Bloomberg News

MF Global Plaintiffs Compete to Lead Lawsuit Against Corzine

January 04, 2012

(Updates with plaintiffs in third paragraph.)

Jan. 4 (Bloomberg) -- Plaintiffs including funds and retirement systems are competing to lead a lawsuit against Jon Corzine, MF Global Holdings Ltd.’s former chief executive officer, over the collapse of the commodity brokerage.

Corzine is the defendant in at least nine lawsuits before a federal judge in Manhattan that seek compensation for losses from the company’s bankruptcy, according to court papers. U.S. District Judge Victor Marrero has been combining the cases into one, saying they make similar claims that Corzine and other company officials made misleading statements about MF Global’s financial condition before its Oct. 31 Chapter 11 filing.

Banyon Capital Master Fund Ltd., Virginia and Arkansas retirement systems and the Building Trades United Pension Trust Fund all filed separate requests in court yesterday to serve as lead plaintiff.

Andrew Levander, a lawyer for Corzine, didn’t immediately respond to an e-mail seeking comment on the filings.

Corzine, the former governor of New Jersey, and senior MF Global officers touted the company’s internal financial controls and liquidity levels in statements that were “materially misleading or untrue,” according to a Nov. 3 complaint filed in Manhattan federal court by Joseph DeAngelis on behalf of himself and other MF Global shareholders.

DeAngelis also named Henri Steenkamp, the New York-based company’s chief financial officer, and Bradley Abelow, its president.

‘Power and Influence’

“Defendants had the power and influence -- and exercised such power and influence -- as to cause MF Global to engage in the unlawful conduct and practices,” DeAngelis alleged. “Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of MF Global common stock.”

MF Global filed for bankruptcy listing $41 billion in assets after making bets on European sovereign debt and getting margin calls. The holding company is the parent of a futures brokerage that is being liquidated in a separate court proceeding.

An Oct. 25 release on second-quarter results “falsely stated” that MF Global had strengthened its capital and liquidity, DeAngelis said in the complaint. Corzine said in the release he was confident the company had “the resources and expertise to continue to successfully manage these exposures,” according to the complaint.

Corzine and MF Global also have been sued by former employees and commodity customers. A trustee liquidating the MF Global Inc. brokerage is looking for $1.2 billion or more in money missing from commodity customers’ accounts. Corzine has said he doesn’t know where the missing money is and didn’t authorize any misuse of customer funds that may have occurred.

The main case is DeAngelis v. Corzine, 11-cv-7866, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, Charles Carter

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net; Michael Hytha at mhytha@bloomberg.net


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