Jon Corzine sued by MF Global trustee

A bankruptcy trustee sued former Gov. Jon Corzine over his role in the collapse of MF Global.

NEW YORK (CNNMoney)

The suit, brought by bankruptcy trustee Louis Freeh, claims the executives took MF Global on a risky course that led to its bankruptcy and to improper use of client's money to cover losses.

The defendants "dramatically changed the company's business plan without addressing existing systemic weaknesses that ultimately caused the plan to fail," the suit alleges. It further claims Corzine engaged in risky trading strategies that strained the company's cash reserves.

The suit does not set out a specific dollar amount it is hoping to recover.

Also named in the suit were Bradley Abelow, the firm's chief operating officer, and Henri Steenkamp, its chief financial officer.

Freeh, a former FBI director, is one of two court-appointed trustees trying to recover money lost by MF Global. The other is James Giddens, who is involved with a case over the brokerage unit of MF Global. Freeh's concern is the holding company.

Giddens has already joined a class action lawsuit brought by clients of MF Global who are seeking to recover money they say the firm improperly used for its own trades.

Giddens has been more successful recovering money by reaching settlements with some of the major banks, such as JPMorgan Chase (JPM, Fortune 500), that handled MF Global's accounts.

In congressional hearings into the firm's collapse, Corzine, a former CEO of Goldman Sachs (GS, Fortune 500) as well as a former U.S. senator and governor of New Jersey, has denied any wrongdoing. He has yet to face any criminal charges or regulatory action in the case, although a congressional committee report in December also blamed him for the firm's collapse.

Attorneys for Corzine did not have an immediate comment about the suit. Laywers for Steenkamp and Abelow were not immediately available for comment.

First Published: April 23, 2013: 10:52 AM ET

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