Bloomberg News

Virginia, Alberta Lead Suit Against Corzine Over MF Losses

February 03, 2012

(Updates with first suit in third paragraph.)

Jan. 26 (Bloomberg) -- The Virginia Retirement System and Canada’s Alberta province will lead a group lawsuit against Jon Corzine seeking compensation for losses from MF Global Holdings Ltd.’s collapse.

U.S. District Judge Victor Marrero in Manhattan combined 12 lawsuits against Corzine, putting Virginia and Alberta at the head as their combined investment losses of $19 million give them a larger stake in the suit than seven other applicants for lead plaintiff, he said in a signed order.

MF Global executives led by Corzine, New Jersey’s former governor, made “materially misleading” statements about liquidity and financial controls, Joseph DeAngelis alleged in the first of the 12 similar suits. He also named Henri Steenkamp, the New York-based company’s chief financial officer, and Bradley Abelow, its president. JPMorgan Chase & Co., MF Global’s banker, should have noticed the “depletion” of customer money, and should have investigated, commodity customers said in a separate suit seeking unspecified restitution and damages.

Andrew Levander, a lawyer for Corzine, hasn’t responded to e-mails seeking comment on the suits and Mary Sedarat, a JPMorgan spokeswoman, has declined to comment.

Virginia and Alberta won over competition from investment funds and union pension trusts. They are typical of the class of investors who lost money on MF Global investments, the judge said. The judge’s order was signed on Jan. 20 and entered on the docket yesterday.

European Sovereign Debt

MF Global filed the eighth-largest U.S. bankruptcy with $41 billion in assets on Oct. 31, after making bets on European sovereign debt and getting margin calls. The parent company’s commodities brokerage, which is being liquidated in a separate court proceeding, is missing an estimated $1.2 billion in customer assets. Corzine has said he doesn’t know where the missing money is.

“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.”

An Oct. 25 release on second-quarter results “falsely stated” that MF Global had strengthened its capital and liquidity, according to 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 claiming back pay, and by Montana farmers.

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

--With assistance from Patricia Hurtado in New York. Editors: Peter Blumberg, Stephen Farr

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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