Corzine; MF Global Executives Testify Before Congress Again Today

It's another day of testimony before Congress for disgraced former New Jersey Governor Jon Corzine and several top MF Global executives. They'll again have to state that they have no idea where nearly $1.2 billion in customer money went. They'll claim that they aren't responsible for the accounting of the monies, despite being in a position to not only be responsible for the company policies, but are fiduciaries for their clients and made the decisions that sank MF Global in the first place.

Bradley Abelow, MF Global's president and chief operating officer, and Henri Steenkamp, the chief financial officer, are also scheduled to testify to the Senate Agriculture Committee.

All three say they don't know where the money is, according to prepared remarks and Corzine's previous testimony to a House panel last week. Nor do they take responsibility for authorizing the movement of money out of customer accounts.

Depending on the circumstances, transferring money from customers' accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.

MF Global collapsed into the eighth-largest bankruptcy in U.S. history on Oct. 31 after a disastrous bet on European debt. Corzine stepped down as CEO on Nov. 4.

Corzine told the House Agriculture Committee last week that he didn't know what happened to the money. He said he didn't become aware of the shortfall until Oct. 30, one day before the firm filed for bankruptcy protection.

In his prepared testimony, Steenkamp says he had no direct involvement in the transfer of funds.

"Direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties," Steenkamp says.

Abelow says he cannot explain what happened to the money without having access to MF Global documents, which a trustee now controls.

They'll try to distance themselves from the scandal, but that's frankly impossible to do. They are going to do their best to avoid falling into a perjury trap, so the amount of information that they can shed on the inner workings at MF Global in the runup to the collapse will be at a minimum.

Anything they say can and will be used against them in what is likely to be a series of criminal and civil suits, but so too is the fact that they simply claim ignorance, being outside the loop of those responsible for the transactions that led to the missing $1.2 billion.

Corzine, despite his attempts to fall on his sword, continues to claim that he isn't a responsible party in the missing money. Is it possible that some underling undertook the illegal actions that led to the missing money? Absolutely. However, it was a policy initiated by Corzine to expand trading on sovereign debt that pushed MF Global to the brink. Corzine took the risks, removed those involved in managing risks and were warning about the downside, and pushed ahead despite the sovereign debt risks increasing MF Global's exposure.