New York (HedgeCo.Net) – US regulators are planning a lawsuit later this week against Jon Corzine over the collapse global financial derivatives broker and hedge fund trader MF Global, formerly known as Man Financial, Reuters reports. The company allegedly dipped into customer funds, spending as much as $1 billion in misappropriated funds to cover it’s losses from scrutiny.
MF Global declared bankruptcy on October 31, 2011, and faced liquidation beginning in November 2011. According to a trustee liquidating the company after its collapse, the losses incurred by customers of MF Global stood at $1.6 billion because of the debacle as of April 2012. The vast majority of these funds have not been returned to customers. Rolling Stone reported in April 2012 that the number stands at $1.6 billion, and that “nobody disputes the fact that MF Global officials dipped into customer accounts and took…customer money.”
The rapid expansion of the Man Investments unit in the emerging hedge fund management business shrouded many investors from the development of MF’S brokerage unit.
The New York Times said, “MF Global dipped again and again into customer funds to meet the demands”, perhaps beginning as early as August 2011. If found liable, Corzine could face millions of dollars in fines and possibly a ban from trading commodities.
In a statement issued to the New York Times, Steven Goldberg, a spokesman for Corzine, denounced CFTC for planning to file what he called an “unprecedented and meritless civil enforcement action.”
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