Corzine fails to win dismissal of MF Global customers' lawsuit

Tue Feb 11, 2014 1:12pm EST
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By Nate Raymond

NEW YORK (Reuters) - A federal judge on Tuesday allowed a lawsuit to move forward that seeks to hold former MF Global Holdings Ltd Chief Executive Officer Jon Corzine and other executives responsible for the brokerage's collapse.

District Judge Victor Marrero said that it was reasonable to infer someone "did something wrong to set in motion such an extraordinary chain of events causing such extensive harm to so many people and interests."

But the judge also called the litigation "wasteful and rancorous" and chastised the parties for failing to come together to resolve the matter "in a just and efficient way."

The judge also chided lawyers for the customers for filing claims that "fly in the face of clear precedent." He dismissed parts of the lawsuit, including claims pending against accounting firm PricewaterhouseCoopers.PWC.UL

A lawyer for Corzine, a former New Jersey governor and U.S. senator as well as a former co-chair of Goldman Sachs & Co, did not immediately respond to a request for comment.

The ruling was the latest by the judge that refused to dismiss a lawsuit over the 2011 collapse of MF Global, which left about $1.6 billion of customer funds missing and was one of the 10 largest bankruptcies in U.S. history.

Last month, Marrero refused to dismiss a lawsuit by the U.S. Commodity Futures Trading Commission accusing Corzine and former Assistant Treasurer Edith O'Brien of illegally transferring money out of customer accounts to stem losses from big bets on European sovereign debt.

The judge similarly in November allowed investors in MF Global to move forward with a lawsuit against Corzine, other executives and several banks related to their alleged role in the futures brokerage's collapse.   Continued...

Former MF Global CEO Jon Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington, December 15, 2011. REUTERS/Jonathan Ernst