Federal bankruptcy trustee Louis Freeh has filed a lawsuit against Jon Corzine who was in charge of MF Global when the commodity trading firm collapsed in 2011.
The lawsuit accuses Corzine and two other MF Global officials of recklessly exposing the company to risks that led to its bankruptcy and the improper use of client money to cover company losses.
The MF Global collapse left clients locked out of more than $1 billion in their accounts. Nearly 90 percent of the money of U.S. customers and 18 percent of the money of foreign customers has been recovered, according to reports. MF Global shareholders and customers had already filed lawsuits against Corzine.
MF Global’s collapse came 18 months after Corzine became the company’s CEO. He previously had done stints as the governor of New Jersey, member of the U.S. Senate, and CEO of investment banking firm Goldman Sachs.
Corzine and other executives “were repeatedly warned — in reports, meetings, emails, and in-person exchanges — of the failures and need for improvements in the company’s procedures and controls,” the lawsuit says. Instead, they “pursued an even riskier business plan.”
That risky plan included big investments in overseas bond markets. In Congressional testimony in December 2011, a few weeks after MF Global went bankrupt, Corzine denied any wrongdoing but admitted he “had little expertise or experience” in MF Global’s operations.
Corzine has not been charged with any criminal offenses.