Ex-MF Global CEO faces ban from trading

WASHINGTON — Jon Corzine once saw a boutique brokerage called MF Global as his best hope to rescale the heights of Wall Street he had once occupied as head of Goldman Sachs.

Now MF Global is bankrupt, and Corzine faces a lifetime ban from the futures industry.

On Thursday, federal regulators sued Corzine, a onetime US senator and governor of New Jersey. They allege he was responsible for the misuse of customer money while chief executive of MF Global.


A civil lawsuit filed in Manhattan by the Commodity Futures Trading Commission seeks to restrict Corzine’s ability to trade investments and demands he pay unspecified penalties.

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The suit charges that MF Global violated US laws in the weeks before it collapsed by using customer funds to support its own trading operations. About $1.2 billion in customer money vanished when the firm collapsed in 2011.

CFTC Enforcement Director David Meister said Corzine failed to do enough to ‘‘prevent the firm from dipping into customers’ funds to stay afloat.’’

MF Global has agreed to pay a $100 million penalty as part of a settlement announced Thursday. The money will come from bankruptcy proceedings.

Corzine disputes the allegations by the CFTC, which regulated MF Global, however.


James Giddens, the court-appointed trustee overseeing MF Global’s bankruptcy, called the settlement “appropriate.’’ He said the $100 million penalty will be paid only after the firm’s customers and creditors have received all their claims.

The CFTC also filed civil charges against Edith O’Brien, the firm’s former assistant treasurer. Last year, O’Brien was summoned to a congressional hearing. She declined to answer questions, invoking her Fifth Amendment right against self-incrimination.

Attorneys for O’Brien did not immediately return a call seeking comment Thursday.