Federal regulators file civil charges against Corzine - Press of Atlantic City: Southern New Jersey Local News, Breaking News, Sports & Weather - PressofAtlanticCity.com

Federal regulators file civil charges against Corzine

Print
Font Size:
Default font size
Larger font size

Posted: Thursday, June 27, 2013 3:03 pm

WASHINGTON (AP) — 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.

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.

© 2016 Press of Atlantic City. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

loading...

Upcoming Events

  • RODGERS' ROMANCE

    • Thu, Jun 30, 8:30 pm EDT
    • ELTC in residence at First Presbyterian Church, Cape May
  • RODGERS' ROMANCE

    • Thu, Jun 30, 8:30 pm EDT
    • ELTC in residence at First Presbyterian Church, Cape May
CREATE AN EVENT