Shortly after Jon Corzine not only destroyed MF Global but “vaporized” $1.6 billion in supposedly segregated client funds which were illegally commingled with operating cash, Jon Corzine had a brief encounter with the legal system including several kangaroo court sessions in Congress, which ultimately led to absolutely nothing for two simple reasons.
And Reason #2:
In fact, Jon Corzine’s quiet disappearance into the shadows was apparently only punctuated by one new notable entry in the Urban Dictionary for the term “Corzined“
… but not before rumors emerged that Corzine, whose dream has always been to run his own capital, would start a hedge fund.
In August 2012 we wrote that “after 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.” And algos… And glitches… And faulty software installs… And some junior person who has long since left the company… and, and, and, lots and lots of passive voice… Because in the Banana republic of the crave, no bundlers can ever go to jail, no matter how heinous the crime, which is not to say other places are better: in Thailand you shoot your secretary in the stomach during dinner with an Uzi and you don’t even pay a $600 fine. But at least it puts things in perspective. So what is next in store for this former man of power? “Mr. Corzine, in a bid to rebuild his image and engage his passion for trading, is weighing whether to start a hedge fund, according to people with knowledge of his plans. He is currently trading with his family’s wealth. If he is successful as a hedge fund manager, it would be the latest career comeback for a man who was ousted from both the top seat at Goldman Sachs and the New Jersey governor’s mansion.” So will Jon will be buying Italian bonds? We don’t know. Ask him yourself.”
However, this led absolutely nowhere, leading many to speculate that Corzine was just waiting for a correction before reentering the asset mismanagement business.
Then, three years of manipulated, artificially propped up markets later Jon Corzine had enough of waiting for a correction which almost came. And, as the WSJ reported in 2015, the time had come for another push for Vapor Capital Asset Mismanagement LP. To wit:
Jon S. Corzine, the embattled former MF Global Holdings Ltd. chief executive and ex-chairman of Goldman Sachs Group Inc., has discussed plans to start his own hedge fund in recent months, according to people familiar with the matter. The fund would start with cash from Mr. Corzine’s personal wealth and a handful of outside investors. Mr. Corzine said he had been speaking with about a half-dozen potential investors, and projected around $150 million in assets under management, one of the people said.
Would the fund invest all of its AUM in 2 year Italian bonds? While all answers would be revealed in due time, first Corzine has to get over that whole “criminal” stigma:
Mr. Corzine most likely wouldn’t be able to launch a fund until legal proceedings against him over MF Global have been resolved. Pretrial motions are expected to go at least until February of next year. The Commodity Futures Trading Commission in June 2013 filed civil charges against him and is still collecting evidence for a possible trial.
Mr. Corzine’s supporters point out that he hasn’t been criminally charged and that after MF Global collapsed, his bets on the bonds of Portugal, Italy and other European nations were ultimately proven on target.Mr. Corzine’s supporters point out that he hasn’t been criminally charged and that after MF Global collapsed, his bets on the bonds of Portugal, Italy and other European nations were ultimately proven on target.
Yes they were, but in the interim MF Global went bankrupt, and Corzine was exposed as a criminal commingler. In any case, the second, 2015 attempt at starting his own hedge fund also led nowhere.
Corzine at a 2010 morning meeting at the headquarters of MF Global, just before
he blew it up.
* * *
Now, nearly five years after his first attempt, it’s time for try #3, and according to the NYT, Corzine is – again – plotting his next and final act: “starting a hedge fund. And not just any hedge fund, but one designed to take advantage of the turmoil in the Trump era.”
On a recent afternoon [Corzine] he squeezed into a 100-square-foot office in the Flatiron district of Manhattan — no nameplate on the door — where a pair of Bloomberg terminals consumed much of the space. His eyes fixed on one, Mr. Corzine scribbled notes about his trades on a yellow legal pad as a computer chimed an imitation closing bell.
In the final seconds of trading, Mr. Corzine watched as a tiny sliver of his day’s profits slipped away, prompting him to utter a profanity or two and grumble about not ending the afternoon on more of “a high note.”
In other words, Corzine wants to go down in a blaze of glory, trading the upcoming Trump crash.
In his first interview since the MF Global meltdown, Corzine told the NYT his plans for a new hedge fund, saying that “he will seek to anticipate what often seems unpredictable: how the Trump administration and other world leaders will enact policy and, in turn, move markets.”
One of his Trump trades, for example, is designed to pay off in the event of a broad decline in the stock market, not unlike what happened Wednesday when shares swooned on Trump-related worries. On the bullish side, he hopes to ride a wave of a corporate-tax overhaul while trading in big tech, banking and industrial companies poised to gain from a policy shift.
Nothing groundshattering there, in fact even the 17-year-old “hedge funds managers” on Fin Twitter already have these trades on, so what makes Corzine’s product offering unique?
Well, we couldn’t quite answer that question. Neither apparently could the NYT.
Mr. Corzine would hardly be the only hedge fund manager seizing the moment in Washington. Some expect a correction in the stock market as investors come to terms with turmoil in the White House.
Mr. Corzine worries that the administration will make “a serious foreign policy mistake,” he said, which would be “horrible for markets.” He said that he planned to place a major bet that the market would fall but added that, as an American, “I’m hoping that I’m wasting money.”
Alas, with that “thesis” it’s Corzine’s LPs that will be thinking the same. That said, at least Corzine has a putch:
“I think I can read between the lines more than a lot of people can on these issues,” he said last month, on the eve of a trip to raise money for his fund with wealthy investors.
Maybe… except that one time in 2011. And yet, the third time may just be the charm for Corzine:
In the first few weeks of marketing, Mr. Corzine has secured commitments and indications of interest in the tens of millions of dollars, according to a colleague who is helping him reach an initial goal of roughly $150 million. At a time when the stars of the hedge fund world can raise billions of dollars in a matter of weeks, Mr. Corzine’s financial ambition is modest. The real test will come, he said, if after several months the fund can demonstrate healthy returns and expand to a broader base of investors.
But wait, there’s more:
There are signs his pitch is resonating with some investors. After securing commitments from family and friends, he recently returned from a trip to the Middle East, where he met with a number of wealthy investors. He also plans to visit Latin America and Hong Kong.
When the fund-raising concludes, Mr. Corzine hopes to have collected just shy of $150 million, the amount at which private funds must register with the Securities and Exchange Commission. That sum will include several million dollars of his own money.
Indeed, there just may be a lot more dumb money out there than meets the eye. On Friday, Corzine will appear at the SALT Conference in Las Vegas, the premier hedge fund schmooze-fest, where he will join Joseph R. Biden Jr., Ben Bernanke and the singer Jewel, as well as hundreds of fund managers and reporters, in an attempt to conclude his fundraising.
Jon, however, is probably unaware that in the 6 years since he was professionally trading, things have changed, and that any and all positions he puts on will be promptly sold to the exchanges’ best clients: HFTs who who will seek to frontrun and scalp his limit orders, ram his stops and bleed his P&L to death on a daily basis. In fact, with only $150mm, we give Corzine 6 months before he is forced to shut. Again.
We are probably optimistic.