‘Never stronger’: MF brag in S&P e-mailBy PAUL THARP
New York Post
January 31, 2012
Just days before MF Global imploded and $1.2 billion in customer cash vanished, a top executive swore that the brokerage firm had “never been stronger,” according to a newly disclosed e-mail.
Finance chief Henri Steenkamp insisted in an Oct. 24 e-mail to ratings firm Standard & Poor’s that MF was on firm financial footing. A week later, on Oct. 31, MF filed for bankruptcy — the eighth largest in history.
The e-mail, gathered as part of a congressional investigation into the firm’s collapse, offered fresh insight into the actions of MF executives, including then-CEO Jon Corzine, as the firm scrambled to avert disaster in its final days.
An excerpt of the e-mail — which was provided to a House panel by Craig Parmelee, a managing director at S&P — showed that Steenkamp was trying to persuade S&P that Corzine’s controversial $6.3 billion bet on shaky European government debt would have no impact on the firm.
In his letter to the panel, Parmelee also said that Corzine met with its analysts on Oct. 20 to reassure them that his outsize bet was no danger to the firm, according to Bloomberg News, which obtained a copy of the letter.
The oversight panel of the House Financial Services Committee plans to hold a hearing on Thursday to examine the role the ratings firms played in MF’s collapse and the $1.2 billion in customer money that was mingled with the firm’s.
“Trying to cover up company shortfalls by using over $1 billion in segregated customer money is not only unprecedented, but highly illegal,” said Rep. Peter King (R-L.I.), who is on the panel. “Investigators have yet to determine if this is exactly what occurred at MF Global, but recent reports indicate the missing customer funds may never be recovered.”
Congressional investigators said S&P and fellow ratings agency Moody’s Investors Service knew for months about Corzine’s risky bet on sovereign debt but didn’t sound any alarms until MF disclosed it in a regulatory filing.
Among key witnesses set to appear at the hearing are Michael Roseman, the former risk officer at MF who raised the first red flags on the firm’s European exposure.