The Commodity Futures Trading Commission (CFTC) sued former MF Global Holdings Ltd. Chief Executive Officer Jon Corzine for failing to properly oversee the company as it spiraled toward bankruptcy in 2011. The regulator also sued MF Global’s former assistant treasurer Edith O’Brien and said it reached a settlement with subsidiary MF Global Inc. to pay all funds due to customers and impose a $100 million penalty. That settlement is subject to court approval.
“Turning a profit is not the only job of the person at the top of a CFTC-regulated firm,” CFTC Enforcement Director David Meister said in a statement on the regulator’s website. “Particularly in times of crisis, the person in control, like the CEO here, must do what’s necessary to prevent unlawful uses of customer money, so that customers’ money is still there if and when the music stops.”
Corzine wasn’t informed that customer funds were at risk or were being used improperly, and there is no evidence that he failed to work with management to try and turn around a failing company, Corzine spokesman Steve Goldberg said in a statement before the complaint was filed.
Corzine has also been sued along with senior executives Bradley Abelow and Henri Steenkamp in U.S. Bankruptcy Court by Louis J. Freeh, a trustee winding down the brokerage. Freeh alleged in the complaint that they failed to act in good faith and implemented strategies that caused the company to fail. It seeks unspecified damages to be determined at trial, as well as legal fees.