Breaking News: CEO Jon Corzine of MF Global allegedly orders customer funds to be used for covering overdraft
This could be very damning evidence if this turns out to be true. To be fair, this email just surfaced and we need to let the authorities to do their job and determine the validity and authenticity of this email. What is interesting is that the transfer is to a JP Morgan Banking unit in London.
I would have to believe this may be tried to the bets MF Global made on Europe that would force credit lines and positions to be covered. It doesn’t look good and we will need to stay on top of this to see what happens. Customers are largely still without over $1 billion in deposits and this needs to be gotten to the bottom of so that confidence can be fully restore that deposit taking institutions can not take client funds and use them to cover their own bets.
Jon S. Corzine, MF Global Holding Ltd., chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. (JPM) accounts in London, according to an e-mail sent by a firm executive.
Edith O’Brien, a treasurer for the firm, said in an e-mail sent the afternoon of Oct. 28, three days before the company collapsed, that the transfer of the funds was “Per JC’s direct instructions,” according to a copy of a memo drafted by congressional investigators and obtained by Bloomberg News.
O’Brien’s internal e-mail came as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify after being subpoenaed this week.