Jon Corzine Civil Charges

Former New Jersey Gov. Jon Corzine, once the head of collapsed trading firm MF Global, has been charged with misusing customer funds before the firm’s collapse.

Federal regulators at the Commodity Futures Trading Commission brought the charges, which would ban Corzine from trading in the futures markets and require him to pay unspecified penalties, according to CBS News.

The regulator also filed civil charges against Edith O'Brien, the firm's former assistant treasurer.

About $1.2 billion in customer funds disappeared at the time of the firm’s collapse. Most of the money has been returned. MF Global has agreed to pay a $100 million penalty as part of an earlier settlement.

Thursday’s civil lawsuit said Corzine was responsible for MF Global's violations, Fox reported. He "either did not act in good faith or knowingly induced these violations."

(http://nation.foxnews.com/2013/06/27/report-former-nj-gov-jon-corzine-slapped-civil-charges-over-mf-globals-collapse)

"In the last week of October 2011, with virtually no other sources of immediate cash to turn to, the firm repeatedly and unlawfully used customer funds for firm needs, ultimately leaving it nearly $1 billion short of customer funds," the CFTC said. "In that last week, Corzine is alleged to have been aware of the firm's true low cash balance, even as he directed the firm to continue paying large obligations without inquiring how the firm could come up with the money to do so."

David Meister, the CFTC's Enforcement Director, told CBS that CEOs are ultimately responsible for a company’s financial operations:

"Turning a profit is not the only job of the person at the top of a CFTC-regulated firm. Particularly in times of crisis, the person in control, like the CEO here, must do what's necessary to prevent unlawful uses of customer money, so that customers' money is still there if and when the music stops."

MF Global ran into trouble after making a wrong-way bet on European sovereign debt. Its $41 billion bankruptcy was eighth-largest in U.S. history, Fox reported.

The investments strained the brokerage's capital and liquidity, leaving it "in desperate need of funding to survive" as cash sources dried up in late October 2011, the lawsuit charged, as reported by USA Today. To try to turn the situation around, the company allegedly used customer funds, which are legally required to be segregated from its business operations.

(http://www.usatoday.com/story/money/business/2013/06/27/corzine-sued-over-mf-global/2457123/)

Related stories:

MF Global Customers May Get 94 Cents on Dollar, Trustee Says

(http://www.moneynews.com/FinanceNews/mf-global-customers-trustee-/2013/06/05/id/508228)

CFTC Likely to Charge MF Global Officials Beyond Corzine, Legal Experts Say

http://www.moneynews.com/FinanceNews/MF-Global-Jon-Corzine-Charges-Commodity-Futures-Trading/2013/06/26/id/511938

Suggested headline: CFTC Files Civil Charges Against MF Global Head Jon Corzine