A risky business strategy, failure to improve inadequate systems, as well as "negligent conduct" by former Chief Executive Officer Jon S. Corzine and others contributed to the unraveling of MF Global Holdings Ltd., a new report said Thursday.
The report, released by Louis J. Freeh, the trustee for MF Global Holdings-the parent company of the U.S. brokerage firm MF Global Inc. and other units-laid much of the blame at Mr. Corzine's feet, accusing him of implementing trading strategies with minimal oversight and exceeding board-approved limits for some European trades the company made under his stewardship.
A spokesman for Mr. Corzine couldn't be reached for comment.
The report also said Mr. Corzine and his management team failed to improve faulty controls in MF Global's risk and treasury departments, even after being warned of their inadequacy. Those weaknesses prevented the company from knowing that customer funds were being used to meet MF Global's needs, the report said.
It was also "almost impossible to properly monitor the liquidity drains...caused by Corzine's proprietary trading strategy," the report said.
The deficiencies, such as the lack of an integrated global treasury system, were "long-known to Corzine and management, yet they failed to implement sufficient corrective measures promptly," the report concluded.
The investigation was based on interviews with former MF Global employees, former board members and the review of hundreds of thousands of documents.