MF Global
MF Global Bankruptcy
Estimated impact: $1.6B
Under CEO Jon Corzine's leadership, MF Global made a $6.3 billion bet on European sovereign debt using repo-to-maturity transactions. When European debt prices fell, margin calls drained the firm's liquidity, and $1.6 billion in customer funds were improperly used to meet obligations.
Decision context
Whether to approve CEO Corzine's strategy of leveraged bets on European sovereign bonds as a path to transforming MF Global from a brokerage into an investment bank.
Biases present in the decision
Toxic combinations
- Yes Committee
- Sunk Ship
Reference class base rates
Across all 146 curated case studies in our library:
Lessons learned
- A CEO's prior political stature and reputation can create authority bias that suppresses board-level risk oversight.
- Concentrated directional bets funded by customer money violate the fundamental trust of brokerage operations.
- Anchoring to past success in government bond markets ignores the different risk profile of sovereign credit exposure.
Source: CFTC v. MF Global Inc. complaint; SIPA Trustee's Report on MF Global (2013) (SEC Filing)
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