In a shocking admission, former New Jersey Governor and Senator Jon Corzine has stated that he does not know what happened to the “many hundreds of millions of dollars” missing from clients’ accounts at MF Global Holdings, the now-bankrupt brokerage Corzine once led. “I simply do not know where the money is, or why the accounts have not been reconciled to date,” said Corzine.

This was Corzine’s first public statement since MF Global’s bankruptcy. While he apologized to all those affected and said he was stunned when he heard about the missing money, the fact that the former head of MF Global is clueless as to the whereabouts of hundreds of millions of dollars in client funds is appalling.

Numerous securities regulators and the FBI have been investigating what happened to an estimated $1.2 billion worth of missing clients’ money and whether MF Global used the clients’ funds to shore up its own finances as its bets on European debt plummeted. As it stands now, it appears that the logical explanation for the missing client money is that MF Global misused the funds. Using client funds in that manner would have been a serious violation of regulatory rules and of the Commodity Exchange Act.

It also now appears that MF Global was not fully truthful with the Financial Industry Regulatory Authority in 2010 when it was asked about its exposure to European debt. MF Global even may have denied that it had any exposure to declining European debt instruments.

In Corzine’s defense, he claims that he had limited involvement in MF Global’s clearing, settlement and payment mechanisms, and accounting. But that begs the question as to whether someone in Corzine’s position should have been so in the dark about some of the fundamental functions of the firm that he ran.

Corzine and other MF Global directors and officers could be held personally liable for misrepresenting to investors the risks the firm had taken. They also could be held personally liable for the missing $1.2 billion in client funds.

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