Jon Corzine has agreed to pay a $5 million civil fine to settle a lawsuit by the U.S. Commodity Futures Trading Commission over the 2011 collapse of the former New Jersey governor's brokerage, MF Global Holdings Ltd.
Under the settlement disclosed on Thursday, Corzine also agreed to never again work for a futures commission merchant, or register with the CFTC in any capacity.
Edith O'Brien, MF Global's former assistant treasurer, agreed to pay a $500,000 civil fine and accept an 18-month ban to settle related claims.
Thursday's settlement resolves the last piece of litigation against Corzine stemming from MF Global's Oct. 31, 2011 bankruptcy.
The CFTC had objected to MF Global's use of nearly $1 billion of customer funds to shore up liquidity in the final week of that month.
This occurred as margin calls, credit rating downgrades and Corzine's big wager on European sovereign debt left customers and investors increasingly worried about MF Global's survival prospects.
"I am pleased to have reached this settlement," Corzine said in a statement. "As the CEO of MF Global in 2011, I have accepted responsibility for its failure, and I deeply regret the impact it had on customers, employees, shareholders and others."
Christopher Barber, a lawyer for O'Brien, was not immediately available for comment.
|© REUTERS/Jonathan Ernst. Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington|
Regulators Say Jon Corzine Will Pay $5 Million Penalty Over MF Global Collapse
Former MF Global Chief Executive Jon Corzine will pay a $5 million penalty for his role in the company's collapse, according to the U.S. Commodity Futures Trading Commission.
MF Global collapsed in 2011, and hundreds of millions of dollars in customer money disappeared, as we reported.
Under the terms of the settlement, Corzine, who has also served as the governor of New Jersey, is barred from commodity trading and cannot use insurance money to pay the penalty. A statement by the CFTC says the amount of customer money the company run by Corzine mishandled is nearly $1 billion.
The former assistant treasurer of MF Global, Edith O'Brien, will pay a $500,000 civil penalty in a separate settlement with the regulatory agency, which was also announced Thursday.
As we reported in 2013, the approximately 26,000 MF Global customers who lost money in the company's collapse were expected to recoup their entire investments in a court deal that freed up funds from other parts of MF Global's parent corporation.
Corzine has apologized to customers for the company's collapse, saying at a 2011 congressional hearing:
"I appear at today's hearing with great sadness. My sadness, of course, pales in comparison to the losses and hardships that customers, employees and investors have suffered as a result of MF Global's bankruptcy. Their plight weighs on my mind every day — every hour. And, as the chief executive officer of MF Global at the time of its bankruptcy, I apologize to all those affected."
The Wall Street Journal reported Corzine "said he accepted responsibility for the company's failure and is pleased to have reached a settlement."
The paper also reported criminal prosecutors had investigated Corzine and other former executives over their role in the company's bankruptcy, which was the result of billions of dollars of bad bets on European bonds, but they brought no criminal charges.