TribLIVE

| USWorld


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Corzine suit would implicate workers

Getty Images
A regulator considering charges against former MF Global Chairman Jon Corzine likely would seek '“injunctive relief” to prevent Corzine from returning to the brokerage business, according to an industry expert.

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

Daily Photo Galleries


By Reuters

Published: Tuesday, June 25, 2013, 6:27 p.m.

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

Most-Read Nation

  1. ‘Patriots’ back Nevada rancher; Reid labels them ‘domestic terrorists’
  2. Del Taco customers mistakenly charged thousands for fast-food meals
  3. IRS, other agencies award contracts to license plate tracking company
  4. Recovery expert believes wreckage of missing plane located
  5. Fox fires exec who used email to plan aid
  6. First date in New Jersey ends with him pilfering her TV and Yorkshire terrier
  7. Health care law enrollee passwords at risk for Heartbleed Internet security flaw, feds warn
  8. Ohio couple married for 70 years dies just 15 hours apart
  9. Mauling puts bears back on firing line in Central Florida
  10. Washington’s snowy owl recovers from apparent bus crash, returns to wild
  11. Census director defends changes, denies questions altered to inflate Obamacare success
Subscribe today! Click here for our subscription offers.