It was a busy weekend for damage control, with two examples of executives who tried to regroup after enduring very bad news.
First, there was an effort by former MF Global CEO Jon Corzine to counter a memo that emerged late last week that said Corzine authorized the transfer of client monies to J.P. Morgan. The memo’s contents, first reported by Bloomberg, would appear to contradict Corzine’s sworn testimony before Congress that he did not approve such actions in the chaotic, final days of the firm.
Corzine’s team (presumably led by his lawyers) provided email and other documents exclusively to the New York Times to show that Corzine believed the funds used in the transfer belonged to the firm. The Times broke this news in a Dealbook column today.
But the documentation wasn’t fully persuasive, and suspicion about Corzine’s actions remain. The Times notes that the email:
“…did not capture the full story behind the wire, which turned out to contain customer money. MF Global employees in Chicago had first transferred $200 million from a customer account to the firm’s house account, people briefed on the matter said. Once it was in the firm’s coffers, the people said, Chicago employees then promptly transferred $175 million of the money to the MF Global account at JPMorgan in London — the account that was overdrawn.”
The response by Team Corzine helped, but perhaps not as much as it hoped. Certainly the email reinforces the narrative that Corzine would likely use in a legal defense: That events simply overwhelmed MF Global despite the best efforts of management, and miscommunication rather than malice resulted in the loss of customer funds.
The second example comes from BATS Global Markets, whose calamitous IPO was the subject of enormous media coverage last week. BATS had very little to say during the episode, aside from comments on its own internal messaging system, which were hard for non-traders to understand, and a terse news release on Friday to announce the withdrawal of its IPO.
BATS correctly realized it would need to say more to address concerns about the integrity of its platform, and released a letter from its chief executive, Joe Ratterman, which was covered widely today. The letter will help draw a line under the miserable episode, but its effectiveness was undercut by the release of a scathing email message from David Cummings, a founder and BATS board member, who spoke bitterly about the failure and suggested corrective actions – like cancelling bonuses – that weren’t part of Ratterman’s script.
Using the relative quiet of a Sunday to position news for the start of the week can be a good strategy, provided the message is strong enough. If not, the strategy merely draws more attention to your weakness and prolongs discussion of the issue by the media.