PwC must face $1 billion MF Global malpractice lawsuit: U.S. judge

Fri Aug 5, 2016 6:19pm EDT
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By Jonathan Stempel

NEW YORK (Reuters) - A federal judge rejected PricewaterhouseCoopers' [PWC.UL] bid to dismiss a $1 billion lawsuit accusing the accounting firm of professional malpractice for helping cause the October 2011 bankruptcy of MF Global Holdings Ltd [MGHL.UL], a brokerage once run by former New Jersey Governor Jon Corzine.

In a 69-page decision made public on Friday, U.S. District Judge Victor Marrero in Manhattan said there remained open questions concerning whether PwC's alleged bad accounting advice was a substantial cause of MF Global's rapid demise.

"PwC has not satisfied its burden of demonstrating the absence of any genuine issue of material fact," Marrero wrote.

Corzine is not a defendant in the lawsuit, which was filed in March 2014 by MF Global's bankruptcy plan administrator.

"PwC stands by its work for MF Global," James Cusick, a lawyer for the firm, said in a statement. "MF Global's collapse was caused by its own business decisions and adverse market events, not any accounting determination."

Nader Tavakoli, director of the plan administrator, in a statement called Marrero's decision "a major victory for the MF Global estate."

The decision keeps alive one of the last remaining pieces of litigation relating to MF Global's Oct. 31, 2011 bankruptcy.

PwC in April 2015 reached a $65 million cash settlement with former shareholders and bondholders, in which it denied wrongdoing. MF Global officials and bank underwriters have also settled with investors. Customers have been made whole.   Continued...

The logo of PricewaterhouseCoopers is seen in front of the local offices building of the company in Luxembourg, April 26, 2016. REUTERS/Vincent Kessler  - RTX2BPUS