The more compelling testimony in the Congressional hearing that featured two chief risk officers of the disgraced MF Global came from Michael Roseman, who appears to have been ousted by Jon Corzine and his cronies because of his concerns about the firm’s exposure to European sovereign debt.
Roseman raised issues with the overexposure as early as September 2010 when the exposure rose significantly to about $2 billion.
“In November, when the positions grew to nearly $5 billion, Mr. Roseman outlined the risks to the board, saying the bets hinged on the European countries not defaulting.”
Unfortunately, the scenarios he outlined were derided as “implausible,” Roseman testified. A search to replace Roseman soon commenced. Corzine has said that he was looking for someone with deeper experience in the securities business--an explanation that struck Roseman as off-key. The firm eventually hired Michael Stockman, who took over as CRO and has been battling the perception that he was merely a stooge for Corzine.
Indeed, one representative blatantly referred to him as a yes man. Stockman indeed approved of the rising European debt exposure until it was too late.
So what to make of all this? The board bears a lot of responsibility, though it’s doubtful they will ever be held accountable. As for Corzine, this is yet more evidence of recklessness. All in all, both former CROs seemed somewhat evasive when they testified, and surprisingly inarticulate, especially Stockman.
For more:
- here’s the Washington Post article
Related articles:
Hearing takes fresh look at MF Global scandal
Employees take shots at Jon Corzine
