(Reuters) – Jon Corzine, one of Wall Street’s best-known stars, stepped down as MF Global Holdings Ltd’s chairman and chief executive after his bets on European debt drove the futures brokerage into bankruptcy.
The departure was announced yesterday, hours before conflicting reports surfaced about the whereabouts of $633 million of missing customer money, whose disappearance derailed MF Global’s effort this week to quickly sell a variety of assets.
JPMorgan Chase & Co said late yesterday it had no information about whether balances in MF Global accounts at the bank contained any of the missing customer funds. It also declined to disclose the balances of those funds.
“The accounts and their balances have been and continue to be wholly transparent to MF Global and the recently appointed (brokerage) trustee,” JPMorgan said in a statement.
Earlier in the day, Bloomberg News had said customer funds had been found in a JPMorgan custodial account holding $658.8 million, citing two people with knowledge of the matter.
Corzine, a former chief of Goldman Sachs & Co, characterized his abrupt departure from a company he once joked as “too small to care about” as “difficult” but voluntary.
It was effective yesterday, four days after MF Global sought bankruptcy protection, a company spokeswoman said.
Corzine, 64, 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.
“He was seeking redemption,” said Robert Fagenson, former vice chairman of the New York Stock Exchange. “When you’re not dealing with a Goldman Sachs-type of balance sheet, though, you can’t take Goldman Sachs-type bets.”
MF Global’s decline accelerated last week as the New York-based company revealed more details about its European exposure, posted a larger-than-expected quarterly loss, and was downgraded by major credit rating agencies to “junk” status. Many investors were also spooked by MF Global’s roughly 30-to-1 leverage ratio, based on more than $40 billion of assets and just $1.4 billion of equity. Corzine himself has said that much leverage is unacceptably high.
