This article originally appeared in Futures Magazine.
Rep. Michael G. Grimm (R-N.Y.) will be joined by other members of Congress and former MF Global customers tomorrow at a press conference in Washington D.C. outside the Capitol Building to officially call for an independent counsel to take over the investigation of the MF Global collapse.
Grimm, last week, called on Attorney General Eric Holder to appoint an independent counsel to look at the collapse of MF Global. MF Global Holdings Ltd. declared bankruptcy on Oct. 31 when a potential sale of its futures commission merchant (FCM)/broker-dealer MF Global Inc. was scuttled because there was a shortfall in customer segregated funds.
Grimm circulated the letter calling on Holder to appoint an independent counsel last week citing former MF Global Chairman and CEO Jon Corzine’s political connections and is in the process of accumulating signatures. There are 21 members of Congress, all Republicans, that have signed the letter, several of whom will participate in tomorrow’s event along with members of the Commodity Customer Coalition (CCC).
“Given the continuing political influence of Jon Corzine, it is incumbent on Attorney General Holder to ensure that politics does not prevent justice from being done,” says John Roe, co-founder of the CCC. “The best way to do that is by authorizing an Independent Counsel to take over the investigation of MF Global. The CCC believes that the current investigation has stalled. The key witnesses we have spoken to have yet to even begin the proffer process by which an immunity deal could be reached.”
The letter states, “Due to Mr. Corzine’s long tenure in both the financial services industry and as an elected official, he naturally developed many relationships with highly placed individuals in the government who are very close to the investigation of the MF Global collapse.”
It goes on to cite Corzine’s relationship with Commodity Futures Trading Commission Chairman Gary Gensler when they both were at Goldman Sachs more than a decade ago. Gensler recused himself from the MF Global investigation several days after it declared bankruptcy.
It notes that Corzine had lobbied the agency and had discussions with Gensler regarding Rule 1.25, which deals with the types of securities in which an FCM can invest customer money. The CFTC had a rule proposal out that would limit the instruments FCMs could invest money in and MF Global was opposing the rule change, which was eventually approved after the collapse.
The letter also points out that Corzine was recently listed as a”first quarter volunteer fundraiser” for President Obama’s re-election campaign. The President had returned direct contributions from Corzine following the collapse but not money Corzine had raised as a bundler.
The MF Global collapse is being investigated by the Federal Bureau of Investigation, the Justice Department, the CFTC and two separate trustees, one representing former customers of the FCM/BD and one representing creditors of the Holdings company.