The trustee in the MF Global Holdings bankruptcy case has sued ex-CEO Jon Corzine and other former executives, alleging they pushed the company into risky practices that ultimately led to its collapse. The lawsuit, filed April 22 in Southern District Bankruptcy Court, claims Corzine and two other top executives "dramatically changed" the company’s business plan after Corzine became CEO in 2010. They then failed to update controls and other systems that were already weak, the lawsuit says. Corzine pushed the company into making big bets on bonds issued by European countries, the lawsuit states, a move that proved disastrous during the implosion of the debt crisis the following summer. MF Global collapsed in October 2011.
Steven Goldberg, a Corzine spokesman, yesterday called the lawsuit "a clear case of Monday morning quarterbacking." He said the lawsuit intentionally ignored the fact that some of MF Global’s trading partners failed and didn’t pay what they owed to MF Global. But according to the lawsuit the company’s controls were so poor that it couldn’t determine its liquidity levels in real time. It portrays Corzine and others as aware of the risks but purposefully ignoring them. Corzine, who stepped down as MF Global CEO soon after the collapse, is the former cochairman of Goldman Sachs, a former Democratic U.S. senator and the former governor of New Jersey.
