NEW YORK (Reuters) - A bankruptcy judge on Tuesday rejected a bid by former MF Global customers to depose the collapsed brokerage’s former chief, Jon Corzine.
In a written ruling in U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn said the Commodity Customer Coalition, which had sought permission to question Corzine and other former MF Global insiders, lacked standing because it is not a direct creditor in the case.
The coalition, a grassroots group led by Chicago-based commodities trader James Koutoulas, bills itself as representing the interests of thousands of traders whose accounts at MF Global were frozen when the company went under.
But the coalition itself is merely a “‘watchdog’ entity with its own independent goals,” hoping to depose Corzine “in furtherance of its own interests” rather than those of the MF Global estate, Glenn said in his decision.
Koutoulas, reached by phone on Tuesday, dismissed that reasoning as ”the most minute technicality imaginable.
“I could have filed 10,000 versions of the motion, one on behalf of each customer we represent,” Koutoulas said, adding that the coalition is considering appealing the decision.
MF Global went bankrupt in October 2011 after its heavy exposure to European sovereign debt spooked investors. The case has become a political firestorm as investigators in Congress and elsewhere try to identify the source of an estimated $1.6 billion hole in customer trading accounts.
Most commodities customers have recovered about 80 percent of the value of their accounts through payouts by James Giddens, the trustee in charge of finding as much of the money as possible and liquidating MF’s broker-dealer unit.
Giddens last month announced a key settlement with MF Global affiliates that is expected to raise those payouts even higher.
The coalition has said Corzine should face criminal charges for his role in the company’s fall, though the exact nature of that role has been unclear. Many officials, including the Department of Justice and the FBI, have been investigating the case and have spoken to MF Global executives.
Giddens said in a June report that Corzine failed to address growing liquidity needs as he built the firm into a global investment powerhouse, using customer funds to cover liquidity gaps as the firm teetered on the brink.
But Corzine, the former Goldman Sachs chief and former Democratic New Jersey governor and senator, has denied wrongdoing.
The coalition in November sought permission to depose Corzine, Chief Financial Officer Henri Steenkamp, former Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber, former Treasurer Edith O‘Brien, and Christine Serwinski, former finance chief at MF’s North American brokerage.
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.
Reporting By Nick Brown; Editing by Bernard Orr and Carol Bishopric