The bankruptcy trustee for MF Global Holdings renewed his attack on ex-CEO Jon Corzine yesterday, hitting him with a fresh lawsuit over the brokerage firm’s collapse.
Just three weeks after releasing a scathing report with his findings, former FBI director Louis Freeh, who has been tasked with cleaning up the holding company’s bankruptcy, sued Corzine and two former deputies for breaching their financial duties.
The firm’s “procedures and controls for monitoring risk were lacking and in disrepair” when Corzine took the reins in 2010, according to the complaint.
Despite being warned “repeatedly“ of these failures, Corzine and his team “pursued an even riskier business plan, thereby straining inadequate controls and risk monitoring systems beyond their capabilities,” Freeh said.
Last year, the trustee responsible for recovering money for MF’s brokerage unit, James Giddens, sued Corzine and the same two executives: Brad Abelow, MF’s chief operating officer, and Chief Financial Officer Henri Steenkamp.
Giddens has recovered most of the $1.6 billion in customer funds that were improperly withdrawn from their accounts in the frantic days leading up to the bankruptcy.
As the trustee for the holding company, any money Freeh collects will go to MF’s institutional creditors, such as JPMorgan Chase.
Corzine criticized the suit as “a clear case of Monday-morning quarterbacking” and slammed the trustee for bringing it while the two parties were still going through mediation.
“We question why the trustee chose to file this lawsuit, which is filled with seriously flawed allegations, while he is participating in court-ordered mediation of these very claims,” Corzine’s spokesman said.
Freeh said the lawsuit is in the “best interests of creditors.”