The trustee liquidating MF Global's broker-dealer said he may bring civil lawsuits against some of the company's employees in connection with a massive shortfall in customer funds created in the days leading up to its collapse.
Trustee James Giddens said in a statement on Thursday he may assert claims for breach of fiduciary duty and for violati ng r ules governing the segregation of client funds. Giddens referenced "individuals at" MF Global's parent company and its broker-dealer, but did not name pote ntial targets.
Giddens' spokesman, Kent Jarrell, said the individuals include officers, directors and other employees, but declined to say whether former Ch ief Executive J on Corzine was am ong them.
Corzine left the company in November, days after MF Global went bankrupt amid investor fears about its exposure to risky European debt. According to a February report from Giddens, MF Global improperly used client funds to cover corporate transactions as the company sank, creating an estimated $1.6 billion shortfall in customer accou nts.
Corzine's defense attorney did not immediately respond to a request for comment.
Corzine in December told a Congressional panel he did not intend to break laws and did not know what happened to customers' money.
Other key officers, including Chief Financial Officer Henri Steenkamp and General Counsel Laurie Ferber, told a Congressional panel last month they also did not know what caused the shortfall. Assistant Treasurer Edith O'Brien was scheduled to testify but invoked her Fifth Amendment right against self-incrimination.
O'Brien became central to regulators' ongoing investigation into the collapse after Congressional investigators released an email from her that said a $175 million transfer made last Oct. 28, and which may have included customer funds, was "Per JC's [Jon Corzine's] direct instructions."
O'Brien's attorney, Evan Barr, declined to comment on Giddens' statement.
A spokesman for Gary Naftalis, Abelow's attorney, declined to comment. Lawyers for Steenkamp and Ferber did not immediately return calls seeking comment.
Giddens said in the statement he is "committed" to negotiating cooperative resolutions with the individuals where possible.
Jarrell said the trustee's legal team has already begun negotiations with some individuals and "is hoping to interview others."
Corzine and other current and former executives are already facing more than 20 civil class action lawsuits from customers over MF Global's demise.