U.S. House Republicans Seek Special Counsel for MF Global

U.S. House Republicans, voicing concern over possible conflicts of interest involving former Chief Executive Officer Jon S. Corzine, are asking the Department of Justice to appoint an independent counsel to investigate the collapse of MF Global Holdings Ltd.

Representative Michael Grimm and 26 of his colleagues have signed a letter to Attorney General Eric Holder requesting the appointment of a special counsel to take over the investigation of the New York-based firm. Corzine’s relationship with regulators and policy makers presents the possibility of favoritism, according to Grimm.

“It’s about perception,” said Grimm, surrounded by Republican lawmakers, MF Global customers and members of the Customer Commodity Coalition, a group representing the firm’s customers. “No one here is saying that any impropriety has taken place, but the perception is certainly there.”

MF Global, once run by Corzine, a Democrat who served in the U.S. Senate and as New Jersey’s governor, filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls and bank demands for money at its brokerage unit. Corzine’s relationship with regulators and government officials from his time in office, his political fundraising for President Barack Obama and in his role as the former head of Goldman Sachs Group Inc., all present conflicts of interest, the lawmakers wrote.

Seeking Signatures

“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,” the lawmakers said in the letter. Grimm said he is still seeking signatures and is talking to “three or four” Democrats who are “on the fence” about signing.

The letter comes as regulators, lawmakers and the Justice Department are probing what led to the firm’s failure. Four congressional panels have held hearings on the bankruptcy of the firm that has left a customer-funds shortfall estimated at $1.6 billion.

House Financial Services Committee Chairman Spencer Bachus of Alabama and Representative Randy Neugebauer of Texas, the chairman of the Financial Services subcommittee investigating the firm’s failure, have not signed the letter, according to the list of signers provided by Grimm’s office.

Alisa Finelli, a spokeswoman for the Justice Department, declined to comment on the letter, which has not yet been sent.

Corzine, who testified on Capitol Hill last year, said he did not know where the missing money is and that he was not involved in its disappearance.

“I never gave any instruction to misuse customer funds, I never intended anyone at MF Global to misuse customer funds and I don’t believe that anything I said could reasonably have been interpreted as an instruction to misuse customer funds,” Corzine told lawmakers in December.

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