Corzine Tells Students to Take Some Risk, Doesn't Name MF Global

  • Firm's ex-CEO speaks on success, failure in rare public speech
  • Says he wanted to turn around broker, then pursue philanthropy

Jon Corzine gave a speech on success and failure without uttering the name MF Global.

Corzine, 68, appeared Thursday at Fairleigh Dickinson University in Madison, New Jersey, delivering rare public remarks after the 2011 collapse of the derivatives brokerage he once led. He described that time by telling the audience, “I failed in an attempt as a private-equity investor to turn around a struggling firm.” Asked afterward if that’s how he saw his role -- not as the chairman and chief executive officer of MF Global Holdings -- he said, “I took responsibility for that.”

The speech, delivered to a room of about 150 students, faculty and reporters, was titled "A Life With Purpose: Reflections on Success and Failure." No student asked him about his experience at MF Global, though he touched on it a few times. His main message was about cultivating and accepting ambition and not being afraid to take risks within limits.

The remarks were drawn from his own ups and downs: He spent 24 years at New York-based Goldman Sachs Group Inc., becoming co-head of the firm with Henry Paulson. After Corzine was ousted in 1999, he won a U.S. Senate seat representing New Jersey in 2000 and then was elected the state’s governor in 2005.

But that legacy turned after he took command of MF Global in 2010. The following year, the company filed for bankruptcy after alarming investors with a $6.3 billion bet on bonds of some of Europe’s most indebted nations. In his remarks Thursday, Corzine said his intentions for the firm had been good.

Philanthropic Ambitions

“My first big obligation was to turn it around, to give it help, to give it vitality,” he said. “I wanted to do that in a way that if we were successful I could build up my capacity as a philanthropist in the remaining years of my life.”

Instead, Corzine is fighting a 2013 lawsuit filed by the Commodity Futures Trading Commission, accusing him of failing to properly oversee the brokerage unit while it spiraled toward failure. The agency aims to permanently bar him from being involved in trading or managing a derivatives company. In pursuit of profit, he had made large, risky bets with the company’s funds, and as the plan faltered, it put “significant strains on the firm’s capital and liquidity,” according to the regulator.

In May 2011, auditors found that the holding company had improperly financed an investment portfolio by borrowing customer funds, the agency has said. The firm unwound the financing and was forced to obtain more expensive alternatives, increasing liquidity stress, the CFTC said. The company’s collapse unleashed a wave of litigation, including customer claims that more than $1.6 billion that should’ve been segregated was transferred to other parts of the firm during its liquidity crisis. A court-appointed trustee spent years recovering client funds.

‘Innocent Bystanders’

Corzine, a Democrat, has testified before Congress that he never gave any instruction to misuse customer money. He also said he didn’t believe anything he said could reasonably have been interpreted as an instruction to misuse their funds. Nor was he told customer funds were at risk -- and there’s no evidence that he failed to work with management in an attempt to turn around the company, his spokesman said in 2013.

“Unfortunately, sometimes in defeat it’s not just the individual that has hardships, it’s been disruptive and painful for many innocent bystanders” Corzine said Thursday.

“Given the circumstances I think people will understand I have to stop there,” he told the audience. “Someday I hope I can speak fully to this issue.”

Before it's here, it's on the Bloomberg Terminal.