MF Global's trustee sues ex-CEO Corzine

Jon Corzine, the former chief executive of the

Jon Corzine, the former chief executive of the now bankrupt MF Global Holdings is being sued for what is called lax controls and risky practices. His attorney called the suit "a clear case of Monday morning quarterbacking." (Credit: AP, 2011)

The trustee in the MF Global Holdings bankruptcy case has sued ex-chief executive Jon Corzine and other former executives, alleging that they pushed the company into risky practices that ultimately led to its collapse.

The lawsuit, filed Monday in bankruptcy court in New York, says Corzine and two other top executives "dramatically changed" the company's business plan after he became chief executive in 2010. They then failed to update controls and other systems that were already weak, the lawsuit says.

Corzine pushed the company into making big bets on bonds issued by European countries, the lawsuit says, a move that proved disastrous during the implosion of the debt crisis the following summer. MF Global collapsed in October 2011.

Tuesday, a spokesman for Corzine called the lawsuit "a clear case of Monday morning quarterbacking." The spokesman said the lawsuit intentionally ignored the fact that some of MF Global's trading partners failed and didn't pay what they owed to MF Global.

According to the lawsuit, however, the company's controls were so poor that it couldn't determine its liquidity levels in real time. It portrays Corzine and others as aware of the risks but purposefully ignoring them.

Corzine, who stepped down as MF Global chief executive soon after the collapse, is the former co-chairman of Goldman Sachs, a former Democratic U.S. senator and the former governor of New Jersey.

The lawsuit is notable not because of any significant revelations but because it represents an escalation in the battle between Corzine and the bankruptcy trustee, former FBI director Louis Freeh.

Freeh is overseeing the wind-down of MF Global Holdings, which means he is trying to recover money for creditors.

The suit seeks "damages in an amount to be determined at trial" and "other and further relief as the court deems appropriate."

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