Former Democratic New Jersey Gov. Jon Corzine was fined $5 million today by a federal judge for his role as head of a brokerage firm that took $1.2 billion from its clients — mostly farmers and ranchers — amid its impending collapse.
Recall that his brokerage, MF Global, lost big money betting on European sovereign debt. When it happened, the firm’s officers began dipping into clients’ money in a futile effort to prevent its collapse. In the end, all of the money was returned to the clients, but the firm’s breach of trust was unlike anything that had happened in the history of the U.S. Commodity Futures Trading Commission, the regulatory entity that took Corzine to court.
The fraud committed against MF Global’s customers was unprecedented in its size and kind, AP reports.
The regulators had said that MF Global moved the money out of client accounts within days as the firm’s cash dried up. The misuse of customer funds was on a scale never seen before, CFTC officials said. Corzine failed to fix MF Global’s deficient controls and to prevent the firm from dipping into customer money, they said.
It was the first time in the 150-year history of the U.S. futures markets that customer funds disappeared in the failure of a commodities brokerage, according to lawmakers.
Much of the missing money belonged to farmers, ranchers and other business owners who bought and sold financial contracts with MF Global to reduce their risks from the fluctuating prices of corn, wheat and other commodities.
The $5 million fine is a mere slap on the wrist for Corzine, a billionaire who previously served as a Democrat in the U.S. Senate and has since resumed his role as a major fundraiser for Democrats. So far, no criminal charges have been filed.
