Former MF Global chief Jon Corzine denied on Thursday a recent allegation that he knew customer funds were improperly used, while absorbing withering criticism from Republicans who chided the former Democratic senator for his role in the firm's failure.
Corzine, who was taunted for staying at the Ritz Carlton in Washington while hundreds of millions of dollars of customer money remains missing, sought to address allegations about a loan to a European unit of MF Global in the firm's final days.
"I don't know the source of the suggestion but let me be clear," Corzine told a House Financial Services oversight subcommittee on Thursday. "I did not instruct anyone to lend customer funds to MF Global or any of its affiliates, nor was I told that anyone had done so."
It was his third appearance in eight days before lawmakers probing MF Global's demise and perhaps the most hostile.
MF Global filed for bankruptcy on Oct. 31 after it was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers. Corzine resigned as CEO days later.
A trustee liquidating the firm has estimated the customer funds shortfall could be as high as $1.2 billion. A diversion of customer funds for the benefit of the firm would be a violation of industry rules.
Neither MF Global nor any of its executives have been charged with wrongdoing.
The search for missing customer money has sent reverberations through the farm belt and trading floors, and has attracted the attention of the FBI and federal prosecutors.
On Tuesday, CME Group Executive Chairman Terrence Duffy told a Senate committee that a CME auditor participated in a phone call during which an MF Global employee indicated that Corzine knew the firm used customer money to lend $175 million to its European affiliate.
A CME timeline of MF Global's last days identified the CME auditor as Mike Procajlo, and said the call took place in the middle of the night, hours before the bankruptcy filing. To view the timeline click: http://link.reuters.com/fef65s
The timeline, among other things, details the back and forth between CME auditors and MF Global officials over the accuracy of their reports on the segregation of customer accounts