US Commodities Watchdog Charges Ex-New Jersey Governor Jon Corzine
US regulators have filed civil charges against former New Jersey governor Jon Corzine for not properly managing MF Global, a brokerage that was accused of misusing customers' funds before its collapse in 2011.
In a civil lawsuit against Corzine, the US Commodity Futures Trading Commission (CFTC) has sought to debar him from trading in the futures market and also demanded payment of penalties.
The CFTC alleged that Corzine as the CEO of MF Global "either did not act in good faith or knowingly induced these violations" and he failed to manage diligently the activities of the company's employees and agents. The futures market watchdog said that he is responsible for MF Global's alleged illegal acts as he directly or indirectly controlled the company and its holdings.
MF Global's former assistant treasurer Edith O'Brien has also been accused by the watchdog, which has filed civil charges against him as well.
Corzine has denied the allegations by the regulator.
Earlier, MF Global was found guilty of misusing $1.2bn (£785m/€921m) of customers' funds. However, the company returned most of the disappeared money to affected customers and agreed to pay $100m in fines as part of a settlement.
The New York-based company also filed for bankruptcy protection after its bets on debt issued by crisis-hit eurozone countries turned disastrous. Amounting to $41bn, the bankruptcy was the eighth largest in US history.
The CFTC charged that Corzine was aware of the company's troubles. Joining the company as CEO in March 2010, he wanted to convert MF Global into a major Wall Street investment bank. He tried to boost the company's revenues through riskier investments such as the debt of certain European countries.
While the strategy worked for a while, the investments became increasingly risky in light of the sovereign debt crisis in the euro area. The company's liquidity and capital started deteriorating by the second half of 2011 and cash sources dried up by October 2011, the lawsuit said.
In order to fund its proprietary operations, the company used customer funds by the last week of October 2011, violating US commodity laws.
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