More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- Books and Records Rule Thorough and complete books and records enable RIAs to demonstrate that they have fulfilled their fiduciary obligations to clients and complied with applicable rules and regulations.
Jon Corzine, former chief of MF Global, sharply criticized a House Subcommittee report that claims he is to blame for MF Global’s collapse.
In response to excerpts of the report, “The Collapse of MF Global,” which were released Wednesday by the House Financial Services Subcommittee on Oversight and Investigations, Steven Goldberg, a partner at RLM Finsbury who is a spokesman for Corzine, told AdvisorOne in an email message that “while we have not been able to review the whole report,” Corzine “disagrees strongly with several of the assertions that apparently are part of the Subcommittee’s report.”
The full report was released Thursday.
Goldberg first highlights the fact that “consistent with Mr. Corzine’s Congressional testimony, the House Subcommittee apparently did not find any evidence that Mr. Corzine acted in bad faith or engaged in any intentional wrongdoing.”
Second, Goldberg notes that while the subcommittee claims that “customers may never get back” the more than $1 billion of money lost, the House Republicans “fail to note that more than 80% of customer money has been returned to date.” Furthermore, he says, Corzine “continues to feel great sadness about what happened at MF Global and the impact it had on customers, employees and shareholders,” and that “he is hopeful that Trustee Freeh is correct in his estimation that customers ultimately will receive a full recovery.”
Corzine also takes issue with the subcommittee report’s assertion that MF Global’s “belated disclosure in October 2011 of its extensive European RTM portfolio–which amounted to 14% of MF Global’s total assets–combined with poor earnings news prompted credit rating agencies to downgrade the company’s credit rating to junk status.”
Says Goldberg: “The Subcommittee fails to recognize that the RTM investments were in fact fully disclosed prior to October 2011. MF Global made full disclosure of the RTM positions in its 2011 10-K, which was publicly filed in May 2011, and in its 2012 first quarter 10-Q, which was publicly filed in August 2011, and the market did not react at those times.”
Furthermore, Goldberg says, the suggestion by the Subcommittee that Corzine created an “authoritarian” atmosphere “is wrong.” All of the MF Global’s significant business decisions, he says, “including the change in business strategy and the RTM investments, were subject to review, debate and approval by the MF Global Board of Directors. In fact, the RTM investments were heavily debated and ultimately approved by the Board, which placed limits on the level of those investments.”
Finally, Goldberg addressed the number of assertions the Subcommittee makes as to Corzine’s “failures” in managing MF Global. Said Goldberg: “When Mr. Corzine joined MF Global he was tasked with quickly turning around a failing business, shoring up internal processes and controls, and, most importantly, immediately returning MF Global to profitability. He set a new strategy for the firm after extensive discussions with the Board, the senior management team and well respected outside consultants. At all times Mr. Corzine acted in good faith and did what he believed was necessary to turn around MF Global.”