The smoking gun has been found with regard to MF Global‘s missing millions.
Jon Corzine, the company’s former CEO, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase accounts in London.
Edith O’Brien, treasurer for the firm, said in an email sent on October 28, three days prior to the company’s monumental collapsed, that the transfer of the funds was “Per JC’s direct instructions,” according to the newly-obtained memo.
O’Brien’s internal email came as MF Global discovered that its intraday credit lines were being limited by JPMorgan, the firm’s clearing bank, according to the leaked memo, which was prepared for a March 28 House Financial Services subcommittee hearing.
O’Brien is scheduled to testify after being subpoenaed this week.
“Over the course of that week, MF Global’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’ segregated funds were safe,” said the memo, written by Financial Services Committee staff.
Vinay Mahajan, global treasurer of MF Global Holdings, wrote an October 28 email that JPMorgan was “holding up vital business in the U.S. as a result” of the overdrawn account, which had to be “fully funded ASAP,” according to the memo.
The money transferred reportedly came from a segregated customer account, according to congressional investigators. Segregated accounts may include client money and excess company funds.
Corzine testified that he never intended a misuse of customer funds at MF Global, and that he didn’t know where the missing client funds went.
MF Global filed for Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe’s most indebted nations led to regulator worries and a credit rating downgrade. Corzine resigned from his post as CEO on November 4.
It now looks as though Jon Corzine will be going away for a very long time.
More in the video below.