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PwC must face MF Global malpractice lawsuit


(Reuters) — A federal judge rejected PricewaterhouseCoopers L.L.P.'s bid to dismiss a $1 billion lawsuit accusing it of professional malpractice for helping cause the October 2011 bankruptcy of MF Global Holdings Ltd., a financial brokerage once run by former New Jersey Gov. Jon Corzine.

In a decision made public on Friday, U.S. District Judge Victor Marrero in Manhattan said there remained open questions concerning whether PwC's bad accounting advice contributed to MF Global's demise.

"PwC has not satisfied its burden of demonstrating the absence of any genuine issue of material fact," the judge wrote.

A spokeswoman for PwC did not immediately respond to requests for comment. Mr. Corzine is not a defendant.

The lawsuit had been filed in March 2014 by MF Global's bankruptcy plan administrator.

It accused PwC of negligence in approving MF Global's accounting treatment for Mr. Corzine's $6.3 billion wager on European sovereign debt and for some deferred tax assets.

MF Global filed for bankruptcy on Oct. 31, 2011, after investors grew anxious over the sovereign debt wager, credit rating downgrades, margin calls, and news that customer funds were used to shore up liquidity.

The PwC lawsuit is one of the last remaining pieces of litigation relating to MF Global, following earlier settlements benefiting shareholders, bondholders and customers.

Mr. Corzine and former MF Global Assistant Treasurer Edith O'Brien still face a 2013 civil lawsuit by the U.S. Commodity Futures Trading Commission.

The case is MF Global Holdings Ltd. v. PricewaterhouseCoopers L.L.P., U.S. District Court, Southern District of New York, No. 14-02197.

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