Was Jon Corzine insane?
In the complaint against former MF Global CEO Jon Corzine filed in federal court on Thursday, the U.S. Commodity Futures Trading Commission depicted the former New Jersey Governor as a negligent leader who should never be allowed back into the financial industry because he did not try hard enough to stop his employees from raiding the brokerage’s customer accounts to cover its own trading losses.
The suit stops short of an important accusation, however: intent. Though Corzine and MF Global’s former assistant treasurer Edith O’Brien should have known better, according to the CFTC, they did not mean to make the inappropriate money transfers or to lie about them or try to cover them up.
“Mr. Corzine did nothing wrong, and we look forward to vindicating him in court,” said Corzine’s lawyer, Andrew Levander, in a statement emailed to reporters shortly after the CFTC unveiled the suit.
Even though a section of the complaint details the false statements MF Global made to the CFTC, its regulator, about how much money was in the segregated customer accounts (the firm reported an excess on nights when there was really a deficit of hundreds of millions of dollars), the CFTC is not accusing anyone of deliberately lying.
This lack of intent is one of the main reasons, experts say, why no criminal charges were ever filed against Corzine or any other MF Global employees despite the misappropriation of nearly $1 billion in customer money.
Within the framework of the law, intent is crucial for building a criminal case. A person accused of murder who can prove he or she was insane during the act cannot be found guilty. Without a sound mind there can be no guilty mind – or mens rea – there can be no intent.
Why is there no criminal intent found behind the false statements sent over to the CFTC? To be sure, inaccurate reports could have been generated by the chaotic activity inside MF Global as it collapsed: Trades were failing, clearing banks were withholding sums of money MF Global could have argued it deserved. If that was the case, other brokerages should take note put steps in place to have employees check the automatically generated reports their firms generate before they’re sent to regulators.
It’s hard to believe nobody at MF Global questioned the wildly inaccurate reports the firm was sending to the CFTC. Computer glitches aside, it seems reasonable to ask: Was Jon Corzine insane?