Corzine fails to win dismissal of CFTC's MF Global lawsuit

Tue Jan 21, 2014 11:58am EST
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By Joseph Ax

NEW YORK Jan 21 (Reuters) - A federal judge on Tuesday rejected a bid by former MF Global Holdings Ltd Chief Executive Officer Jon Corzine to dismiss a U.S. regulator's lawsuit that claims he played a key role in causing one of the country's biggest bankruptcies ever.

U.S. District Judge Victor Marrero said the Commodity Futures Trading Commission's allegations "give rise to reasonable inferences" that Corzine and former Assistant Treasurer Edith O'Brien illegally transferred money out of customer accounts to stem losses from big bets on European sovereign debt. Marrero did not rule on the merits.

The decision came two months after Marrero denied Corzine's request to dismiss investor litigation seeking to hold him, other executives and many banks responsible for the futures brokerage's collapse. {ID:nL2N0IX1HL]

Corzine's lawyer, Andrew Levander of the law firm Dechert, did not immediately respond to a request for comment.

O'Brien's lawyer, Darren Kinkead of Steptoe & Johnson, did not immediately comment.

A call to the CFTC was not immediately returned.

The CFTC previously settled with the firm's brokerage unit, MF Global Inc, which agreed to return more than $1 billion to harmed customers and pay a $100 million penalty.

MF Global's bankruptcy in October 2011, which left about $1.6 billion of customer funds missing, was one of the 10 largest bankruptcies in U.S. history.   Continued...