Former MF Global CEO Jon S. Corzine will pay a $5 million penalty and is permanently barred from the futures industry, the U.S. Commodity Futures Trading Commission (CFTC) announced Thursday. The settlement stems from the unlawful use of nearly $1 billion in customer funds at MF Global prior to its 2011 collapse.
The federal court order, entered by Judge Victor Marrero of the U.S. District Court for the Southern District of New York, prohibits Corzine from acting as a principal, agent, officer, director, or employee of any Futures Commission Merchant (FCM) and prevents him from registering with the CFTC in any capacity. He is also barred from seeking reimbursement for the penalty from any insurance policy.
Edith O’Brien, MF Global’s former Assistant Treasurer, also settled with the CFTC, agreeing to pay a $500,000 penalty and being barred from associating with an FCM or registering with the CFTC for 18 months. O’Brien aided and abetted the misuse of customer funds, according to the CFTC.
The CFTC’s investigation, stemming from an amended complaint filed in December 2013, found that between September 2010 and October 2011, while Corzine was CEO of both MF Global and its parent company MF Global Holdings Ltd., the firm improperly used customer segregated funds to support its own operations and those of its affiliates. These funds were also used to pay broker-dealer securities customers and fulfill withdrawal requests from FCM customers.
The actions violated the Commodity Exchange Act (CEA) and CFTC regulations related to the proper handling and segregation of customer funds. Specifically, MF Global failed to account for customer funds separately, commingled them with company funds, and used them for purposes other than those intended, according to the CFTC.
“This resolution demonstrates the importance that the Commission attaches to customer protection,” said Aitan Goelman, the CFTC’s Enforcement Director. The CFTC previously obtained orders against MF Global and its parent company requiring restitution to cover all customer claims.
Source: CFTC.gov
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