Corzine loses bid for dismissal of CFTC’s MF Global lawsuit

Jon Corzine lost his bid for dismissal of the U.S. Commodity Futures Trade Commission’s lawsuit over the 2011 collapse of MF Global Holdings Ltd.

The requests of Corzine and former MF Global Assistant Treasurer Edith O’Brien to throw out the case are “without merit,” U.S. District Judge Victor Marrero said in a ruling filed Jan. 17 in Manhattan federal court.

The agency alleged in its complaint that the executives violated the Commodity Exchange Act by illegally transferring funds from customer accounts. Marrero said it was too soon in the case to rule on whether the CFTC can prove its claims.

“At this state of the proceedings, the court must accept the pleadings as true, and draw any reasonable inferences and resolve any ambiguities in favor of the opponent of a motion to dismiss,” Marrero wrote.

MF Global, once touted by its senior officers and directors as having strong internal controls and liquidity levels, collapsed and filed for Chapter 11 bankruptcy protection in October 2011 after making bad bets on European sovereign debt and getting margin calls.

In November the company’s brokerage unit was fined $100 million and forced to admit to allegations in a lawsuit by the CFTC over customer losses sustained in its failure.

The case is CFTC v . MF Global Holdings Ltd., 11-cv-7866, U.S. District Court, Southern District of New York (Manhattan).

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