CFTC Sues Jon Corzine Over MF Global Failure; Seeks to Ban Him From Futures Industry

U.S. regulators on Thursday settled charges against MF Global over the futures brokerage's collapse, and also charged former Chief Executive Jon Corzine and former Assistant Treasurer Edith O'Brien in connection with the alleged misuse of customer funds.

The Commodity Futures Trading Commission said MF Global had agreed to settle all charges against it, pay a $100 million penalty, and pay all the funds still owed to commodity customers.

MF Global collapsed in October 2011 under the weight of aggressive bets on sovereign debt, thin capital and questionable disclosures to investors. Customers were left reeling after it was revealed that more than $1 billion of their money could not immediately be found.

Former chairman and CEO of MF Global and former New Jersey Governor Jon Corzine.
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Former chairman and CEO of MF Global and former New Jersey Governor Jon Corzine.

Corzine, a former co-chairman of Goldman Sachs and New Jersey governor, was charged with violating his legal obligations to diligently supervise. He was also charged with not acting in good faith as a "control person" at the firm.

"Turning a profit is not the only job of the person at the top of a CFTC-regulated firm," CFTC Enforcement Director David Meister said. "Particularly in times of crisis, the person in control, like the CEO here, must do what's necessary to prevent unlawful uses of customer money, so that customers' money is still there if and when the music stops."

O'Brien was charged with aiding and abetting the company's misuse of customer funds. The CFTC said that O'Brien was behind the improper transfer of hundreds of millions of dollars from customer accounts to meet the brokerage's other obligations as it experienced a liquidity crisis.

The CFTC is seeking full restitution and penalties against Corzine and O'Brien, as well as trading and registration bans against them.

Late Thursday, Corzine attorney Andrew Levander shot back, saying the lawsuit against his client has no merit.

"This is an unprecedented lawsuit based on meritless allegations that Mr. Corzine failed to supervise an experienced back-office professional who was located in a different city and who did not report to Mr. Corzine or even to anyone who reported to Mr. Corzine," Levander said in a statement. "After 20 months of thorough investigations by the Department of Justice, two bankruptcy trustees, and the CFTC, no evidence has been found that contradicts Mr. Corzine's sworn testimony before Congress. Mr. Corzine did nothing wrong, and we look forward to vindicating him in court."

Evan Barr, O'Brien's lawyer, had no immediate comment.

A statement issued by the MF Global trustee for liquidation said that it has so far distributed $4.981 billion to former customers of the firm.

"The Trustee's investigation showed potential causes of action, including claims for breach of fiduciary duty and negligence, might be asserted against former MF Global CEO Jon Corzine, former MF Global Assistant Treasurer Edith O'Brien and others," the statement said.

—By Reuters. CNBC contributed to this article.