Edith O’Brien, MF Global’s former assistant treasurer, says Corzine ordered the money shifted to one of the firm’s bank accounts overseas Oct. 28 to cover an overdraft, according to a memo that cited the e-mail.
The e-mail noted that the transfer was made “per JC’s direct instructions.”
MF Global filed for bankruptcy protection Oct. 31. The firm failed because of a disastrous bet on European debt. About $1.6 billion of customers’ money hasn’t been recovered.
A House Financial Services subcommittee released the memo Friday in advance of a hearing Wednesday. O’Brien has been subpoenaed to testify.
In December, Corzine told the panel at a hearing: “I did not instruct anyone to lend customer funds to MF Global or any of its affiliates.” He also said he didn’t know about “the use of customer funds on any loan or transfer.”
Corzine told a Senate
panel two days earlier: “I never gave any instruction to anyone at MF Global to misuse customer funds.”
Corzine spokesman Steven Goldberg reiterated Friday that Corzine testified that there wasn’t anything he had said that “could reasonably have been interpreted as an instruction to misuse customer funds. He stands by that testimony.”
“He never directed Ms. O’Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose,” Goldberg said. “Nor was he informed that customer funds had been used for that purpose. To the contrary, as Mr. Corzine testified, he recalls having received written material indicating that the funds used to cure the overdrafts were appropriate for that purpose.”
Client money is required by law to be held separately from a brokerage firm’s cash to protect investors in case a firm fails. If MF Global misused client money, it would violate a fundamental investor protection for people who trade options and futures.
Federal regulators and a federal grand jury in Chicago are also investigating MF Global.
Many lawmakers have heard from farmers, ranchers and small business owners in their states who are missing money that was deposited with the firm. Agricultural businesses use brokerage firms such as MF Global to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.
Corzine, a former New Jersey governor and U.S. senator from the state, led MF Global until early November. He testified before three congressional panels in December. He said he didn’t become aware of the shortfall in customer money until hours before MF Global’s bankruptcy filing.
No one has been charged in the MF Global case.