As MF Global was in the final throes of a fatal cash crisis, CEO Jon Corzine gave "direct instructions" to transfer $200 million of customer funds to cover an overdraft, according to a congressional memo released Friday.
The memo cited an October 2011 memo from assistant treasurer Edith O'Brien, who is scheduled to testify next week at the latest in a series of congressional hearings into the collapse of the firm.
The bankruptcy trustee overseeing the liquidation of the company’s brokerage subsidiary has estimated there is $1.6 billion in customer funds missing.
Corzine, a former senator and governor of New Jersey, has testified before Congress that he had no specific knowledge of how customer funds may have been misused.
Steven Goldberg, a spokesman for Corzine, said Corzine did ask for the overdraft to be corrected but never gave any instructions to misuse customer funds.
"He never directed Ms. O'Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose," Goldberg told Reuters.
Corzine has not been formally accused of any wrongdoing.
According to a footnote in the congressional memo, broker-dealers like MF Global sometimes do deposit excess brokerage funds in segregated customer accounts, but there were clearly questions about the appropriateness of the requested $200 million transfer, which was reviewed by the firm's top lawyer.
The memo says JPMorgan chief risk officer Barry Zubrow called Corzine directly to seek assurances that the funds being transferred belonged to MF Global and did not include customer funds.
The bank followed up with a letter requesting written assurances that all MF Global transfers -- "past, present and future" -- complied with Commodity Futures Trading Commission rules about keeping customer money separate from the broker's own, according to the memo.
Laurie Ferber, MF Global Holding's general counsel, balked at the request as being too broad and instead wanted to narrow the written assurance to only the Oct. 28 transfer, the memo said.
When MF Global collapsed, the firm said it could not account for $600 million in customer funds. The figure has ballooned to $1.6 billion.
Reuters contributed to this report.
