Jon Corzine’s comeuppance will have to wait.
The National Futures Association, the industry’s self-regulatory body, shelved a proposal to ban the ex-chief of MF Global from the multi-billion futures trading industry after a nearly four-hour board meeting yesterday.
A vote in favor of the proposal would have prompted the NFA to set up an independent panel to weigh the lifetime ban and give Corzine a chance to defend himself.
Instead, the NFA’s board tabled the proposal, citing “ongoing investigations concerning Mr. Corzine’s activities at MF Global,” according to a statement from Chairman Christopher Hehmeyer.
NFA’s board “does not wish to take any action that could interfere with those investigations,” said Hehmeyer, referring to probes by the Commodity Futures Trading Commission and the Justice Department in the wake of MF’s collapse.
Neither the firm nor any executives have been charged with any wrongdoing. The NFA may dole out punishment for violations such as not properly supervising employees or keeping poor records of transactions, experts said.
The NFA oversees brokerage firms as well as individuals that handle futures contracts on behalf of clients.
After MF filed for bankruptcy in October 2011, regulators discovered that the firm had improperly tapped customers’ funds in the chaotic days leading up to its demise, creating a $1.6 billion shortfall. Corzine has said he never gave any instructions to employees to misuse customer funds.
Still, plenty of burned MF customers blame Corzine for overseeing the firm’s collapse.
Hehmeyer didn’t rule out the possibility of a ban down the road.
Once the investigations are completed, NFA could “bring disciplinary action against Mr. Corzine for violations of any NFA rules that occurred while he was a member,” he said.
“The sanctions for disciplinary actions could include a lifetime ban and significant monetary fines,” he added.
Hehmyer also said the NFA will have to resolve “issues concerning [Corzine’s] fitness for membership” for it to ever reinstate Corzine, who withdrew his NFA membership after MF’s collapse.
The proposal for a “lifetime ban” was introduced by two new directors. James Koutoulas and John Roe won seats on NFA’s board in January after leading a campaign for the swift return of funds to MF customers.
Koutoulas declined to comment yesterday after the meeting, citing confidentiality of board discussions.
Hehmeyer cited “press inquiries” for his rare statement on the board’s ruling.