A financial-exchange executive said Tuesday that he was told former Sen. Jon Corzine might have known that MF Global tapped clients' money to lend to a European affiliate of the firm.
CME Group Executive Chairman Terrence A. Duffy told a Senate panel that he had received information that Mr. Corzine knew about a transfer of $175 million from customer accounts.
Mr. Corzine has testified that he didn't know any customer money was missing until Oct. 30, the day before MF Global became the eighth-largest bankruptcy in U.S. history. Approximately $1.2 billion of customer money was unaccounted for when the company collapsed.
According to Mr. Duffy, a woman at MF Global told a CME auditor that "Mr. Corzine was aware" of the loan in the week before MF Global's bankruptcy filing.
Mr. Duffy told the Senate Agriculture Committee that he has referred the matter to the Justice Department and the Commodity Futures Trading Commission, MF Global's main regulator. Mr. Duffy said he received the information this week from CME Group attorneys who are investigating the matter.
MF Global traded on exchanges managed by CME Group.
Brokerage firms are required to keep client money separate from company funds. Depending on the circumstances, transferring money from customers' accounts could violate securities laws and, in some cases, could amount to a crime.
If Mr. Corzine, a Democrat who also served as New Jersey's governor, is found to have lied in his testimony before multiple congressional committees, he could be prosecuted. A Corzine representative had no immediate comment on the allegation.
Earlier Tuesday, Mr. Corzine told senators with whom he once served that he never told anyone to "misuse" customer money that vanished when MF Global collapsed. Brokers are required by law to keep customer money separate from company money.
Senators demanded that Mr. Corzine and two other executives from the securities firm explain who authorized the transfer of money in the days before the bankruptcy.
"I never gave any instruction to anyone at MF Global to misuse customer funds," said Mr. Corzine, who resigned as CEO of the securities firm last month.
Bradley Abelow, the firm's president and chief operating officer, and Henri J. Steenkamp, the chief financial officer, also tried at the hearing to distance themselves from any decision to transfer customers' money.
All three witnesses said they don't know where the money is. Yet their phrasing varied in subtle ways that could have legal distinctions.
Mr. Corzine said he did not direct anyone to "misuse" clients' money. Mr. Abelow said he does not recall "any conversation about customer funds being used for anything other than their intended purpose." Mr. Steenkamp was more sweeping, saying he did not "authorize, approve or know of any transfers of customer funds" out of their accounts.
By Douglas Holtz-Eakin
The young drop coverage to avoid higher premiums
Independent voices from the TWT Communities
We welcome you to the intimate and personal thoughts on the news and events we, as editors, watch, read, and discuss with our writers every day.
Consummate traveler Todd DeFeo explores the unique stories that make destinations worth going to.
Looking at pop culture, politics and social issues.
Political commentary and literary criticism in an era of eroding liberty
Benghazi: The anatomy of a scandal
Vietnam Memorial adds four names
Cinco de Mayo on the Mall
NRA kicks off annual convention
California wildfires wreak havoc