The European debt crisis claimed its first major US casualty on Friday when Wall Street star Jon Corzine resigned as chief executive of collapsed broker MF Global.
The former head of Goldman Sachs and former New Jersey governor and senator stepped down four days after the company filed for bankruptcy as creditors cut off funding on worries over its US$6.3 billion investment in risky eurozone sovereign debt.
Futures market operator CME and the Commodity Futures and Trading Commission have said as well that they are investigating the apparent disappearance of more than US$600 million of client money from accounts at CME, money feared diverted for the company’s own needs, according to media reports.
Photo: AFP
Also in question is whether the company has been straight with its accounting, after reporting a healthy US$41 billion in assets and US$39 billion in liabilities in its most recent quarter.
MF Global said early on Friday that Corzine was giving up a promised US$12 million departure payout as he stepped down.
“Mr Corzine has confirmed that he will not seek severance payments in connection with his resignation,” the company said in the terse statement.
It was a hard takedown for the aggressive veteran of US high finance, who took over the company last year with hopes of building it into a Wall Street investment banking power like his former employer Goldman Sachs.
Corzine, 64, shot up through Goldman’s ranks in the 1980s to be named chairman and chief executive in 1994.
Under his lead during the next five years, the company re-established its pre-eminence in investment banking and Corzine helped prepare it to go public in 1999, when he was pushed out by rival Henry Paulson.
He reportedly earned US$400 million on Goldman’s share sale and tapped that for a successful bid as a Democrat for a seat in the US Senate representing New Jersey.
In 2005 he left that job after he was elected the state’s governor.
His tenure scarred by the economic recession, he lost his 2009 re-election bid and moved to head MF Global, the former Man Group brokerage split off four years ago to focus on futures, options and derivatives.
Company employees and US media said that Corzine quickly moved MF Global into heavy trading of its own capital, rather than just broking for customers, aiming to quickly build it into a Wall Street power.
A former staffer said that move was central to its ultimate collapse — and that it was not only risky positions in European sovereign debt, but also other financial and commodity instruments.
“The biggest thing is that they increased proprietary trading activity that has not done well. We know about the eurozone holdings, but also the energy books and the fixed income, so it’s really the worst of all worlds,” the person said.
Beginning last month, MF Global saw its credit lines being cut after markets became concerned over a lack of adequate capital and its US$6.3 billion bet on the short-term debt of financially beleaguered Belgium, Italy, Spain, Portugal and Ireland.
Regulators also pressed MF Global to attract more capital, the New York Times and the Wall Street Journal reported, but Corzine personally talked them back down.
Then on Oct. 26 the company reported its fourth loss in six quarters, US$191.6 million, blaming “stressed markets” and saying it was “focusing on preserving capital and liquidity.”
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his