MF Global: Where Are Corzine and Company Now?

Wednesday will mark four months since MF Global (OTC: MFGLQ) filed bankruptcy. What has happened to the four executives at the heart of this tragic episode?

Jon Corzine, former CEO
MF Global's former CEO needs no introduction. After a hectic end-of-year calendar that included appearances in front of no fewer than three congressional committees, it's been radio silence from Jon Corzine in 2012. Given the potential for shareholder and client lawsuits, there is little motivation for him to speak to the media right now (though I wouldn't rule out a high-visibility PR campaign at a later stage, depending on how things develop).  

Given what we now know, a criminal indictment against Corzine looks highly unlikely. There is no evidence that he hid anything from the board, and he was not involved with the treasury function, which controlled the transfers of firm and client monies. Finally, there is no suggestion of criminal intent. There is an argument to be made that Corzine breached the duty of care he owed his shareholders; his headaches relating to shareholder lawsuits and potential actions by regulators are surely only beginning.

As far as future employment, I don't expect Corzine will be invited to join the board of a public company anytime soon -- that would be much too visible, with the potential for massive negative publicity. However, I think it is quite likely he will eventually join or consult for a hedge fund or private equity firm as a "senior advisor."

Michael Roseman, former Chief Risk Officer
Michael Roseman was one of the good guys in this story. He repeatedly warned Corzine and MF Global's board of directors of the risks associated with the sovereign repo-to-maturity (RTM) transactions that brought the firm down. For his trouble, he was stripped of his role and replaced in January 2011.

Michael Roseman last appeared in front of Congress on February 2, at which time he offered prepared remarks and answered questions. According to his LinkedIn profile, Roseman has not taken employment since leaving MF Global. Not to worry, though: In addition to his receiving a $350,000 salary, the floor on his first-year bonus was set contractually at $1 million; when he left MF Global at the end of March 2011, he was offered a $1.35 million severance package (salary, cash bonus, and equity bonus). My guess is that he could make an adequate living on the speaking circuit -- surely a book describing his experience at MF Global is not long due.

Michael Stockman, former Chief Risk Officer
Michael Stockman replaced Michael Roseman in March 2011. Stockman had been recruited to be the "new Chief Risk Officer, with the experience and skill-set to assist in the transition [of MF Global to investment bank]." Not surprisingly, from the outset, he adopted a more cheery opinion of Corzine's RTM trades than his predecessor. Instead of reporting directly to the board, Stockman reported to Corzine's right-hand man, Brad Abelow (see below).

Stockman appeared at the same February hearing as Roseman. Best quote: "In or about January 2011, MF Global offered me the position of Chief Risk Officer." Never mind managing the risk-management function of an organization that traded complex financial products across multiple time zones and geographies, Stockman can't say with certainty in which month he received MF Global's offer of employment. There's no point in relying on him for a reconstruction of the firm's hectic last days.

It's not clear what Stockman is doing now, but being associated with two organizations that suffered catastrophic breakdowns in risk governance should provide ample warning to anyone considering hiring him in any capacity relating to risk management. (Stockman's previous position was Chief Risk Officer for the Americas at UBS, which suffered the largest losses of any bank during the credit crisis.) Still, stranger things have happened in business.

Brad Abelow, Chief Operating Officer
John Corzine personally recruited Brad Abelow, a longtime associate and his former gubernatorial chief of staff, to fill the role of Chief Operating Officer (the responsibilities of a COO are directly comparable to that of a chief of staff).

Brad Abelow appeared in front of Congress twice in December, but has kept a low profile since then. His days are not his, after all: He still has a day job at MF Global. According to his LinkedIn profile, Brad Abelow remains COO to this day, and, sure enough, he's currently helping the trustee in the resolution proceedings. The firm's bankruptcy did put a dent in his compensation, though: He's now working for $60,000 per annum -- a far cry from the $1.5 million salary he was earning pre-collapse.

Lesson learned?
Whatever else these four men end up doing, we can only hope that they will recognize their responsibility in this grotesque episode (minus Roseman), unlike Richard Fuld. More than a year after Lehman's bankruptcy, the former CEO told the House Financial Services Committee that his firm was conservatively capitalized, "risk averse," and that its "commercial real estate investments were conservative."

Not all financials are toxic. Find out which banking stocks show promise in "Stocks Only the Smartest Investors Are Buying."

Fool contributor Alex Dumortier holds no position in any company mentioned. Click here to see his holdings and a short bio. You can follow him on Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 27, 2012, at 3:50 PM, EquityBull wrote:

    I thought according to Sarbanes-Oxley the CEO is responsible. Why is Corzine not indicted yet? Makes you wonder....

  • Report this Comment On February 27, 2012, at 7:11 PM, GaryKilgore wrote:

    I'm currently reading "All of the Devils are Here", a history of the financial crisis that I highly recommend. A common denominator among the firms that failed was egregious disregard for risk, and senior personnel who punished employees who attempted to mitigate wreckless behavior.

  • Report this Comment On February 27, 2012, at 9:03 PM, TMFAleph1 wrote:

    <<I thought according to Sarbanes-Oxley the CEO is responsible. Why is Corzine not indicted yet?>>

    The scope of a CEO's responsibility under Sarbanes-Oxley is strictly defined; the legislation doesn't place unlimited responsibility on the CEO. However, if the CEO or CFO were aware of material weaknesses in the internal controls systems, that's a problem.

  • Report this Comment On February 28, 2012, at 5:35 PM, car1020 wrote:

    If a CEO is not responsible - for the bottom line of a company - where is the need to have him? If i had been in on this "scam" I would demand recourse and have his head on the block.

    No wonder the younger generation has no knowledge of something called " responsible"!

  • Report this Comment On February 28, 2012, at 7:21 PM, TMFAleph1 wrote:

    <<If a CEO is not responsible - for the bottom line of a company - where is the need to have him?>>

    What do you mean? Should a CEO be held responsible for every single action of every employee? That seems like an expansive view of executive responsibility.

  • Report this Comment On February 29, 2012, at 4:12 AM, nickjob wrote:

    Amazing that four government agencies can't find wrongdoing! Is it possible that the CFTC does nothing because Corzine's buddy Gensler is CFTC head? Is it possible that the FBI does nothing because former FBI head is trustee of MF Global Holdings? Is it possible SEC does nothing because JPM might have a stranglehold on them? Is it possible Eric Holder, Justice Department does nothing because Corzine was top fundraiser for Obama? Naw! Just a coincidence I guess!

Add your comment.

DocumentId: 1793207, ~/Articles/ArticleHandler.aspx, 4/18/2014 7:36:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement