Jon S. Corzine directly ordered that $200 million from a segregated customer account be transfered to cover a $175 million overdraft in a London account. That's according to a memo (pdf) from the Senate's Committee on Financial Services, which is scheduled to hold a hearing next week about the spectacular collapse of MF Global.
As The Wall Street Journal reads the memo, the $200 million transfer "contributed to an estimated $1.6 billion shortfall in customer funds when the securities firm collapsed."
According the memo, the transfer happened on Oct. 28, 2011. On that same day, MF Global Treasurer Vinay Mahajan sent an email demanding that the segregated customer account be "refunded ASAP," because it was "holding up vital business in the U.S. ..."
Edith O'Brien, who was an assistant treasurer at MF Global and is scheduled to appear at the hearing on Wednesday, replied by email that the transfer was "Per JC's [Jon Corzine's] direct instructions."
"Over the course of that week, MF Global's financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers' segregated funds were safe," the memo reads.
The big deal here is that in congressional testimony, Corzine has insisted he did not order customer funds moved. Bloomberg explains:
"The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.
"Corzine testified that he never intended a misuse of customer funds at MF Global, and that he doesn't know where client funds went.
"'I did not instruct anyone to lend customer funds to anyone,' Corzine told lawmakers in December."
In a prepared statement, Corzine added, "I simply do not know where the money is, or why the accounts have not been reconciled to date."
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