Dow Jones) -- MF Global Holdings Ltd. collapsed more than four years ago, but former New Jersey Gov. Jon Corzine and the U.S. Commodity Futures Trading Commission are still sparring in federal court over who is to blame.
The brokerage firm collapsed in the fall of 2011 revealing a shortfall of more than $1 billion in customer accounts. In an exchange of court papers, lawyers for the CFTC and for Mr. Corzine argued whether Mr. Corzine is liable as the person in control when the brokerage tapped customer accounts to support its own proprietary operations.
Sued by the CFTC, Mr. Corzine says he is entitled to a pretrial ruling that the regulator has no case against him.
According to Mr. Corzine's lawyers, he never directed, authorized or encouraged the use of funds in segregated accounts, and wasn't even aware of the transgression until Oct. 30, 2011. By the close of business on Oct. 28, according to the CFTC, nearly $1 billion in funds that were supposed to be held safely for customers were instead being used by the brokerage.
MF Global filed for bankruptcy Oct. 31, 2011. Customers recovered the money that was taken from their accounts, but the bankruptcy failed to satisfy all the claims of creditors of the brokerage or its parent company.
In his letter seeking summary judgment, Mr. Corzine said it isn't his fault customers had to wait to reclaim their money. "Machinations" by James Giddens, the trustee who found and returned the missing customer money, are to blame, Mr. Corzine's lawyers said in a Dec. 18 letter to the Judge Victor Marrero, who is presiding over the case in federal court in New York. Mr. Giddens's representatives couldn't immediately comment.
Mr. Corzine resigned from the chairman and chief executive spots at MF Global, and was called to testify before Congress about the brokerage's troubles.
He and other MF Global executives have denied wrongdoing in their handling of MF's affairs as the cash-strapped firm foundered in the wake of risky bets on European sovereign debt.
The 68-year-old former Goldman Sachs chairman recently spoke to a group of New Jersey college students about his life's successes and setbacks. It marked the first public address since he was forced to testify about his involvement in MF Global's demise.
Earlier this year, Mr. Corzine and other former MF Global officials agreed to a $64.5 million settlement of an investor lawsuit.
CFTC lawyers say they have an open-and-shut case against Mr. Corzine, based in part on his own testimony, which allegedly "demonstrates that he used his power to shape policies and make direct determinations regarding the use of funds in customer accounts to satisfy the firm's liquidity needs."
Mr. Corzine's lawyers responded with a letter that argues he wasn't in control of the funds in the account, as transfers had to be approved by finance, treasury and operations personnel. As MF's chief executive, he had a general level of control, but not the type of grip that would entitle the CFTC to summary judgment in the suit, Mr. Corzine's lawyers contend.
Countering allegations he was lax in his oversight, Mr. Corzine's lawyers say he delegated tasks to competent personnel and "no principle of law or logic" supports the CFTC's position that he should be held to account for everything that went wrong.
A former U.S. senator, Mr. Corzine was defeated by Gov. Chris Christie in his 2009 re-election bid.