The Jon Corzine-led MF Global has filed for bankruptcy after reportedly making bets on European debt for some of the most troubled countries, becoming the first U.S. financial company to be casualty of the European debt crisis. Corzine was formerly the Goldman Sachs chairman and Governor of New Jersey.
Corzine and his firm wagered $6.3 billion on sovereign European debt in a high-stakes bid to increase profits — an effort apparently approved by the company’s board of directors.
Investigators are now looking at whether the firm diverted money from clients’ accounts to help cover that wager.
The former governor has never been reluctant to put his money on the line. After he was forced out of Goldman Sachs, he spent $62 million of his own cash on his successful senate race in 2000, and another $69 million out of pocket on his two campaigns for governor, in 2005 and in 2009. He buttressed his political support by donated roughly $7 million to Democratic organizations from 1999 to 2009.
And according to fundraising reports released by the Obama campaign, Corzine continues to bring in money for the Democrats, helping raise more than $500,000 for the President’s re-election bid.
Jon Corzine, former Democratic U.S. Senator from New Jersey and former Governor of the state, had been the CEO of the Wall Street firm until Friday. 2 days before, on Wednesday, it was reported that Corzine had lost over 600 million dollars in investors’ money betting on European debt. By Thursday that figure was correctly set at 1.5 billion.
On Friday Corzine resigned.
In the aftermath of the fiasco, MF Global is now the subject of an investigation. Regulators suspect there was ‘insider trading.’