Corzine suit would implicate workers
NEW YORK — The lawsuit that the U.S. Commodity Futures Trading Commission is considering filing against MF Global chief executive Jon Corzine would require the agency to charge other former MF Global employees, legal experts said on Tuesday.
The agencyis preparing to recommend to its commissioners that a civil complaint against Corzine be filed in federal court, a person familiar with the matter said. The potential suit was first reported by The New York Times.
Two former agency officials, one of whom declined to be named, said other people who were working at MF Global when the brokerage firm collapsed in October 2011 will have to be charged if the commission plans to accuse Corzine, a former New Jersey governor, of violating his responsibilities as the person in control of the firm.
MF Global made a $6.3 billion bet on European sovereign debt and went bankrupt after dipping into customer accounts to try to meet margin calls, a violation of industry rules.
Under the legal concept of a “control person,” a violation occurs when the person in charge — Corzine in this case — does not stop those under his control from illegal acts. For Corzine to be liable, people under his control would have to be charged with wrongdoing, such as inappropriately transferring customer money into the firm's accounts.
The person familiar with the matter said the commission would consider accusing Corzine of failing to meet his responsibilities as a person in control, as prescribed by the Commodity Exchange Act. According to the act, the CFTC must prove he “did not act in good faith or knowingly induced, directly or indirectly, the act or acts constituting the violation.”
“If you're going to charge him under that, you're basically holding him responsible for the violations of somebody else,” said Gary DeWaal, a former general counsel for the brokerage NewEdge who served as a senior trial attorney for the agency's enforcement division.
DeWaal said the commission would likely seek “injunctive relief” to prevent a later action, most likely Corzine's return to the brokerage business. This would not rule out the regulator seeking financial penalties.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Pot doctors in medical marijuana states push boundaries with marketing
- Self-driving vehicles closer to getting green light as feds ease stance
- Obama pledges support for France against ISIS, wary of role for Russia
- Email address gives FBI lead on record theft of user IDs, passwords
- 20,000 still in dark in Spokane from windstorm
- Kentucky Gov. Beshear restores right to vote for thousands of nonviolent felons
- Poll: 4 in 10 know someone who has been addicted to prescription painkillers
- Police officer killed in Colorado Spring clinic rampage a co-pastor, figure skater
- Authorization for NSA dragnets of phone call data expires
- Colorado clinic shooting suspect talked of baby parts, police say
- Slow-moving, wintry storm packs punch in Plains, Midwest