Jon Corzine's New Hedge Fund Eyes Event Wagers Spurred by Trump

(Bloomberg) -- Jon Corzine, who held the reins of MF Global Holdings when it collapsed, is making his comeback with a new hedge fund that’s betting the Trump administration will stir up markets.

The JDC-JSC Opportunity Fund, which bears the initials of Corzine’s late son Jeffrey and his own, will launch this quarter and aims to attract $100 million to $300 million in its first trading year, according to a person familiar with his thinking. Corzine and former Taconic Capital Advisors investment director Richard Chappelear will share the chief investment officer role.

Corzine, 71, whose wide-ranging career includes serving as a U.S. senator and governor from New Jersey, is jumping into the hedge fund industry as it struggles to raise money. His fund will make event-driven and macro trades on the expectation that President Donald Trump’s policies will trigger corporate actions and ripple through asset valuations, the person said. Tax reform could spell stock-price divergence in sub-sectors of the small-cap Russell 2000 Index, spurring deals.

The fund will begin with event-driven trades and expand into macro investing -- trading interest rates, currencies and stocks -- when market volatility returns. Low volatility over the past few years has hindered the performance of most macro hedge funds.

Over the next six-to-twelve months, macro opportunities could include calendar spreads -- placing opposite wagers on a security such as a volatility index tracker over specific time frames -- and other trades that reflect the difference in turbulence across various markets, the person said.

Chappelear joined Corzine’s New York-based firm in November after relocating from London, and had focused on event-driven and merger arbitrage investing during his decade-long tenure at Taconic. Corzine’s five-person team includes head trader Sean Roberts, who worked at MF Global, and ex-Zama Capital Advisors Chief Financial Officer Justin Mauskopf, who is CFO at JDC-JSC. Jack Schneider is head of client outreach and services.

Corzine took the helm at MF Global in March 2010 and the firm imploded the next year after more than $1 billion of customer money went missing. It was, at the time, the eighth-largest bankruptcy in U.S. history. The money was later found and returned.

Last year, Corzine paid $5 million of his own money to settle with regulators who accused him of failing to fix inadequate controls at MF Global. He was banned from running or working for a futures broker or registering with the Commodity Futures Trading Commission. His new fund can only invest a limited amount of client capital in futures.

Steven Goldberg, a spokesman for Corzine, declined to comment.

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