Corzine sued for firm’s collapse

jon corzine sue

The CFTC is suing former MF Global CEO Jon Corzine, who has been blamed for the firm’s collapse.

The U.S. government is suing former MF Global CEO Jon Corzine along with the firm’s former assistant treasurer and parent company for their part in the MF Global failure.

The Commodity Futures Trading Commission, the federal regulator that oversaw MF Global, announced the lawsuit Thursday, along with a proposed settlement with MF Global.

The settlement, which still needs court approval, will require 100% restitution of all remaining customer claims, along with a $100 million penalty.

The lawsuit charges that the firm repeatedly and unlawfully used customer funds for the company’s needs.

The collapse of MF Global ultimately led to a shortfall of $1.2 billion of customer funds.

The suit also alleges that Corzine was aware of the firm’s true low cash balance, even as he directed the firm to continue paying its obligations.

In Congressional hearings last year, Corzine, a former U.S. senator and former governor of New Jersey who once led Goldman Sachs (GS, Fortune 500), denied any wrongdoing and said he did not learn of the massive shortfall until less than 24 hours before the firm filed for bankruptcy.

Corzine took over at MF Global in 2010, seeking to remake the brokerage firm into a trading powerhouse, in part through major investments in European debt.

Corzine: MF Global's chaotic last days 

MF Global filed for bankruptcy in 2011, after disclosing that billions of dollars worth of bets on risky European debt had sparked a panic among investors.

The firm was left scrambling for cash to make good on its obligations and ended up tapping customer funds. That put them squarely in violation of industry rules and left the firm with a massive debt.

Related: Corzine sued by MF Global trustee

“Mr Corzine did not do enough to fix those problems and to prevent the company from dipping into customer funds to stay afloat,” David Meister, director of enforcement, said during a press call Thursday

While Corzine has been bombarded with lawsuits from former investors, Thursday’s lawsuit is the first government enforcement action against Corzine, who has been blamed for the firm’s collapse. To top of page

Article source: http://rss.cnn.com/~r/rss/money_topstories/~3/H9RZAkRaF5w/index.html

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