Today at 2 PM, the House Financial Services Committee will hold its third hearing (and the fifth overall) on the ever more confounding topic of MF Global, its bankruptcy, and its vaporized client funds, which amount to about $1.6 billion at last check. And while Jon Corzine will not be there, virtually everyone else from the firm who can promise that said vaporitzation of funds was merely a softward glitch and not the fault of anyone in particular, will be present, from the General Counsel, to the CFO, to the Deputy General Counsel of JPMorgan, all the way to Edith O'Brien, assistant treasurer of MF Global, who is expected to plead the Fifth. One wonders why if there is nothing to hide, but that is the topic of another discussion. And as exposed last week by the WSJ, this hearing will be particularly interesting as now it has been made clear that Corzine specifically gave the order to transfer funds to JPM's account. As NJ.com summarizes: "Per JC’s direct instructions." This line, contained in an email that an MF Global finance official sent to explain a $200 million transfer to JPMorgan Chase from an MF Global account containing customer funds, will be a focal point of a congressional hearing today into the futures firm’s collapse. The email, disclosed in a congressional memo circulated Friday, has raised questions about whether the former governor and CEO of MF Global knew customer money was being used to plug holes in the firm’s finances as it plunged into bankruptcy during the last week of October. As much as $1.6 billion of client funds has gone missing, according to a trustee liquidating the futures firm." Wrong - not "gone missing": it vaporized.
Furthermore, as JPM's Deputy General Counsel will testify today, "on the morning of Friday, October 28, as a result of the heightened level of attention to MF Global transfers and balances dictated by the debit alert, J.P. Morgan determined that there were overdrafts in certain of the foreign-exchange clearing accounts maintained by MF Global’s U.K.-based affiliates. We promptly advised the Chairman and CEO of MF Global Holdings Ltd., Jon Corzine, and others at MF Global of these overdrafts and were assured that any overdraft would be covered....when this was raised with Mr. Corzine on Friday morning, he readily agreed that it was important for MF Global to cover the overdrafts, and he assured J.P. Morgan executives that MF Global had ample funds to cover the overdrafts and that they would be covered promptly" The problem is that as is now known it was covered with client money.
So bring your popcorn - the contradictions in Corzine's sworn testimony are now so blatant, even corrupt congressional critters, potentially those tied in some way to Corzine's fundraising efforts, will be forced to ask relevant and pertinent questions this time around. Showtime is 2pm and will have a live webcast.
Full cast of characters:
Hearing entitled “The Collapse of MF Global: Part 3”
Wednesday, March 28, 2012 2:00 PM in 2128 Rayburn HOB
Oversight and Investigations
- Ms. Laurie Ferber, General Counsel, MF Global Holdings Ltd.
- Mr. Henri Steenkamp, Chief Financial Officer, MF Global Holdings Ltd.
- Ms. Christine Serwinski, Chief Financial Officer for North America, MF Global Inc.
- Ms. Edith O’Brien, Assistant Treasurer, MF Global Inc. (no written statement submitted)