Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., met with New York Federal Reserve officials in 2010 as the broker sought to become a primary dealer of government securities, Thomas C. Baxter Jr., general counsel of the New York Fed, said.
Corzine met with the New York Fed on June 1, 2010 and discussed the firm’s efforts to improve its credit structure by raising $150 million in equity, Baxter said in testimony prepared for a hearing tomorrow of the House Financial Services subcommittee on oversight and investigations.
In January 2010, before Corzine became CEO, MF Global sought to expedite a New York Fed review in order to become a primary dealer. The broker argued that an enforcement action by the Commodity Futures Trading Commission that required MF Global to overhaul its internal controls wasn’t material to the New York Fed’s review, Baxter said in the testimony.
Baxter said the New York Fed disagreed and determined the CFTC order was material and that MF Global couldn’t become a primary dealer before December 2010. On Feb. 2, 2011, the New York Fed announced that MF Global received designation as a primary dealer.
MF Global Holdings Ltd. filed for bankruptcy protection on Oct. 31 and an estimated $1.2 billion is missing in client funds. Baxter said the New York Fed hasn’t lost money.