Corzine Pushed Europe Bet to $11.5 Billion as Board Balked

Jon Corzine bet $11.5 billion on European sovereign debt in his bid to rebuild profits at MF Global Holdings Ltd., almost twice the net amount disclosed to investors, and relied on short-term hedges that left the firm exposed to larger losses if they couldn't be rolled over.

Corzine, who was chairman and chief executive officer of the futures broker before it went bankrupt last month, overcame resistance from directors, senior traders and risk managers to accumulate the bonds, according to two people with knowledge of the situation. He used the hedges, or offsetting trades, to cut the net risk reported to shareholders to $6.4 billion, according to an Aug. 3 regulatory filing by the company.

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There was never any doubt about who engineered the sovereign-debt trade.

"Our positions and the judgment about risk-mediation steps are my personal responsibility," Corzine, 64, said on an Oct. 25 conference call to answer questions about a record quarterly loss and debt-rating downgrade that sliced the firm's market value that week by 67 percent, or $410 million, as MF Global slid toward collapse.