US lawmakers blame CEO for MF Global meltdown

Last year's meltdown at MF Global was the result of risky investment decisions made by CEO Jon Corzine, who sidelined critics and ignored warnings, US lawmakers said in a blistering report. The report prepared by Republicans on the House Financial Services Committee lays blame for the disappearance of an estimated $1.2 billion from MF Global's accounts on Corzine, a former Democratic senator and New Jersey governor. "Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate," the committee's chairman Randy Neugebauer said Wednesday. "Corzine dramatically changed MF Global's business model without fully understanding the risks associated with such a radical transformation." The conclusions were based on three hearings, more than 50 witness interviews and a review of more than 243,000 documents. However, Democrats on the committee did not sign off on the report, set to be released Thursday, which could allow Corzine to brand it a partisan attack. The Republican lawmakers said Corzine had cultivated an "authoritarian atmosphere" at the firm, where "no one could challenge his decisions." The report, excerpts of which were released Wednesday, said Corzine had acted as MF Global's "de facto chief trader" and isolated his investment activities from the company's normal risk management procedures. The report said MF Global had invested heavily in European bonds without disclosing the full extent of its exposure until October 2011, when its announcement led to a credit downgrade that caused a "run on the bank." The company filed for bankruptcy on October 31, 2011. "The responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine," the report said. "This failure represents a dereliction of his duty as MF Global's chairman and CEO." In December 2011, Corzine said he did not know what happened to the $1.2 billion that disappeared from his company's accounts after it made vast bets on European sovereign debt that soured when the eurozone crisis hit.