Category Archives: MF Gobal News

Consent Order Entered Against Bankrupt Commodities Firm MF Global, Inc.

This week, the U.S. District Court for the Southern District of New York entered a consent order in the Commodity Futures Trading Commission’s (CFTC) lawsuit against bankrupt commodity firm MF Global, Inc. and its former CEO Jon Corzine and officer Edith O’Brien. This lawsuit was filed in June 2013.  The consent order requires MF Global, Inc. to pay a $200 million fine to the CFTC and $1.212 billion in restitution to customer who sustained losses when the firm failed in 2011.

The CFTC’s complaint alleges that MF Global, Corzine and O’Brien unlawfully used customer funds and did not put proper safe holds in place to ensure that the firm’s practices did not result in losses for its customers.

The CFTC  will continue to pursue its claims against defendants Corzine and O’Brien.

In 2011, MF Global used approximately $1 billion of customer funds to address the failing firm’s need for immediate cash. Corzine was allegedly aware that the firm was violating its own policies by dipping into customer funds and knew the truth about the firm’s low cash balance, but still continued to direct the firm to unlawfully use customer funds.  Before taking over at MF Global, Corzine was the CEO of Goldman Sachs and governor of New Jersey.

O’Brien allegedly oversaw transfers of hundreds of millions of dollars from customer accounts to the firm, while being aware that the practice was illegal. It “could be game over” if funds were not returned to customers on time, O’Brien allegedly said.

Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership and shareholder rights disputes.  Contact us at 312-443-1600 to learn more about the services we offer.