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Corzine Settles CFTC’s MF Global Charges for $5 Million

by   |   January 5, 2017

The U.S. Commodity Futures Trading Commission has obtained a federal court Consent Order against Defendant Jon S. Corzine, former CEO of MF Global Inc., requiring him to pay a $5 million civil monetary penalty for his role in MF Global’s unlawful use of customer funds totaling nearly one billion dollars and for his failure to diligently supervise the handling of customer funds. Per the Corzine Order, Mr. Corzine cannot seek or accept, directly or indirectly, reimbursement or indemnification from any insurance policy with regard to the penalty amount.  The Corzine Order also requires Mr. Corzine to undertake that he will never act as a principal, agent, officer, director, or employee of a Futures Commission Merchant and that he will never register with the CFTC in any capacity.

According to the CFTC, during the last week of October 2011, in violation of U.S. commodity laws, MF Global unlawfully used nearly one billion dollars of customer segregated funds to support its own proprietary operations and the operations of its affiliates and to pay broker-dealer securities customers and pay FCM customers for withdrawals of secured customer funds. The CFTC said when the transfers occurred, Mr. Corzine controlled MF Global because he was CEO, which was experiencing a worsening liquidity crisis.  Because of this control and by his conduct, the CFTC stated Mr. Corzine is liable for MF Global’s violations as its controlling person.  Furthermore, from at least August 2011 through October 31, 2011, the CFTC stated Mr. Corzine failed to supervise diligently the activities of the officers, employees, and agents of MF Global in their handling of customer funds.

Mr. Corzine did not admit or deny the findings in the Corzine Order.