Jon Corzine issued a statement today saying that he had no idea what happened to the missing customer funds at MF Global:
"Even when I was at MF Global, my involvement in the firm's clearing, settlement and payment mechanisms and accounting was limited."
A lot of people will assume, naturally enough, that he is lying, and just laying the groundwork for an innocent plea in an upcoming trial.
I actually think it's possible he's telling the truth. This doesn't absolve him of responsibility, of course, as he was in charge of the firm. But he clearly saw himself as the big picture guy - which most CEOs are. And big picture guys tend not to pay much attention to what goes on in the back office.
The fact that Corzine had been both a United States Senator and the Governor of New Jersey since his days as CEO of Goldman Sachs probably put his head even further up in the clouds. It's just not that hard to imagine that a 63-year-old who's friends with Bill Clinton and Barack Obama and saw himself as next in line for the Treasury job would not dig in and acquaint himself with the nuts and bolts of clearance and delivery.
When I worked on Wall Street as a bond trader, my responsibilities were limited to buying and selling bonds. But I would have had no clue had someone decided to embezzle the actual physical bonds which I had bought for the firm (back in those days, some bonds were still in actual paper form). I had no knowledge about how the firm's clearing and settlement operations actually worked.
Think of it this way: when you buy or sell a stock in your brokerage account, do you follow up and find out exactly whom you bought it from and make sure that the money which is reported to be in your account is actually there? Or do you just believe your brokerage statement?
Obviously, someone was responsible for transferring the customer funds. And that person should go to jail. Maybe Corzine should too, given that he was theoretically in charge. And it's certainly possible that he knows more than he's saying.
It's also possible he doesn't.