Corsine: “I never intended to break any rules.”

Ex MF Global CEO Jon Corsine did not tell Congress he didn’t break rules, just that he didn’t mean to. Which leaves him much weasel room, should it be shown he did. Yet Sarbanes-Oxley requires that CEOs sign off on financial matters. Ignorance is not an excuse, except perhaps for Corsine, who is an ex Goldman head, senator, and governor. We shall see if we still have a functioning legal system (and if it becomes clear to the majority of the populace that we don’t then we will see riots in the streets, of that, I’ve no doubt.)

Bruce Kasting has digging into the MF Global story hard, trying to determine where the $1.2 billion vanished to. Here’s his take.

  • MFG is sinking. Clients are demanding their money be transferred out.
  • MF Global orders its bank (possibly JPM) to transfer the money.
  • The transfers are made.
  • In a highly unusual procedure, the bank sends a Letter of Indemnity to all institutions receiving the money, requesting it be sent back. The LOI indemnifies the institutions against possible problems.
  • The transfers are sent back.
  • BUT, the money goes into unrestricted MFG accounts not the client accounts. IOW, it is commingled, all in the terrible fog of war as MFG is going down. Pass me a hanky, this is all so terribly tragic.
  • Then, poof, the money disappears.

To claw-back a wire transfer requires significant human intervention. Banks do not write LOIs without carefully considering the consequences. There’s always a signature on an LOI……


  1. Corsine misspoke. What he really meant to say was “I never intended to get caught breaking any rules.”

Comments are closed.