Jon Corzine, the former head of bankrupt broker MF Global Holdings Ltd., was sued by the holding company’s trustee, Louis J. Freeh, for failing in his duty to oversee the company and causing the eighth-biggest bankruptcy in U.S. history.
The suit, filed in U.S. bankruptcy court in Manhattan, alleges that Corzine, the company’s chief executive officer and a former governor and senator from New Jersey, along with senior executives Bradley Abelow and Henri Steenkamp, failed to act in good faith and implemented strategies that caused the company to fail.
Giddens, who has conducted his own probe into how the company failed, said in a report last year that he determined claims for breach of fiduciary duty and negligence against Corzine, Steenkamp and other officials.
In the summer of 2011, former Chief Risk Officer Michael Stockman recommended that MF Global stop investing in the European debt and start hedging its exposure, according to the report. Management ignored the advice and searched for additional sources of liquidity to support the trading strategy, even debating how aggressively brokers could borrow on an intraday basis customer funds that were required to be kept in segregated accounts, Freeh said.