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June 28, 2013

Suit Accuses Corzine of a Failure at the Helm

“Jon S. Corzine, no stranger to bare-knuckle brawls after spending nearly 40 years on Wall Street and in New Jersey politics, now faces the biggest fight of his career: a showdown with the United States government.

On Thursday, federal regulators sued Mr. Corzine in connection with the collapse of the brokerage firm MF Global and apparent misuse of customer money during its final days. Mr. Corzine, a former United States senator and New Jersey governor, ran the firm until its bankruptcy in October 2011.

The Commodity Futures Trading Commission, the federal agency that regulated MF Global, argued in the lawsuit that Mr. Corzine had failed to prevent a lower-level employee from transferring customer money to banks and clearinghouses. The agency also sued that employee, Edith O’Brien, assistant treasurer, who oversaw the transfer of customer money from the firm’s Chicago office.

While the agency did not accuse Mr. Corzine of authorizing the breach of more than $1 billion in customer money, or even knowing that the wrongdoing had happened, it claimed that he had failed to “diligently supervise” the firm as it jeopardized the client accounts. The suit also outlined a more ambitious claim that Mr. Corzine was subject to so-called control person liability, a legal provision that allows for the punishment of executives for the bad acts of lower-level employees.”

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Read full New York Times article here

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