Law and Regulations

Judge rules against Corzine, banks in MF Global suit

Jon Corzine testifies at a Capitol Hill hearing on Dec. 15, 2011.
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A federal judge on Tuesday rejected a bid by former MF Global Holdings Chief Executive Jon Corzine to dismiss investor litigation seeking to hold him, former colleagues and several banks responsible for the futures brokerage's collapse.

U.S. District Judge Victor Marrero rejected the defendants' contention that there was no plausible claim that the company's demise—which culminated in bankruptcy on Oct. 31, 2011—resulted from violations of securities law.

"In evaluating the application of the law that defendants argue would allow the outcome they seek at this stage of the litigation, the court's assessment may be simply stated: It cannot be," Marrero said in a 105-page decision.

(Read more: Corzine's double-speak)

Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, accused MF Global of inflating its ability to manage risk, obscuring risks from European sovereign debt and improperly accounting for deferred tax assets.

(Watch: CFTC Sues MF Global)

The defendants included Corzine, two former MF Global chief financial officers, several independent directors and many banks, including JPMorgan Chase and Goldman Sachs.

—By Reuters