The federal government is suing former New Jersey Gov. Jon Corzine for his part in the collapse of financial services firm MF Global.
The Commodity Futures Trading Commission is seeking to ban Corzine, as well as the firm's former Assistant Treasurer Edith O'Brien, from all future trading for their roles in the scandal.
In October 2011, the cash-strapped MF Global allegedly used customers' money for its own needs. Eventually, that practice left the firm $1 billion short of consumer funds, according to a CFTC press release. MF Global filed for bankruptcy on October 31, 2011, and stands among the largest bankruptcies in U.S. history.
The CFTC, a government agency that regulates the financial industry, alleges that Corzine, then the CEO and chairman of the firm, was complicit in the misuse of customer funds by refusing to address the company's financial problems, despite his knowledge of those issues.
"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," the CFTC said in a release Thursday. The regulatory agency is holding Corzine responsible as he "did not act in good faith" and failed "to diligently supervise."
"Mr. Corzine is charged with being more than a passive actor in the downfall of MF Global," CFTC enforcement head David Meister told journalists in a call, as reported by Reuters. "He lacked good faith and ... violated his supervision obligations."
In addition, MF Global has agreed to settle with the CFTC for $100 million and agreed to pay $1 billion in restitution to its former clients. This is in addition the fact the CFTC is still seeking "full restitution and penalties" from MF Global Holdings, Corzine, and O'Brien.