Thursday, November 10, 2011

Jon Corzine of MF Global Was Not Registered with FINRA Since 1999

Let's get this straight.  Not only did MF Global make off with $700 million in customer assets, pay themselves hefty bonuses merely hours before the firm's bankruptcy, but we have now discovered that MF Global's head Jon Corzine was not registered with FINRA and never took requalifying exams as required by FINRA prior to taking over the firm.
Was Corzine issued a double waiver- no qualifying exams, and no registration needed?
FINRA's records indicate that Corzine was last registered in 1999 with Goldman Sachs & Co.

FINRA's website states:

Qualifications FAQ - Registration

"Who must register as a representative?

Anyone actively involved in the member's investment banking or securities business must be registered as a representative with FINRA. Their duties may include supervision, solicitation, or training of persons associated with the member.
[NASD Membership and Registration Rule 1031(b) - Definition of Representative]

Who must register as a principal?
Persons associated with a member, enumerated below, who are actively engaged in the management of the member's investment banking or securities business, including supervision, solicitation, conduct of business, or the training of persons associated with a member for any of these functions are designated as principals. Such persons shall include:

  • Sole Proprietors 
  • Officers 
  • Partners 
  • Managers of Offices of Supervisory Jurisdiction, and 
  • Directors of Corporations.

[NASD Membership and Registration Rule 1021(b) - Definition of Principal]"

So here's where things get fun.  A check of FINRA's BrokerCheck for Jon Corzine indicates he has passed these exams:
  • Series 24 Principal’s (June 1982);
  • Series 7 Representative’s (June 1975); and
  • Series 32 Futures (August 2010).
FINRA's records also reveal that Corzine was last registered in 1999 as a member of Goldman Sachs & Co.!

Further, FINRA's regulations page states that qualification exams must be retaken 2 years after ending affiliation with a FINRA member firm.

How long will my qualification examinations be valid after I end my affiliation with a FINRA member firm?
You may reactivate your representative or principal exam up to two years after your registration has been terminated. (Note, the two years are calculated from the employment end date with the prior employer or from the CE inactive date.)

[NASD Membership and Registration Rules 1021(c) and 1031(c) - Requirements for Examination on Lapse of Registration]

As Bill Singer puts it:
Given that Corzine was out of the industry for about 12 years – which is quite a bit beyond the 2 year window – he needed to requalify by examination but there’s no indication that he sat for the Series 7 or the Series 24, which he needed upon his return to a FINRA member firm.  
This really puzzles me.  I mean, you know, FINRA makes such a BIG deal about not granting registration waivers, particularly when someone has been out of the business for a few weeks or months beyond the two year window.  Since I don’t see any indication that Corzine took the two exams at issue, did FINRA grant him a double waiver? Who authorized that?  Why?

The MF Global saga is beginning to feel like the 7th-10th innings of Game 6 of the World Series.