Corzine Seeks Dismissal of CFTC Lawsuit Over MF Global
By Joel Rosenblatt - Sep 11, 2013 12:01 AM ET
Jon Corzine, former chief executive officer of bankrupt MF Global Holdings Ltd., asked that a lawsuit against him by the Commodity Futures Trading Commission be dismissed.
The CFTC sued Corzine in June for failing to oversee the brokerage company properly while it spiraled toward failure in 2011 as $1.6 billion in customer funds went missing. After “exhaustive investigations lasting 19 months,” the CFTC hasn’t produced evidence to support its claims, Corzine said in a filing yesterday in federal court in New York.
The CFTC’s complaint “relies on irrelevant allegations calculated to sully Mr. Corzine’s character, as well as rambling hindsight criticisms of complex management decisions, many of which were made during times of extreme stress,” Corzine said in the filing.
MF Global’s collapse on Oct. 31, 2011, a year and half after Corzine joined the firm, was the eighth-biggest bankruptcy in U.S. history. Wrong-way $6.3 billion trades on bonds of some ofEurope’s most-indebted nations helped destroy the firm and its brokerage unit, which listed assets of $41 billion and debt of $39.7 billion in its Chapter 11 filing.
Corzine, who is also a former U.S. senator and Goldman Sachs Group Inc. (GS) co-chairman, came to MF Global in March 2010 intent on turning the commodity brokerage firm into a global investment bank that generated substantial revenue from proprietary trading, the CFTC said in the complaint. His plans included making larger and riskier investments from the company’s funds, according to the complaint.
The CFTC alleges Corzine did nothing about inadequate controls over misuse of customer funds, that he was aware of the New York-based firm’s extreme shortage of cash and that he didn’t ask any questions about where the money was coming from to make transfers he ordered.
Corzine has previously argued that he never ordered any misuse of customer funds to help his firm stay afloat as it dealt with margin calls on bad bets. He testified to Congress under subpoena and under oath that he asked that overdrafts with JPMorgan Chase & Co. (JPM) be corrected, and that he never gave any instruction to misuse customer funds.
He also said he didn’t believe anything he said could reasonably have been interpreted as an instruction to misuse customer funds.
Dennis Holden, a CFTC spokesman, didn’t immediately respond after regular business hours yesterday to a phone call seeking comment on the filing. Chad Silverman, a lawyer representing the CFTC, also didn’t immediately respond after regular business hours to an e-mail seeking comment.
The case is U.S. Commodity Futures Trading Commission v. MF Global Inc., 13-cv-04463 and 11-cv-07866, U.S. District Court, Southern District of New York (Manhattan.)
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