Where in the World is the MF Global $1.2 billion?

Where in the World is the MF Global $1.2 billion?

Amid accusations of commingled accounts, misuse of customer funds, and imprudent risk oversight, this past week MF Global CEO Jon Corzine testified before the House Agriculture Committee that he was aware of unreconciled accounts but that he does not know what happened to $1.2 billion in missing customer funds. Mr. Corzine also testified that he no longer had access to company records and some of his own notes. Mr. Corzine is also an ex-CEO of Goldman Sachs, a former U.S. Senator, and the former Governor of New Jersey. He did not become CEO of MF Global until March 2010, approximately 20 months ago.

MF Global filed for Chapter 11 bankruptcy protection on October 31, 2011. Now, I am reasonably sure that the missing money will be traced or that the path of its disappearance will be determined, unless the MF Global internal controls and accounting function are inept, as that is a shoot load of money. Long term however, the demise of MF Global presents an opportunity to evaluate the causes of yet another catastrophic financial collapse, who did and who did not do what, how the collapse should have been avoided.

So, where in the world is the MF Global $1.2 million? Whereas based on past observations I suspect that the subpoena of Mr. Corzine to appear before the Congressional Committee was in essence a political dog and pony show, beside Mr. Corzine, who actually might not know where the money is and might not have ever known, the following are some of the other people or positions that should be asked what they know about the money, internal and accounting controls, and risk management:

The chief financial officer;

The chief internal audit executive, if any;

The chief risk officer, if any;

Legal counsel, in-house and outside legal counsel;

The board of directors;

The audit committee members;

The risk committee members, if any;

The governance committee members, if any;

The independent outside auditor; and

The regulators who oversaw MF Global, if any.

More to follow.

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