UPDATE: Jon Corzine Hired As CEO Of MF Global In Management Shake-Up
23 Marzo 2010 - 10:55PM
Dow Jones News
Former New Jersey governor Jon S. Corzine is returning to the
business world as chairman and chief executive of MF Global
Holdings Ltd. (MF), the brokerage said Tuesday.
Corzine will replace CEO Bernard Dan effective immediately as
part of a shake-up at the loss-making futures and commodity
specialist, formerly known as Man Financial.
The move comes four months after Corzine, a former chairman of
Goldman Sachs Group Inc. (GS), failed to win re-election in New
Jersey.
New York-based MF Global remains one of the world's largest
independent futures brokers, but it has suffered a tumultuous three
years. A rogue trading scandal in 2008 has left its value below $1
billion, less than a third of its 2007 flotation value.
"We're going to focus on earnings here and generate some capital
internally that I think will make us a lot more attractive to
investors," said Corzine in an interview Tuesday. "We need to get
more client-driven, based on the discussions that I've had."
He will also succeed Alison Carnwath, who will step down from a
three-year tenure as chairman in August.
Corzine, once thought of as a possible Bank of America Corp.
(BAC) chief, is the third senior Goldman alumni to enter the
derivatives sector, following Duncan Niederauer and John Thain, the
current and previous CEOs of NYSE Euronext (NYX), respectively.
Dan is stepping down immediately for "personal reasons,"
according to the company, after notifying MF Global's board of his
decision last week. The former CEO of the Chicago Board of Trade
was hired in mid-2008 and took over as CEO in October of that year
after the departure of long-time head Kevin Davis.
Dan's departure will carry a six-month non-compete clause,
according to a person familiar with the matter.
Under Davis, MF Global grew to become the world's biggest
non-bank futures and options brokerage through nearly 20
acquisitions, including assets from Refco (RFX) following the 2005
collapse of that Chicago financial services group.
But the company was rocked in early 2008 by rogue wheat trades
that led to a $141.5 million charge, a dilutive restructuring and
Davis' replacement by Dan.
MF Global has reported a string of quarterly losses in the past
year as Dan presided over efforts to deleverage its balance sheet
and push into options market-making and Asian stock trading.
The company is also pursuing status as a primary dealer to
participate in Treasury auctions, and continues to await approval
from the New York Federal Reserve.
While Corzine said these efforts would continue, the company
continues to be shadowed by the risk management issue. In December
it paid a $10 million fine to U.S. futures regulators because of
the rogue trades, alongside a $495,000 payment to Chicago futures
exchange operator CME Group Inc. (CME). On Tuesday MF Global
outlined expectations for net revenue of $235 million to $245
million in its fiscal fourth quarter, which ends March 31. The
company said its capital and liquidity position for the quarter
would not be materially different from the prior quarter.
Though MF Global's size pales compared to leading Goldman Sachs
or the state of New Jersey, Corzine said the potential to "create
franchise value" and the international growth opportunities made
his new position attractive.
"There are a lot of places that have bigger capital positions,
and a lot more so-called panache, that don't have global footprint
of this organization," he said.
Corzine was asked if he was interested in the job by J.
Christopher Flowers, the investor whose private-equity firm J.C.
Flowers & Co. maintains a stake of nearly 10% in MF Global as
part of its 2008 restructuring. Simultaneous to his taking the CEO
role at MF Global, Corzine also joined J.C. Flowers as an operating
partner.
"We are gratified that the [MF Global] board enthusiastically
accepted our recommendation," said a spokesman for the
private-equity firm. "We are also very proud to have played a role
in bringing Mr. Corzine back to the financial services arena."
MF Global shares jumped 8.6% to $7.95 in late trading after
closing Tuesday at $7.32.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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