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U.S. regulators sue ex-MF Global CEO Jon Corzine

  |   June 27, 2013 at 8:05 PM
NEW YORK, June 27 (UPI) -- U.S. regulators Thursday brought civil charges against Jon Corzine, former head of the bankrupt financial derivatives brokerage MF Global Inc.

The U.S. Commodity Futures Trading Commission brought the lawsuit in U.S. District Court in New York against Corzine, who was chief executive officer of MF Global and former assistant treasurer Edith O'Brien, as well as against MF Global itself, alleging the brokerage illegally used its customers' money in ways that harmed thousands of customers and violated customer protection laws on what it called in a release "an unprecedented scale."

The commission said MF Global has agreed to settle all charges against it by paying 100 percent restitution of about $1 billion lost by its customers when it failed Oct. 31, 2011. The agreement is subject to court approval.

"I am pleased that the MF Global trustee has agreed to settle the charges against the company," Commissioner Jill Sommers said. "There is nothing more important than doing everything possible to make full restitution to all commodity customers."

Federal officials said Corzine, a former U.S. senator and New Jersey governor with more than two decades of Wall Street experience, joined MF Global in March 2010 with the intention of transforming it from a futures broker into a major investment bank. They said he allowed increasingly risky and larger investments of the firm's money. Ultimately, as Global's need for cash rose and its resources shrank, Corzine failed to take steps that would enhance MF Global's systems and controls sufficiently, contributing to massive customer losses, officials said.

They said Corzine was warned about the firm's precarious financial situation -- one executive was recorded saying, "We have to tell Jon that enough is enough. We need to take the keys away from him." -- but he allegedly failed to act to stop the repeated and unlawful used customer funds for the firm's needs.

O'Brien is accused of aiding and abetting the firm's misuse of customer funds.

The proposed settlement also includes the imposition of a $100 million penalty against MF Global.

The commission also seeks full restitution and penalties against the firm, Corzine, and O'Brien. It also wants trading and registration bans and injunctions against Corzine and O'Brien.

Topics: Jon Corzine
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