Contact Us
Make My Homepage

US Agency Sues Former NJ Gov. Corzine Over MF Global Failure

Federal regulators are accusing former New Jersey Governor Jon Corzine of failing to properly manage MF Global, which misused customer funds before its 2011 collapse.

Mark Wilson, Getty Images

A civil lawsuit by the Commodity Futures Trading Commission seeks to ban Corzine from trading in the futures market and demands he pay unspecified penalties.

The lawsuit said Corzine bore responsibility for MF Global’s unlawful acts because he directly or indirectly controlled the company and its holdings and “either did not act in good faith or knowingly induced these violations.”

“He also failed to supervise diligently the activities of MF Global’s officers, employees and agents.

Corzine has disputed the allegations by the CFTC, which regulated MF Global.

The regulator also filed civil charges against Edith O’Brien, the firm’s former assistant treasurer.

About $1.2 billion in customer funds disappeared. Most of the money has been returned. MF Global has also agreed to pay a $100 million penalty as part of a settlement.

New York-based MF Global sought bankruptcy protection after a disastrous bet on European countries’ debt. Its $41 billion bankruptcy was eighth-largest in U.S. history.

The lawsuit said that when Corzine joined the firm as CEO in March 2010 he planned to convert the company into a major Wall Street investment bank that generated revenue from proprietary trading and other business lines. It said Corzine tried to boost revenue by making significant investments in financial instruments such as the sovereign debt of certain European countries.

The plan worked for a while. The investments became an important part of the firm’s revenue, though the investments grew increasingly risky, the lawsuit said. By the second half of 2011, the investments and other factors put significant strains on the company’s capital and liquidity and by October 2011, sources of cash were drying up, the lawsuit said.

Corzine and other company employees communicated with one another, sometimes by email and sometimes on recorded telephone lines, concerning the firm’s “dire situation,” the lawsuit said.

By the last week of October 2011, MF Global violated U.S. commodity laws by using nearly $1 billion of customer segregated funds to supports its own proprietary operations, directly harming thousands of customers, the lawsuit said.

___

Neumeister contributed from New York.

 

Copyright 2013 The Associated Press.

Best of the Web


Leave a Comment

It appears that you already have an account created within our VIP network of sites on . To keep your points and personal information safe, we need to verify that it's really you. To activate your account, please confirm your password. When you have confirmed your password, you will be able to log in through Facebook on both sites.

Forgot your password?

*Please note that your points, prizes and activities will not be shared between programs within our VIP network.

It appears that you already have an account on this site associated with . To connect your existing account with your Facebook account, just click on the account activation button below. You will maintain your existing profile and VIP program points. After you do this, you will be able to always log in to http://nj1015.com using your Facebook account.

*Please note that your points, prizes and activities will not be shared between programs within our VIP network.

Please fill out the information below to help us provide you a better experience.

Register on New Jersey 101.5 quickly by logging in with your Facebook account. It's just as secure, and no password to remember!

Not a Member? Sign Up Here.

Register on New Jersey 101.5 quickly by logging in with your Facebook account. It's just as secure, and no password to remember!