“A risky business strategy as well as “negligent conduct” by former Chief Executive Officer Jon S. Corzine and his management team contributed to the unraveling of MF Global Holdings Ltd., MFGLQ +2.56% a new report said Thursday.
The report, released by Louis J. Freeh, the trustee for MF Global Holdings, laid much of the blame for the company’s 2011 bankruptcy at Mr. Corzine’s feet, accusing him of implementing trading strategies with minimal oversight and exceeding board-approved limits for some European trades the company made under his stewardship.
The brokerage Mr. Corzine was trying to turn around was doomed due to “inadequate systems” and a trading strategy that had “fatally flawed” capital and liquidity assumptions, said the 174-page report, filed in U.S. Bankruptcy Court Thursday morning.
Mr. Freeh planned to bring a lawsuit alleging breaches of fiduciary duty against former MF Global executives including Mr. Corzine, but held off to join settlement talks instead, according to the report and a person familiar with Mr. Freeh’s thinking.
Mr. Freeh agreed to postpone filing any suit until a mediator in a related MF Global civil case could complete his work, the person added. Mr. Freeh and other attorneys representing customers of the firm hope that settlement talks will result in faster distributions of payments to all parties.
Parties in the settlement talks are expected to meet next week, people familiar with the matter said. The talks are being handled by a mediator, retired California Judge Daniel Weinstein.
Steven Goldberg, a spokesman for Mr. Corzine, said in a statement that Mr. Freeh’s report “is a clear case of Monday-morning quarterbacking.” He added that the report “intentionally ignores the failure of” counterparties to fulfill contracts with MF Global, a result that contributed to the firm’s demise….”
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