Witness: Corzine knew about loan made with customer funds

An executive of a financial exchange monitoring MF Global told senators Tuesday that Jon Corzine, the former head of the financial firm, knew that loans were improperly made with customer funds.

The claim was made just minutes after Corzine professed his ignorance for how up to $1.2 billion in customer funds had gone missing.

Terrence Duffy, the executive chairman of CME Group, the exchange that regulates MF Global, told the Senate Agriculture Committee that a CME auditor was told by an MF Global executive that Corzine knew that a loan was made to a European affiliate of the company, and that he has passed along that information to the Justice Department and financial regulators.

"One employee indicated that Mr. Corzine knew about the loans that had been made from the customer segregated accounts," he said, adding that it was unclear whether other funds were improperly transferred.

Sen. Pat RobertsCharles (Pat) Patrick RobertsSenate ethics panel resumes Menendez probe after judge declares mistrial Senate passes resolution requiring mandatory sexual harassment training Overnight Energy: Perry takes heat for sexual assault comments | Clovis withdraws nomination for USDA post | Battle lines drawn on Arctic refuge drilling | Energy regulator back to full strength MORE (R-Kan.) called the revelation "a bomb."

Duffy said he received the information this weekend from attorneys with the exchange.

The revelation of the roughly $175 million loan seems to run counter to Corzine's claims; the former governor and senator has maintained under oath and through two congressional hearings that he had no idea where the funds went, and never authorized any transfer of customer funds that should have been kept segregated.

"I want to be clear, I never gave any instruction to misuse customer funds. I never intended anyone at MF Global to misuse customer funds," Corzine said at the beginning of his appearance Tuesday.

Corzine has repeatedly apologized to the victims of the firm's collapse, and maintained that he hoped the missing funds would eventually be recovered. He testified that he was "stunned" to learn of the missing funds on Oct. 30, one day before the company filed for bankruptcy.