WASHINGTON, DC – Jon S. Corzine, former CEO of MF Global, faces ongoing legal repercussions as the Commodity Futures Trading Commission (CFTC) continues to pursue litigation related to the firm’s 2011 collapse. While MF Global Inc. has begun distributing $1.212 billion in restitution to customers impacted by the failure, a $100 million civil monetary penalty remains outstanding.
The restitution payments, authorized by a November 8, 2013 consent order from Judge Victor Marrero of the U.S. District Court for the Southern District of New York, are being funded by the MF Global general estate after a recent bankruptcy court ruling. The CFTC’s investigation revealed that during the final week of October 2011, MF Global unlawfully utilized customer segregated funds to bolster its own proprietary operations and those of its affiliates.
The CFTC’s complaint, filed June 27, 2013, alleged multiple violations of the Commodity Exchange Act and CFTC Regulations. These included failing to promptly notify the CFTC of deficiencies in customer accounts, submitting false reports concealing those deficits, and investing customer funds in illiquid securities. The firm was also accused of failing to adequately supervise the handling of customer accounts.
MF Global admitted to liability for the actions of its employees as outlined in the consent order and complaint. Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, emphasized the agency’s commitment to ensuring full restitution for customers and holding accountable those who violate commodity laws.
However, the case is far from closed. Litigation continues against MF Global Holdings Ltd., Corzine, and Edith O’Brien. The CFTC is pursuing further action against these remaining defendants, seeking to address the full extent of the misconduct that led to the firm’s downfall and the significant losses suffered by its customers. The U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois have assisted in the investigation.
Source: CFTC.gov
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