Corzine compelled to testify to US Congress

Jon Corzine, the former head of MF Global, will be forced to attend a congressional hearing into the collapse of the broker-dealer next week alongside top regulators.

The House agriculture committee said on Friday it was taking the “extraordinary step” of using Congress’s legal power to compel the ex-chief executive and former New Jersey governor to turn up at its hearing on December 8.

Jill Sommers, commissioner at the Commodity Futures Trading Commission, who is leading the regulatory inquiry, is also expected to face a grilling from lawmakers at the same panel, according to congressional aides.

Mr Corzine has stayed out of public view since MF Global filed for bankruptcy on October 31. A committee spokesman said lawmakers had moved to force his attendance after not receiving a response to an invitation. A spokesman for Mr Corzine declined to comment.

In a statement, Frank Lucas, the committee’s Republican chairman, and Collin Peterson, its senior Democrat, said Mr Corzine’s “testimony is critical to fulfil our objectives on behalf of our constituents, which is why we have taken this extraordinary step to ensure his attendance”.

The congressmen said many of their constituents had lost funds “and many more have lost confidence in futures and derivatives markets”.

Mr Corzine now faces a difficult decision: whether to “plead the fifth”, using the US constitution’s fifth amendment right to silence, or try to answer lawmakers’ questions.

Kenneth Lay, the former chief executive of Enron, took the first approach during a 2001 hearing into the collapse of the energy group and sat in silence for more than an hour while lawmakers criticised his stewardship of the company.

Mr Corzine’s forced trip to Washington next week may be followed by two more hearings the following week. The Senate agriculture committee and the House subcommittee on oversight and investigations said they were both considering subpoenas.

The congressional moves came as the company announced that seven directors had left the company. David Bolger, David Gelber, Eileen Fusco, Martin Glynn, Edward Goldberg, David Schamis and Robert Sloan resigned earlier in the week, according to a filing with the Securities and Exchange Commission filing on Friday.

MF Global filed for bankruptcy after a series of credit rating downgrades made the business untenable and a last-ditch sale to Interactive Brokers, a rival futures broker, was scuppered by the discovery that money was missing from segregated customer accounts.

Regulators and law enforcement officials led by the CFTC and the Federal Bureau of Investigation have been trying to pin down what happened to a shortfall in customer funds that the company’s bankruptcy trustee estimates at $1.2bn.

US authorities now believe that MF Global had been dipping into client funds for weeks before its failure. The bankruptcy trustee, James Giddens, said on Thursday that some of the customer money from MF Global would never be recovered.