Corzine, banks push to end MF Global fraud lawsuit

NEW YORK, Mon Oct 22, 2012 – Jon Corzine’s lawyers say allegations that he fraudulently ran MF Global Holdings Ltd. make “no sense” and that a lawsuit seeking to hold him and others responsible for the futures brokerage’s bankruptcy must be thrown out.

Corzine, former colleagues and several banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., filed papers on Friday night to dismiss investor litigation over MF Global’s collapse. The company’s Oct. 31, 2011, bankruptcy was Wall Street’s biggest meltdown since 2008.

Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, have accused MF Global in the U.S. District Court in Manhattan of inflating its ability to manage risk, obscuring risks from a big bet on European sovereign debt and improperly accounting for deferred tax assets.

But lawyers for Corzine, MF Global’s former chairman and chief executive officer, said there was no securities fraud. They said the allegations merely suggested that Corzine mismanaged the company, was too optimistic, or failed to predict a liquidity squeeze prompted in part by credit rating downgrades.

Corzine’s lawyers also said the former New Jersey governor’s ownership of 441,960 MF Global shares, including some bought in August 2011 when the exposure to European sovereign debt had peaked, showed that he had no motive to commit securities fraud.

“Plaintiffs have not alleged any facts from which it could be inferred that Mr. Corzine knew prior to Oct. 30, 2011 that MF Global would not be able to survive,” Corzine’s lawyers wrote. “Plaintiffs’ theory that Mr. Corzine had fraudulent intent or participated in a fraud makes no sense.”