Legal Standing of Commodity Customer Coalition is questioned.

[ by Howard Haykin ]

A request to depose former MF Global CEO Jon Corzine, by former customers was submitted last week to U.S. Bankruptcy Court  in Manhattan.  Judge Martin Glenn initially expressed skepticism because he doubted whether the Commodity Customer Coalition, the grassroots advocate group for customers hurt by MF Global's 2011 bankruptcy, had legal standing to subpoena and depose Corzine and other former executives.

"The coalition is not a creditor" of MF Global even though it represents customers who are creditors, Glenn said.  He added, "It is an inanimate entity,"  then said he would wait to make an official ruling.

MF Global Bankrupty Proceeding.   MF Global declared bankruptcy in October 2011 after its heavy exposure to European sovereign risk, took serious losses - which led to margin calls for additional collateral.  The case has become a political fire storm as Congressional investigators and others tried without success to identify the  whereabouts of an estimated $1.6 billion hole in customer trading accounts.

Corzine's role has been unclear, though the former Goldman Sachs chief executive and former Democratic New Jersey governor and senator has denied wrongdoing.

James Giddens, the trustee liquidating MF's broker-dealer unit, said in a June report that Corzine failed to address growing liquidity needs as he built the firm into a global investment powerhouse, and used customer funds to cover liquidity gaps as the firm teetered on the brink.  Giddens, so far, has returned about 80% of the money in customer trading accounts, which were frozen when the company went bankrupt.

Corzine was not the only target of the Commodity Customer Coalition.  Last month the group sought permission to depose Corzine, and these other former officers:  CFO Henri Steenkamp, COO Bradley Abelow, General Counsel Laurie Ferber, Treasurer Edith O'Brien, and Christine Serwinski, former finance chief at MF's North American brokerage.

Reuters reported in September that prosecutors are close to wrapping up a criminal inquiry into MF Global's collapse and are unlikely to file criminal charges.

The liquidation of MF Global's North American brokerage is In re MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-2790. MF Global's bankruptcy case is In re MF Global Holdings Ltd, in the same court, No. 11-15059.

 For further details, go to:   [ Reuters, 12/19/12 ].