Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., will apologize to investors, customers and employees of the failed New York broker and tell lawmakers he doesn’t know the location of the estimated $1.2 billion in missing client money.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said in a statement prepared for a House Agriculture Committee hearing in Washington today.
Corzine, a Democrat who served in the Senate and as New Jersey’s governor before joining MF Global, is scheduled to testify on events leading to the brokerage’s filing for bankruptcy protection on Oct. 31. James W. Giddens, the trustee overseeing the liquidation of the firm, estimated that $1.2 billion in client money is missing, and the Commodity Futures Trading Commission, Securities and Exchange Commission and Justice Department are investigating the collapse.
Corzine, who resigned from his MF Global positions on Nov. 4, said in the 21-page statement that he was “stunned” to learn on Oct. 30 that the company couldn’t account for “many hundreds of millions of dollars.” His appearance before the House Agriculture Committee comes after the panel voted to issue a subpoena to compel his testimony. The Senate Agriculture Committee and a House Financial Services subcommittee also voted to subpoena Corzine.
In his prepared remarks, Corzine apologized to MF Global’s customers, investors and former employees who have suffered because of the bankruptcy. “Their plight weighs on my mind every day -- every hour,” he said in the statement.
He said that he would attempt to answer questions and avoid relying on his Fifth Amendment right to remain silent. “As a former United States Senator who recognizes the importance of congressional oversight, and recognizing my position as former chief executive officer in these terrible circumstances, I believe it is appropriate that I attempt to respond to your inquiries,” Corzine said. At the same time, “without adequate time and materials to prepare, I may be unable to respond to various questions,” he said.
The company filed for bankruptcy protection after risky bets on some of Europe’s most indebted countries.
MF Global’s board of directors was told of the European debt trades and approved limits on the risk in the trades by specific countries, Corzine said.
“At the time of the bankruptcy, MF Global was within the risk limits set up by the board of directors,” Corzine said. “MF Global’s board was not a rubber stamp,” he said. None of the foreign debt securities that MF Global used in so-called repurchase-to-maturity transactions has defaulted or been restructured, Corzine said.