The suit was filed on Dec. 8 in the Northern District of Illinois, but was first reported by the Wall Street Journal as it dug through piles of customer suits filed against MF Global and its former Chief Executive Jon S. Corzine. According to The Journal, the plaintiffs' lawyer Michael Moirano of Nisen & Elliott is looking to convert the suit to a class action claim that would represent 38,000 commodity accounts held with the now defunct New York -based brokerage.
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In MF Global's bankruptcy, the eight largest in U.S. history, a reported $1.2 billion in customer funds which were supposed to be maintained in segregated accounts has gone missing, prompting congressional hearings starting in December that continued Thursday.The legal action taken by members of CME Group's board does not stand for the exchange, which operates the CME, CBOT, NYMEX, and COMEX exchanges, facilitating trading of many asset classes, including futures, options and currencies."We have not filed a lawsuit," said CME Group spokesperson Michael Shore, referring to the action by its directors Carey and Ciciforo and not on behalf of the CME.Separately, on Thursday, Corzine defended himself against claims made by CME Group Chief Executive Terrence Duffy that he was aware of potentially improper transfers from client accounts in the days leading to the firms bankruptcy. Duffy pointed to a $175 million loan between MF accounts that he had been made aware of in a conference call prior to MF's demise. In Senate testimony, Duffy said such loans had the potential to be in violation of the Commodity Exchange Act. "Transfers of customer funds for the benefit of the firm constitute serious violations of our rules and of the Commodity Exchange Act," said Duffy in a Senate Agricultural Committee Committee hearing.In a Thursday hearing with the House Financial Services Committee, Corzine rejected such claims, saying MF Global's back-office staff "explicitly" said that transfers made prior to the firms bankruptcy were legal. "I did not instruct anyone to lend customer funds to anyone," Corzine added. Instead, Corzine suggested that the transfers Duffy had heard of through-second hand accounts may have referred to legal transfers made as MF Global was selling billions of dollars in securities. According to Bloomberg reports,JPMorgan(JPM) was involved in the transactions, but halted MF Global from making sales until overdrafts in some accounts in London were corrected. Still, Corzine may have left open the possibility that missing funds were the result of operational error. "I contacted the firm's back office in Chicago and asked them to resolve the issues, which I understood they did," said Corzine without confirming whether or not loans could have come from customer accounts.
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