOBAL BEFORE I JOINED
C. The Decision to Engage in RTMs Involving European Sovereign Debt
D. Participants in the Decision to Engage in RTMs Involving European Sovereign Debt
E. The Public Disclosures of the RTMs
COMMUNICATIONS WITH REGULATORS
A. FINRA’s Position Regarding the Capital Treatment of the RTMs Involving European Sovereign Debt Securities
B. My Communications Regarding Proposed CFTC Rules Changes
THE EVENTS OF OCTOBER 2011
THE UNRECONCILED ACCOUNTS
Collapse and Bankruptcy of MF Global
( Economic Issues, Problems and Perspectives )
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