Judge allows customers' lawsuit against MF Global's Corzine

Tue Feb 11, 2014 9:49pm 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.

U.S. 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.

In a statement, a Corzine spokesman said the former CEO is pleased the court dismissed some of the claims.

"We believe that discovery in the case will reveal that the remaining claims also are without merit, and that ultimately we will prevail on all counts," the spokesman said in the statement.

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.   Continued...

Former MF Global CEO Jon Corzine gestures as he 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