Bloomberg News

Mighty Who Fell Wield Wrong Kind of Clout: Bloomberg Markets

September 04, 2012

Money laundering and interest-rate manipulation, brokerage collapses and insider convictions. The past year has had enough failure and scandal in the world of finance to perhaps overshadow the successes.

The 50 Most Influential list, published in the October issue of Bloomberg Markets magazine, recognizes those who have been on the good side of bad events, such as U.S. Attorney Preet Bharara. To complete the picture, though, here are five people who were influential for the wrong reasons.

JON CORZINE Former CEO, MF Global Holdings Ltd. (MFGLQ:US)

He ran Goldman Sachs Group Inc. (GS:US), served as a U.S. senator and was governor of New Jersey, although he failed to win reelection. Then, in about a year and a half at the helm of MF Global, Corzine, 65, drove the firm into bankruptcy by embracing increased trading risk. About $1.6 billion of brokerage customer money went missing in the process. Corzine hasn’t been charged with any wrongdoing.

What he says: “I did not instruct anyone to lend customer funds to MF Global or any of its affiliates, nor was I told that anyone had done so.” Testimony to Congress on Dec. 15

BOB DIAMOND Former CEO, Barclays Plc (BARC)

An American in London, Diamond, 61, rose to the top job at Barclays by building an investment bank that kept the company’s profit growing. He courted controversy, though, pushing back against some regulations and commanding the highest pay of any British bank CEO. He resigned after Barclays paid a record fine for manipulating the London interbank offered rate.

What he says: “I worry that the world looks at Barclays, and a group of traders who had reprehensible behavior, and that that is being put on Barclays in a way that is not representative of the firm that I love so much.” Testimony to Parliament on July 4

RAJ GUPTA Former Managing Director, McKinsey & Co.

The top job at McKinsey and a Goldman Sachs board seat gave Gupta, 63, the aura of success. Now, he faces years in prison, convicted of insider trading. His lawyer said he will appeal. Prosecutors showed at his trial that Gupta used his lofty positions to pass tips to hedge-fund manager Raj Rajaratnam.

What his lawyer says: “We continue to feel that Mr. Gupta is innocent of all the charges.” Attorney Gary Naftalis, speaking after the June 15 verdict

PHIL FALCONE CEO, Harbinger Group Inc. (HRG:US)

Smart bets on the mortgage bust helped Falcone, 50, build Harbinger into a successful hedge fund. He had $26 billion under management as of mid-2008. Losses and customer withdrawals since then have shrunk the fund to about $3 billion. Falcone’s biggest investment, wireless startup LightSquared Inc., filed for bankruptcy protection in May. He’s being sued by the U.S. Securities and Exchange Commission over alleged improper loans from the fund.

What his lawyer says: “The notion propagated by the SEC that investors were harmed by that conduct or any other is not only irresponsible but completely unsupported by any evidence.” Statement from attorney Matthew Dontzin on June 27

BRUNO IKSIL Former Derivatives Trader, JPMorgan Chase & Co. (JPM:US)

As a London-based trader in the bank’s chief investment office, Iksil moved markets. His credit derivatives index trades were big enough to earn him the London Whale nickname. Then they were too big, and the market moved against him. JPMorgan’s losses total at least $5.8 billion.

What his lawyer says: Iksil “considers he did nothing wrong and will cooperate fully with the authorities.” Attorney Raymond Silverstein, in a July 23 e-mail

(Click here for a slide show of Bloomberg Markets magazine’s 50 Most Influential.)

To contact the reporter on this story: Robert S. Dieterich in New York at rdieterich@bloomberg.net

To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net


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