With Customer's Money Missing, MF Global CEO Jon Corzine Resigns

CEO departs four days after MF Global filed for bankruptcy protection.

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(Reuters) — Jon Corzine resigned as MF Global Holdings Ltd's chairman and chief executive in the face of mounting pressure from regulators searching for customer money that has gone missing from the brokerage's accounts.

Corzine, a former chief of Goldman Sachs & Co, called his departure "difficult" but voluntary, capping a rapid downfall for one of Wall Street's best-known stars.

News of his abrupt departure -- four days after MF Global filed for bankruptcy protection -- comes as federal regulators work around the clock to locate $633 million in missing funds at the company, one that Corzine once joked was "too small to care about."

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"No longer can we simply accept bottom line totals on balance sheets," Bart Chilton, a commissioner at the Commodity Futures Trading Commission, said in the text of a speech for delivery later on Friday.

Alluding to a widely-quoted line from the 1996 movie "Jerry Maguire," he added, "These guys need to do a Tom Cruise and show us the money."

Corzine joined MF Global in March 2010 as his ticket back to Wall Street, after stints as a U.S. senator from New Jersey and one-term governor of that state. He had run Goldman from 1994 to early 1999.

But when MF Global's $6.3 billion bet on sovereign debt from Belgium, Ireland, Italy, Portugal and Spain went public, counterparties and investors headed for the exits.

The New York-based company's decline accelerated last week as it revealed more details about this exposure, posted a larger-than-expected quarterly loss, and was downgraded by major credit rating agencies to "junk" status.


"My how the mighty are fallen," said Jim Rogers, a prominent commodities investor. "It is inconceivable to me he would do this after Refco," he added, referring to a brokerage that failed in an 2005 accounting scandal.

It is unclear how Corzine's resignation might affect the various ongoing investigations. Neither MF Global nor Corzine has been charged with wrongdoing.

Corzine said he intended to "continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm's assets."

He has had no role overseeing the company's U.S. broker-dealer unit MF Global Inc since Monday, when James Giddens was appointed trustee to oversee that unit's liquidation, a spokesman for Giddens said. Corzine's departure will not affect that process, the spokesman said.

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The company's bankruptcy is the seventh-largest in U.S. history, according to BankruptcyData.com and Reuters data.


In his statement, Corzine said his departure is best for MF Global and its stakeholders.

"I feel great sadness for what has transpired at MF Global and the impact it has had on the firm's clients, employees and many others," he said.

Corzine is not seeking severance, the company said. He had been entitled to $12.1 million in severance, prorated bonus and other benefits if he were let go without cause, a July 7 regulatory filing shows. The severance portion was $9 million.

Chief executives often step down as their companies face federal probes or bankruptcy. Leaving might also give him greater flexibility in dealing with authorities.

Corzine has hired prominent white-collar defense lawyer Andrew Levander of the law firm Dechert to represent him in cases that might stem from the bankruptcy filing, a legal source briefed on the matter said on Thursday.

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Levander has represented outside directors of Lehman Brothers Holdings Inc and former Merrill Lynch & Co chief John Thain, among others. Corzine hired another lawyer, Schuyler Carroll of Perkins Coie, for the bankruptcy case.

"If you're still with the company and the government wants to interview you, it's hard to decline," said Barry Pollack, a partner at law firm Miller & Chevalier specializing in white-collar defense. "If you're no longer with the company, it gives you freedom to respond from the perspective of solely protecting your own interest."