Corzine Controversy

The lead article in today’s New York Times, “Corzine-Led Firm is Said to be Eyed on Missing Funds,” gives more fodder to the Occupy Wall Street protest as it details more wrongdoing by a financial firm.

The brokerage firm, MF Global, is run by former New Jersey Senator Jon Corzine, and it declared bankruptcy yesterday after revelations about hundreds of millions of dollars in missing funds scuttled a last-minute deal for a partial takeover by Interactive Brokers.

One of the most fundamental regulations for brokerage firms involves keeping customers’ money separate from corporate money, and MF Global seems to be guilty of sloppy bookkeeping at the very least.

The firm was originally in trouble because of risky investments at the heart of the European sovereign debt crisis, as it purchased holdings of debt from Italy, Portugal, Belgium, Ireland and Spain. After investors evaluated these holdings, it lowered MF Global’s bond rating to the status of junk bonds, making it hard for the organization to borrow money for operational purposes.

Still, the company was hoping to sell part of its organization to Interactive Brokers, but the acquirer got cold feet after the revelation about missing funds.

Whether there is something more nefarious about these missing funds remains to be seen. This story will definitely be continued.