Jon Corzine, the former Democratic New Jersey governor who led the collapsed brokerage MF Global, has been ordered to pay a $5 million penalty for his role in the firm’s alleged illegal use of almost $1 billion in customer funds.
A federal court in Manhattan on Thursday granted the order against Corzine to the U.S. Commodity Futures Trading Commission, which brought civil charges against him in 2013. Following the stunning collapse of the big Wall Street firm in late 2011, the CFTC alleged that MF Global misused customer funds in a vain attempt to remain solvent. Corzine failed to closely supervise the handling of customer money by the firm’s employees.
Corzine, who was the CEO of Wall Street powerhouse Goldman Sachs before entering politics in 2000, was banned by the court order from serving as an official or employee of any commodities trading firm. He also was banned from trading most commodities and other investments regulated by the CFTC, with limited exceptions.
The New York-based company imploded after a disastrous $6.3 billion bet on European countries’ debt. The firm filed for bankruptcy protection on Oct. 31, 2011. The $41 billion bankruptcy was the eighth-largest in U.S. history at the time and one of Wall Street’s biggest. About $1.2 billion in customer money was missing.
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. Much of it belonged to farmers, ranchers and other business owners.