MF Global trustee eyes Chase suit

Jon Corzine failed to address MF Global’s growing liquidity needs as he tried to build the commodities broker into a global investment powerhouse, helping create the conditions that led to its downfall, a trustee in MF’s bankruptcy said yesterday.

In a blistering 275-page report, James Giddens, the trustee liquidating the company’s broker-dealer unit, said he might bring civil claims against former CEO Corzine and other top MF Global executives for negligence and breach of duties to customers.

Giddens also said he was prepared to sue JPMorgan Chase, one of MF Global’s main banks, if he and the bank could not settle within 60 days claims that the bank played a role in the disappearance of customer funds.

To date JPMorgan has returned $89 million of customer funds and $518 million of general MF Global assets, the report said.

Giddens has estimated that $1.6 billion disappeared from customer accounts when the company, which filed for bankruptcy on Oct. 31, 2011, improperly mixed client funds with its own money.

MF Global collapsed after investors abandoned it following revelations of heavy bets it made on European government debt. In the report, Giddens said those bets peaked at $7 billion last October.

Corzine, a former New Jersey governor and ex-CEO of Goldman Sachs, resigned soon afterward, and he and other current and former MF officials have been sued by customer groups over their role in the collapse.

Any legal action supported by Giddens could add weight to those claims.