WASHINGTON (AP) ? 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. Gensler and other regulators are trying to find out what happened to hundreds of millions in clients' money that went missing last week.
Gensler's long history with Corzine poses an apparent conflict of interest that could taint the probe's findings, experts say.
"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 rose to become Goldman's co-head of finance before leaving in 1997. Corzine left Goldman in 1999, after serving as chairman and CEO.
The two later collaborated when Corzine was a senator and Gensler worked on Capitol Hill. As a key advisor to Sen. Paul Sarbanes, a Maryland Democrat, Gensler advised Sarbanes on the accounting law that bears his name. At the time, Corzine was a Democratic senator from New Jersey.
At a conference last year, Gensler began his remarks by thanking Corzine.
"I had the privilege of working with Jon. . . . he played a significant role in what later became the Sarbanes-Oxley Act," Gensler said. "When the full Senate voted on the bill, if memory serves, Jon was sitting in the presiding chair, and I was staffing Chairman Sarbanes on the floor."
Experts in corporate governance said there is no reason to believe Gensler will mishandle the investigation. But they said just the appearance of a conflict is reason enough for Gensler to remove himself from the case.
"I'm not sure what other options there are," said Naveen Reddy, a research analyst with the firm GMI Inc. "Gensler is a highly qualified guy, but these cozy relationships tend to taint the oversight in these big blowups."
Representatives for Gensler and Corzine declined to comment on their relationship or to say whether Gensler should recuse himself.
At a Senate hearing Thursday, Gensler had harsh words for Corzine's company.
"You don't put your hand in the cash register; you just don't," Gensler said. He said the firm's failure to separate client money from its own assets violated "the core foundation" of investor protection.
MF Global admitted early Monday that it had diverted client money as its financial woes intensified. The company filed for bankruptcy protection on Monday after a disastrous bet on European debt spooked its investors and trading partners.
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AP Business Writer Marcy Gordon and AP News Researcher Judith Ausuebel in New York contributed to this report.
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