Alex Wong/Getty Images
Former chairman and CEO of MF Global and former New Jersey Governor Jon Corzine testifies during a hearing before the Oversight and Investigations Subcommittee of the House Financial Services Committee.
A couple of pieces of breaking business news, one from Hollywood and one from Wall Street. Reed Business Information just announced that it's going to sell Variety; and Jon Corzine — former head of Goldman Sachs, U.S. Senator, and Governor of New Jersey — may have broken securities laws as CEO of MF Global and perjured himself before Congress.
Not a lot to say about Variety, just get ready for all the inside jokes about Reed "ankling" the century-old trade. The Wrap wastes no time in, um... Celebrating?
[Variety] has been challenged by digital upstarts like TheWrap and the Deadline blog. It has also faced greater competition from long-time rival The Hollywood Reporter, which relaunched its website and folded its daily print editions, launching a glossy weekly in its stead.
The larger point is worth noting, of course: ad dollars are moving away from print to digital. However, the profits from digital aren't enough to make up the losses, so it's tougher for companies to maintain both print and digital editions — or hang onto the brands at all.
As for Corzine...well, yikes. Here's Bloomberg:
Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. (JPM) accounts in London, according to an e-mail sent by a firm executive.
[Treasurer] Edith O’Brien internal e-mail came as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify after being subpoenaed this week.
“Over the course of that week, MF Global (MFGLQ)’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’ segregated funds were safe,” said the memo, written by Financial Services Committee staff and sent to lawmakers.
Corzine Congress testified last year that he did no such thing.
I figured that the missing $200 million is MF Global customer accounts was a back-office problem (JPMorgan was serving as a clearing agent for MF Global, which just means that it was facilitating the firm's trades). The story here is that Corzine's bet big on European debt, expected the situation to improve faster than it has. When the $200 million is supposedly segregated client funds went missing, MF Global was lurching toward bankruptcy.
I didn't think Corzine would be forced to evade direct responsibility, even he set the disastrous wheels in motion. There have been back-office meltdowns on Wall Street before, and MF Global was a broker-dealer, not a highfalutin investment bank. It could be expected the have some back-office issues.
Looks like Corzine is going to have a much harder time demonstrating his innocence now — especially if it turns out he wasn't completely truthful with the government.