MF investigator has history with Corzine

WASHINGTON -- The regulator overseeing the investigation of Jon Corzine's collapsed securities firm, MF Global, gave $10,000 to the New Jersey Democratic Party in 2005 as Corzine ran for governor of that state.

Gary Gensler, chairman of the Commodity Futures Trading Commission, and Corzine had worked together for 18 years at Goldman Sachs Group Inc. and later collaborated to pass a law to combat corporate fraud.

Election records show Gensler gave the money in August 2005. Corzine, a Democrat, was elected governor later that year.

MF Global filed for bankruptcy protection on Monday after a disastrous bet on European debt spooked its investors and trading partners. Gensler and other regulators are trying to find out what happened to hundreds of millions in clients' money that went missing last week. MF Global admitted Monday it had diverted client money as its financial woes intensified.

Gensler's long history with Corzine poses an apparent conflict of interest that could taint the probe's findings, experts said. "The appearance of a conflict is there, there's no question," said Jay Lorsch, a professor at Harvard Business School. "It might be wise for Mr. Gensler to recuse himself from this particular investigation."

"Gensler is a highly qualified guy, but these cozy relationships tend to taint the oversight in these big blowups," said Naveen Reddy, a research analyst with the firm GMI Inc.

Gensler and Corzine representatives declined to comment on the relationship or whether Gensler should recuse himself.