By Cristina Alesci and Matthew Leising - Nov 4, 2011 8:18 PM GMT+0700
Nov. 4 (Bloomberg) -- MF Global Holdings Ltd. said Chairman and Chief Executive Officer Jon Corzine has resigned from all posts in the company, according to an e-mailed statement today. Scarlet Fu, Stephanie Ruhle and Michael McKee report on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Jon Corzine resigned as chairman and chief executive officer of MF Global Holdings Ltd. (MF), the broker- dealer that filed the eighth-largest bankruptcy in U.S. history this week and is being probed by regulators.
Corzine, the former co-CEO of Goldman Sachs Group Inc. (GS), quit all of his posts, New York-based MF Global said today in an e-mailed statement. Corzine, 64, won’t seek severance pay, the company said.
“I have voluntarily offered my resignation to the Board of Directors of MF Global,” Corzine said in a separate statement. “This was a difficult decision, but one that I believe is best for the firm and its stakeholders.”
His resignation came four days after the bankruptcy filing as the company’s bets on European sovereign debt rattled investors. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said yesterday. The Commodity Futures Trading Commission sent a subpoena seeking information about the money to MF Global’s auditor, PricewaterhouseCoopers LLP, the person said, asking not to be named because the matter isn’t public.
While Corzine ultimately made the decision to resign, board members had indicated to him in discussions during the past two days that he should consider stepping down, according to a person with direct knowledge of the talks who declined to be identified because they weren’t authorized to speak publicly. The board’s support for Corzine eroded once talks to sell the company collapsed, the person said.
‘Great Sadness’
“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Corzine said in his statement. He said he would continue to assist the company in responding to regulatory inquiries and in the “disposition of the firm’s assets.”
Corzine, a former governor of New Jersey who helped run Goldman Sachs from 1994 to 1999, sought to transform MF Global into a mid-size investment bank after arriving there in March 2010. He increased the firm’s risk and used its own money to trade, including investments in European sovereign debt.
As of Oct. 25, MF Global owned $6.3 billion of Italian, Spanish, Belgian, Portuguese and Irish debt, the company said at the time in a presentation. Concerns that it might lose money on the holdings amid Europe’s debt crisis led to credit downgrades, margin calls and demands from regulators to boost capital before the bankruptcy filing.
Severance Conditions
Corzine was in line for $12.1 million in severance and pro- rated bonus and benefits payments if he left for “good reason” or was fired “without cause,” according to an MF Global proxy statement filed in July. Of that, $9 million was to have been severance payments, according to the filing, which said the company’s compensation committee found Corzine’s performance had been “exemplary” since joining the firm.
Corzine took home $4.28 million in salary and cash bonuses for the two fiscal years that ended March 2011, according to the firm’s proxy statement. During fiscal 2011, Corzine agreed to lower his guaranteed annual cash pay to $750,000 a year from $2 million. He received 2.5 million options to buy MF Global stock when he joined the firm, according to the proxy.
In his 24-year career at Goldman Sachs, Corzine made a name for himself as an intrepid trader who pushed the limits of risk.
When Corzine, after almost a decade as a U.S. senator and governor, was named chairman and CEO of MF Global, his plan for expanding the futures and commodities trader involved taking more risk. Less than 20 months later, the company is bankrupt, days after posting a $192 million quarterly loss.
With Corzine unable to find a buyer, MF Global filed for protection from creditors on Oct. 31, saying it had $41 billion in assets.
To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net
Matthew Leising in New York at mleising@bloomberg.net
To contact the editors responsible for this story: Steve Dickson at sdickson1@bloomberg.net; David Scheer at dscheer@bloomberg.net
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