Jon Corzine sued by MF Global trustee

  @CNNMoneyInvest April 23, 2013: 11:42 AM ET
corzine sued

A bankruptcy trustee sued former Gov. Jon Corzine over his role in the collapse of MF Global.

NEW YORK (CNNMoney)

Jon Corzine and two lieutenants at MF Global were sued Tuesday over the collapse of the commodity trading firm in 2011.

The suit, brought by bankruptcy trustee Louis Freeh, claims the executives took MF Global on a risky course that led to its bankruptcy and to improper use of client's money to cover losses.

The defendants "dramatically changed the company's business plan without addressing existing systemic weaknesses that ultimately caused the plan to fail," the suit alleges. It further claims Corzine engaged in risky trading strategies that strained the company's cash reserves.

The suit does not set out a specific dollar amount it is hoping to recover.

Also named in the suit were Bradley Abelow, the firm's chief operating officer, and Henri Steenkamp, its chief financial officer.

Freeh, a former FBI director, is one of two court-appointed trustees trying to recover money lost by MF Global. The other is James Giddens, who is involved with a case over the brokerage unit of MF Global. Freeh's concern is the holding company.

Giddens has already joined a class action lawsuit brought by clients of MF Global who are seeking to recover money they say the firm improperly used for its own trades.

Giddens has been more successful recovering money by reaching settlements with some of the major banks, such as JPMorgan Chase (JPM, Fortune 500), that handled MF Global's accounts.

Corzine: MF Global's chaotic last days

In congressional hearings into the firm's collapse, Corzine, a former CEO of Goldman Sachs (GS, Fortune 500) as well as a former U.S. senator and governor of New Jersey, has denied any wrongdoing. He has yet to face any criminal charges or regulatory action in the case, although a congressional committee report in December also blamed him for the firm's collapse.

A spokesman for Corzine called the suit "a clear case of Monday Morning quarterbacking" that intentionally ignored the role that MF's trading partner played in the firm's collapse.

"Mr. Corzine was recruited to revitalize a troubled company, and during his entire tenure as CEO he worked tirelessly with the board, firm management and world class consultants to improve MF Global's operations and performance," said the spokesman. He said Corzine looked forward to his day in court.

Gary Naftalis, attorney for Abelow, denied that his client caused any losses or contributed in any way to the collapse of MF Global. He said Abelow stayed with the firm for a year after its bankruptcy helping to recover clients' money, which Naftalis said Freeh had described as "invaluable."

Naftalis said he and Abelow are disappointed that Freeh is now making allegations that they say lack any factual or legal basis.

Laywers for Steenkamp were not available for comment.

To top of page



Join the Conversation
Markets
Sponsored by
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 3:45pm ET
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.19 -0.02 -0.09%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.36%4.24%
15 yr fixed3.39%3.26%
5/1 ARM3.36%3.27%
30 yr refi4.34%4.22%
15 yr refi3.38%3.24%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.