Ex-MF Global Directors Must Face Investors’ Fraud LawsuitBob Van Voris and Christie Smythe
Former directors and officers of MF Global Holdings Ltd. were ordered to face a lawsuit claiming investors were defrauded in the collapse of the firm in 2011.
U.S. District Judge Victor Marrero in Manhattan today rejected a request from 23 defendants, including former MF Global Chairman and Chief Executive Officer Jon S. Corzine. Marrero said the investors, led by the Virginia Retirement System and the Canadian province of Alberta, showed “compelling facts” to proceed with their case.
“At the culmination of what occurred at MF Global in the course of a few days, $1.6 billion had disappeared from the company,” Marrero wrote, likening the situation to a train wreck. “Plaintiffs’ allegations suggest a long, knowing, and consistent course of action on the part of the various defendants, wrongful conduct that cumulatively produced the harmful outcome that came to pass.”
The judge said that the investors’ case was supported by information gathered through investigations conducted by Congressional committees and government regulators.
In January, the judge combined 12 investor lawsuits over the collapse of the firm and put Virgina and Alberta at the head. The state and Canadian province claimed losses of $19 million as a result of the collapse.
MF Global executives led by Corzine, New Jersey’s former governor, made “materially misleading” statements about liquidity and financial controls, one of the plaintiffs, 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, in his lawsuit.
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 main case is DeAngelis v. Corzine, 11-cv-07866, U.S. District Court, Southern District of New York (Manhattan).