Talks show desperation in last days at MF Global

The Commodity Futures Trading Commission filed a civil lawsuit against former New Jersey Gov. Jon Corzine on Thursday, laying on him responsibility for the misuse of customer money while he headed brokerage firm MF Global, which collapsed in 2011. The agency also sued Edith O’Brien, who was an assistant treasurer at MF Global with the authority to approve transfers of customer funds.

The agency obtained recordings of phone calls among MF Global employees, and put snippets from them into the lawsuit:

—A treasurer of MF Global’s parent company tells a chief financial officer and another employee on Oct. 6, 2011, 25 days before the firm failed: “We have to tell Jon that enough is enough. We need to take the keys away from him.”

—In an Oct. 7 conversation with another firm employee, Corzine says: “We need to go through what the real number is at the (futures brokerage). You know, what’s the drop dead amount.” The CFTC says it shows that Corzine was “determined to squeeze” the customer accounts for cash.

—On Oct. 25, O’Brien tells another employee: “They have to move half a billion dollars out of (Bank of New York) to pay me back. … Tell me how much money is coming in and I will make sure it gets posted. But if you don’t tell me, then tomorrow morning I am going to have a (segregation of funds) problem.”

—On Oct. 27, O’Brien says to a colleague: “I don’t want to take anyone down with me.” She was explaining why she didn’t copy others in her department on an email she sent to Bank of New York about whether a transfer of $325 million would comply with regulations on segregating customer funds.

—Also on Oct. 27, an employee tells Corzine: “Edith thinks we are not in a significant excess cash position.” His reply: “It would be very dangerous if we are not.”

—On Oct. 28, O’Brien tells two employees that at least $530 million had been transferred from customer accounts and at least $355 million must be returned, or “That could be game over, you guys.” One of the employees tells her, “You need the 530 million bucks.” Says O’Brien: “Yep. I don’t care where you get it, quite frankly.” As of the close of business that day, only $177.5 million had been returned to customer accounts, according to the CFTC.

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