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MF Global boss doesn't know where money is | MF Global boss doesn't know where money is |
(about 3 hours later) | |
The head of bankrupt US brokerage firm MF Global, Jon Corzine, has told a congressional committee that he has no idea where its clients' money has gone. | |
An estimated $1.2bn (£760m) in customer cash is missing from accounts. | |
The company filed for Chapter 11 bankruptcy on 31 October after making a $6.3bn bet on European sovereign debt. | The company filed for Chapter 11 bankruptcy on 31 October after making a $6.3bn bet on European sovereign debt. |
In response to questions, Mr Corzine denied knowingly moving money from "segregated" customer accounts. | |
"I never intended to break any rules... I would never intend to direct or have segregated funds moved," he said. | |
In written testimony read out to the committee Mr Corzine apologises to "all those affected" by the business's failure. | |
Missing money | Missing money |
"I simply do not know where the money is, or why the accounts have not been reconciled to date," he added. | "I simply do not know where the money is, or why the accounts have not been reconciled to date," he added. |
In the statement Mr Corzine said he consulted with other board members on the eurozone investments. | In the statement Mr Corzine said he consulted with other board members on the eurozone investments. |
He also denied that the bets were the main cause of MF Global's collapse. | |
Instead he says decisions by previous management which forced the company to declare a loss meant "the marketplace lost confidence in our firm". | Instead he says decisions by previous management which forced the company to declare a loss meant "the marketplace lost confidence in our firm". |
The firm's losses - he said - were not the result of its eurozone investments. | |
"None of the foreign debt securities has defaulted or been restructured, all were paid in full," he said. | |
However some experts have suggested the eurozone bets played the key role in MF Global's collapse. | |
As confidence in the ability of eurozone governments to pay back their debts fell, analysts say investors became worried about MF Global's ability to absorb any losses. | |
"His entire testimony looks like a very skilled way to try to detract from that key issue," said Janet Tavakoli, president of Tavakoli Structured Finance. | |
Mr Corzine headed MF Global for 20 months after stints as a Democrat Senator and chief executive of Goldman Sachs. | Mr Corzine headed MF Global for 20 months after stints as a Democrat Senator and chief executive of Goldman Sachs. |
Fifth amendment | Fifth amendment |
He was subpoenaed by the US House of Representatives agriculture committee following questions over the whereabouts of client money. | He was subpoenaed by the US House of Representatives agriculture committee following questions over the whereabouts of client money. |
It is extremely rare for a former US congressman to have to testify in a federal investigation. | It is extremely rare for a former US congressman to have to testify in a federal investigation. |
Mr Corzine, who faces possible indictment over the collapse, says he has chosen not to invoke the fifth amendment which gives US citizens the right not to answer questions. | Mr Corzine, who faces possible indictment over the collapse, says he has chosen not to invoke the fifth amendment which gives US citizens the right not to answer questions. |
However, he suggested he may do so in some cases. | However, he suggested he may do so in some cases. |
"Without adequate time and materials to prepare, I may be unable to respond to various questions members might pose," he said. | "Without adequate time and materials to prepare, I may be unable to respond to various questions members might pose," he said. |
Congressmen are likely to push questions from farmers and small businesses concerned as to where money they invested with the firm has gone. | Congressmen are likely to push questions from farmers and small businesses concerned as to where money they invested with the firm has gone. |
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