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Tuesday, January 10, 2012

Corzine Sued by Montana Farmers Over MF Global Futures Account Money

Following in the footsteps of AIG and Lehman Brothers collapse, money at least as far as the public is concerned vanishes without a trace ($1.2 billion but likely a lot more). The lawyers enter the fray once the cloud of uncertainty around hypothecation dissipates. Yet somehow despite a lot of official finger pointing and extensive legal wrangling investors still find themselves holding the bag.

Headline: Corzine Sued by Montana Farmers Over MF Global Futures Account Money

Jon Corzine, former chief executive officer of collapsed commodity brokerage MF Global Holdings Ltd. (MFGLQ), was sued for fraud by Montana farmers who claim he oversaw the misappropriation of their commodity trading account funds.

The lawsuit filed today by three farmers and a cattle- raising operation in Montana seeks to represent a nationwide group of commodities futures customers whose money went missing amid the $41 billion bankruptcy of MF Global, parent of the futures brokerage that is being liquidated. A trustee is looking for $1.2 billion or more in money missing from commodity customers’ accounts.

Corzine, the former governor of New Jersey, and other executives at MF Global made “knowingly false statements” to induce the plaintiffs to enter into contracts with the brokerage, according to the complaint filed in federal court in Missoula, Montana.

The executives failed to disclose to customers that their money was used to finance MF Global’s bad bets on European sovereign debt, the farmers said in the complaint.

The lawsuit also names JPMorgan Chase & Co. (JPM), MF Global’s clearing broker and custodian, as a defendant, alleging it failed to detect suspicious activity at the brokerage and aided and abetted in the fraud.

Source: bloomberg.com

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