MF Global’s Jon Corzine Runs Out of Luck

In his 24-year career at Goldman Sachs, Jon Corzine made a name for himself as an intrepid trader who pushed the limits of risk. So it makes sense that when Corzine, after almost a decade as a U.S. senator and governor, was named chairman and chief executive officer of MF Global Holdings in March 2010, his plan for expanding the futures and commodities trader involved taking more risk. Less than 20 months later the company is bankrupt, days after posting a $192 million quarterly loss and disclosing $6.3 billion in bets on European government bonds. “This goes back to the myth of Goldman people being the best risk takers,” says Janet Tavakoli, who once worked at Goldman Sachs and is now president of Tavakoli Structured Finance, a Chicago firm that advises institutional investors.

Wall Street applauded Corzine’s appointment. MF Global shares rose 15 percent the week his hiring was announced. Says Rob Rutschow, an analyst at investment bank CLSA: “It was like, ‘Here’s Jon Corzine: very connected, very successful ex-Goldman guy. Take him at his word that he’s going to build a world-class, full-service investment bank.’ ” And Corzine struck a statesman-like chord on taking the job. “MF Global is a firm with tremendous potential and excellent talent,” he said. “Profitability and responsibility must go hand in hand with growing our franchise.”