Regarding ongoing MF Global bankruptcy proceedings, Duffy backed those calling for customers to be made whole first. Such clients “should be first in line in front of all other participants, including bond-holders and everyone else.”

Duffy stuck another thumb in Corzine’s eye. In the wake of MF Global’s collapse, Duffy doesn’t believe the regulatory system “is broke. I think someone violated the rules.”

Kansas Sen. Pat Roberts rued the fact that Duffy hadn’t been in the panel prior to the MF Global executives. “You have sort of tossed a bomb.”

Undoubtedly, Duffy’s allegations against Corzine will be a key focus of the House Finance Committee’s MF Global hearing on Thursday (Dec. 15).   

Addressing Corzine (who was joined by the firm’s Chief Financial Officer Henri Steenkamp and Chief Operating Officer Bradley Abelow), North Dakota Sen. Kent Conrad said trying to “pierce the veil” surrounding MF Global was proving “incredibly” difficult.

And it quickly became obvious that — despite hours’ worth of congressional testimony and weeks to consider their past actions — the firm’s lawyered-up and subpoenaed executives were simply unwilling to help the committee shed light on the situation.

Seeking a “direct answer” Georgia Sen. Saxby Chambliss simply asked Corzine if he knew MF Global was using “customer funds to carry out proprietary transactions?”

Corzine claimed he was unaware of the “misuse” of customer funds, a word he used regularly. “I didn’t authorize it, didn’t intend to have it happen.” 

A combative Roberts, ranking member of the committee, asked the panel a series of questions regarding MF Global actions in the days just prior to the discovery of “lost” customer funds. Did the firm receive margin calls “or other requests for liquidity on Oct. 28?”

Corzine: “I believe there were margin calls as there are on almost every day.”

Roberts: “Well, you indicated publically that $4.5 billion went out the door.”

Corzine: “I’ve repeatedly said that there was $4.5 billion worth of U.S. government agencies sold on that day. That was a sale designed to produce margin coming back to the firm as opposed to margin going out of the firm.”

Roberts: “We’ve heard a lot of 35-cent words being tossed around. ... We may not understand the ins-and-outs of it, but two things we do understand are margin calls and chain of command.

“We know customer money was accounted for on (Oct. 26). On (Oct. 28), the firm’s cash flow situation was dire and demands for cash kept coming in.”

Roberts asked Abelow and Corzine if it was the case “that MF Global didn’t have enough cash on hand to cover the cash needs that came in late (Oct. 28).”