Jon Corzine (MF Global) vs. Martha Stewart (ImClone)

In 2004 Martha Stewart was convicted of conspiracy, obstruction of justice and making false statements.  Though her sentence was light, the conviction wore all of the appearances of bigotry based on a random act of genetics. She was born female.  

In December 2011 Jon Corzine was subpoenaed to answer for the misappropriation of $1.5 billion of investors’ funds. In his statement of having no knowledge as to where the money was allocated, he also maybe facing conviction based on conspiring, obstruction, making false statements and more. Through a lens colored with the fact that Martha Stewart’s crimes may seem superfluous in comparison to what Jon Corzine, CEO of MF Global may be accused of. There is a thread of fundamental truth that draws a commonality between the two.
Martha Stewart is a well-known brand that is part of many households and contributes mightily to the economies of many well-known retailers. She was the first of her kind during a time when America’s opinions of rich and powerful women were ambivalent. Many proclaimed that her legal defense was poorly planned. There were growing charges against her for insider trading. While refusing to plea bargain her companies were rapidly losing equity value. Her self-perception of being insulated from the routine machinations of common law was her biggest mistake.
Achieving the privileges of a life lived within a circle of extreme intelligence and accomplished people, obscured her sense of the realities of her legal dilemma. The tangled web of lies and the dishonesty began with her knowledge that the company ImClone, owned by a personal friend Sam Waksal, would soon lose its market value. Sam Waksal lost faith that his new cancer fighting drug would go to market. To offset any loss in his investments he decided to sell $5 million worth of shares of his own company. The decision to sell securities through his daughter’s name to avoid detection was a blatant abuse of securities laws. Sharing this information with others Martha Stewart decided to sell her shares in ImClone as well. Though the crime may not seem similar to the troubles faced by former CEO Jon S Corzine the causes and similarities in self-perceptions may result in the same outcome.
March 2010 Jon Corzine was chosen CEO and Chairman of MF Global. The post came after a long history of extremely successful public service. A practicing Democrat, he actively initiated strong bills to impose specific sanctions for the public good. As a reformer he was voted to the New Jersey Democratic Senate in 2000. On January 2001, he authored the Sarbanes-Oxley Act. He worked for and led in reforms to the 401(k) plan, to minimize investment risks. Defeated while running for a second term as governor, as a former CEO of Goldman Sachs, Corzine went back to private sector employment as CEO of MF Global.
Its credit rating lowered and suffering a forty percent drop in market value, in October 2011 MF Global was forced to file for bankruptcy protection. It was a numbing shock to Wall Street. Few saw it coming and the well-respected Jon Corzine gave no indication that the firm was in trouble. He resigned his post shortly after and was subpoenaed to appear before the house committee on December 8, 2011, to answer for an investors’ shortfall in cash of $630 million.
MF Global is a worldwide bond and futures brokerage, with investments that reached well into the currency flow of the euro. It is widely held that MF Global was following Goldman Sachs’ ambitious design to monetize the euro. As CEO Jon S. Corzine had perhaps forgotten that in achieving success for his shareholders, keeping a watchful eye on the firm’s solvency is also important. Jon Corzine should have known at the close of each market day where the totality of $6.3 billion in company wealth was located.
Will MF Global prove that it has a legal right to invest those dollars? Will the money eventually be reconciled? The boundaries of truths have been grayed for a purpose. To insure a survivable outcome for himself Jon Corzine has hired New York attorney Andrew J. Levander. As Chair of Dechert LLP’s Policy Committee and partner in the White Collar and Securities Litigation group Andrew Levander is brilliant as a complex litigation defense attorney. He has achieved fame through brilliantly advocating for high profile individuals like the former Merrill Lynch’s CEO John Thain, gifted hedge fund manager and philanthropist Ezra Merkin; as well as several high level directors during the Lehman demise.
Comparing the fact of Martha Stewart’s conviction with the reality of the possible condemnation of Jon Corzine’s crimes, one must not ignore a fundamental commonality. Both Jon Corzine and Martha Stewart operate within a world insulated from adherence to common laws. The need to stretch the confines that dictate how we should abide by what is right and what may be commonly viewed as wrong is tweaked and rewritten. The outcome of the Jon Corzine chronicle is still unclear. But the underlying moral reasoning of Martha Stewart versus those of Jon Corzine is too similar to be ignored.