Lawsuit filed against Corzine in connection with MF Global bankruptcy

NEW YORK—At least one law firm has filed a purported class action suit in connection with the bankruptcy of MF Global Holdings Ltd., the securities firm that had been headed by former New Jersey Gov. Jon Corzine.

According to market reports, MF Global, which filed for bankruptcy on Oct. 31, had $200 million in directors and officers liability coverage. Its insurers could not immediately be learned. A spokesman for the trustee of MF Global Holdings unit MF Global Inc. said she did not have information on insurance coverage.

Boston-based law firm Block & Leviton L.L.P. filed the lawsuit, Joseph DeAngelis et al. vs. Jon S. Corzine et al., in federal district court in New York on Thursday on behalf of investors seeking to recover money lost because of alleged investment fraud.

The suit charges violations of securities laws on behalf of MF Global's common stockholders from May 20, 2011, through Oct. 28, 2011. It says Mr. Corzine, the firm's former chairman and CEO, and other top officers “engaged in a scheme to deceive the market and a course of conduct that artificially inflated the company's stock price, and operated as a fraud or deceit” on its common stock buyers.

The lawsuit seeks compensatory damages, among other things.

Separately, Seattle-based plaintiffs law firm Hagens Berman Sobol Shapiro L.L.P. said Nov. 1 it was investigating reports that MF Global has allegedly admitted to regulators that it diverted customers' funds.

MF Global Inc. trustee James W. Giddens said Monday that he has filed a motion with Federal Bankruptcy Judge Martin Glenn in Manhattan asking for authority to use streamlined process to return misdirected wires sent to MF Global post-bankruptcy, which he said “will significantly expedite the return of misdirected funds.”

The statement said Mr. Giddens is “satisfied” that on Monday about 17,000 customer account positions and about $1.5 billion in customer account funds were transferred to other future commodities merchants.

The statement said the trustee and his staff are working closely with the Securities Investor Protection Corp., the U.S. Commodities Future Trading Commission, the U.S. Securities and Exchange Commission, the Chicago Mercantile Exchange and other exchanges.

The trustee announced last week that Judge Glenn had approved an order confirming Mr. Giddens’ authority to issue as-needed subpoenas and that he planned to conduct an “independent and thorough” investigation that will be reported to the general public, the court and regulators.