MF Global Car Wreck Had One Driver

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Another day, another scathing report condemning the actions of Wall Street’s former elite.

Earlier this week, the crosshairs focused on the cultural evils fostered by Barclays’ upper management. Now comes a report from the bankruptcy trustee of collapsed U.S. brokerage firm MF Global. This time the blame is shouldered by one man: former Chief Executive Jon Corzine.

Corzine was an active trader, according to the report, but received minimal oversight from the firm’s chief compliance officer. The internal regulator had no control over Corzine’s trading decisions – extremely risky bets on European sovereign bonds. The compliance officer only looked to prevent insider trading or market manipulation.

The former Goldman Sachs alum also executed large trades at the end of quarters, purportedly to make it appear that the firm was meeting its revenue goals. Corzine reportedly knew the firm’s safeguards were faulty but did little to amend them. He pushed back on implementing a Global Value at Risk (VaR) system, which would have given MF Global more visibility over its potential for losses, because he found it “unduly expensive.”

Maybe the firm should have just dipped into customer funds to pay for the VaR system. Oh wait – some of the funds were already being used to meet margin calls. Never mind.

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