Corzine, banks fail to win dismissal of MF Global lawsuit
By Jonathan Stempel
NEW YORK (Reuters) - A federal judge on Tuesday rejected a bid by former MF Global Holdings Ltd Chief Executive Jon Corzine to dismiss investor litigation seeking to hold him, former colleagues and several banks responsible for the futures brokerage's rapid collapse.
Likening the company's demise to a "massive train wreck," U.S. District Judge Victor Marrero in Manhattan rejected the defendants' contention that MF Global's October 31, 2011, bankruptcy could not have resulted from securities law violations.
"Defendants seem convinced that no one named in this lawsuit could possibly have done anything wrong," Marrero said in a 105-page decision.
Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, accused MF Global of inflating its ability to manage risk, obscuring risks from European sovereign debt, and improperly accounting for deferred tax assets.
The defendants included Corzine, former MF Global Chief Financial Officers J. Randy MacDonald and Henri Steenkamp, seven former independent directors, and more than a dozen banks and financial institutions, including JPMorgan Chase & Co (JPM.N: Quote) and Goldman Sachs Group Inc (GS.N: Quote).
Corzine is a former New Jersey governor and U.S. senator, and a former Goldman co-chairman.
He argued that the plaintiffs' allegations merely suggested that he mismanaged MF Global, was too optimistic, or failed to predict a liquidity squeeze. He also argued that his large stake in MF Global stock showed he had no motive to commit fraud.
Andrew Levander, a lawyer for Corzine, did not immediately respond to requests for comment. Lawyers for MacDonald and Steenkamp, spokesmen for JPMorgan and Goldman, and lawyers for the plaintiffs did not immediately respond to similar requests. Continued...