Jon S. Corzine, the embattled former New Jersey politician accused of a failure at the helm of the brokerage firm MF Global, is fighting back.
Lawyers for Mr. Corzine filed a legal motion late Tuesday to dismiss a civil case against him brought by the Commodity Futures Trading Commission, the federal agency that regulated MF Global until its demise in 2011. The 30-page motion, filed in United States District Court in Manhattan, outlined the contours of Mr. Corzine’s defense and leveled a sharp critique of his federal adversary.
“There is no evidence demonstrating that Mr. Corzine knowingly directed unlawful conduct or acted without good faith,†the lawyers, Andrew J. Levander and Benjamin E. Rosenberg at Dechert, said in the motion. “Rather than acknowledge that reality and move on, the C.F.T.C. has clung to its baseless presumptions and manufactured charges of wrongdoing that are supposedly connected to Mr. Corzine.â€
The trading commission’s case, filed in June, stems from the largest Wall Street collapse since the financial crisis. Mr. Corzine, a former New Jersey senator and governor, ran MF Global when it collapsed into bankruptcy in October 2011, a blowup that coincided with the brokerage’s apparent misuse of customer money.
Mr. Corzine’s risk taking, the trading commission claims, paved the way to the firm’s demise. And as chief executive, according to the government, he failed to prevent a lower-level employee from using customer money for its own purposes. The commission also sued that employee, Edith O’Brien, an assistant treasurer, who oversaw the transfer of customer money from the firm’s Chicago office to banks like JPMorgan Chase. Customer money is supposed to be sacrosanct on Wall Street, where brokerages are required to keep it segregated from their own funds.
The commission did not accuse Mr. Corzine of authorizing the breach of more than $1 billion in customer money, or even knowing that the wrongdoing had happened. Instead, the suit hinged on his supposed failure to “diligently supervise†the firm as it raided the client accounts. The suit also argued that Mr. Corzine was subject to so-called control person liability, a legal provision that allows for the punishment of executives for the bad acts of lower-level employees.
