Corzine fund story undercut

WASHINGTON - A former MF Global executive appears to contradict testimony from Jon Corzine, saying the former senator and New Jersey governor ordered the transfer of $200 million last fall out of a customer account days before the brokerage firm collapsed, according to an e-mail obtained by congressional investigators.

Edith O'Brien, MF Global's former assistant treasurer, says Corzine ordered the money shifted to one of the firm's bank accounts overseas Oct. 28 to cover an overdraft, according to a memo that cited the e-mail.

The e-mail noted that the transfer was made "per JC's direct instructions."

MF Global filed for bankruptcy protection Oct. 31. The firm failed because of a disastrous bet on European debt. About $1.6 billion of customers' money has not been recovered.

A House Financial Services subcommittee released the memo Friday in advance of a hearing Wednesday. O'Brien has been subpoenaed to testify. The Associated Press was unable to reach her for comment.

In December, Corzine told the panel at a hearing: "I did not instruct anyone to lend customer funds to MF Global or any of its affiliates." Corzine also told the subcommittee he did not know about "the use of customer funds on any loan or transfer."

And Corzine told a Senate panel two days earlier: "I never gave any instruction to anyone at MF Global to misuse customer funds."

Steven Goldberg, a spokesman for Corzine, reiterated in a statement Friday that Corzine testified that he had said nothing that "could reasonably have been interpreted as an instruction to misuse customer funds. He stands by that testimony."

Client money is required by law to be held separately from a brokerage firm's cash in order to protect investors in case a firm fails. If MF Global misused client money, it would violate a fundamental investor protection for people who trade options and futures.