WASHINGTON — A trustee overseeing MF Global says a risky trading strategy and "negligent conduct" by former chief executive officer Jon Corzine and his top managers contributed to the brokerage firm's collapse in late 2011.
A report issued Thursday by the trustee, former FBI director Louis Freeh, said Corzine and his team ignored the advice of MF Global's chief risk officer regarding trading strategy.
The report said they also failed to fix gaps in the firm's system for monitoring its cash flows and customer funds.
MF Global failed after it made a calamitous $6.3 billion bet on debt issued by Italy, Spain and other European nations with troubled economies. The firm filed for bankruptcy protection in October 2011. It was the eighth-largest corporate bankruptcy in U.S. history. More than $1 billion in customer money was discovered to be missing.
"The negligent conduct identified in this report foreseeably contributed to MF Global's collapse," Freeh's report says.
Corzine, a former Democratic U.S. senator and governor of New Jersey, stepped down as MF Global CEO in November 2011.
Steven Goldberg, a spokesman for Corzine, called the trustee's report "a clear case of Monday-morning quarterbacking." The report "intentionally ignores" the failure of banks and other firms that were MF Global's trading partners to pay what they owed MF Global "and the profound impact this failure had on MF Global's customers," Goldberg said in a statement.
James Giddens, who has overseen the liquidation of the firm's operations and distributed recovered funds to customers, has said that he may sue Corzine and other former executives for negligence and breach of fiduciary duty.
No one has been charged in the MF Global case. Shareholders of MF Global have sued Corzine and other former top executives. Federal regulators, Congress and a federal grand jury in Chicago have investigated MF Global's failure and the disappearance of customers' money.