Jon Corzine, the former chief executive of MF Global and former governor of New Jersey, testifies before the House Financial Services Oversight and Investigations Subcommittee on Capitol Hill in Washington, Dec. 15, 2011.PHILIP SCOTT ANDREWS/The New York Times
Alberta's public-sector pension manager and its Virginia counterpart have recovered more than $200-million (U.S.) in a class-action lawsuit on behalf of a group of investors against high-flying Wall Street financier Jon Corzine and his defunct futures brokerage.
Alberta Investment Management Corp. (AIMCo) and the Virginia Retirement System were granted co-lead plaintiff status by a Manhattan judge in 2012 on a combined 12 lawsuits against Mr. Corzine. The former U.S. senator and New Jersey governor's massive bets – an estimated total of $6.3-billion – on euro zone debt at MF Global Holdings Ltd. went sour in 2011 and resulted in major losses for investors.
MF Global collapsed after concerns were raised by regulators and customers over the risky bets on European bonds in the midst of the continent's debt crisis. About $1.6-billion in customer funds went missing and recovery of the money took years of diligent work by the trustee overseeing the firm's bankruptcy proceedings.
Edmonton-based AIMCo and Virginia were seeking to recover combined investment losses of $19-million. AIMCo did not say in a news release late Wednesday whether that amount had been recovered or what its share of the payout is. The total amount of the recovery for all the plaintiffs is $204.4-million.
"AIMCo considers its fiduciary obligations to our Alberta clients to be of paramount importance. Companies that do not adhere to those same high standards should know that we will work tirelessly, and exhaust all available avenues, to ensure our clients' best interests are preserved," AIMCo chief executive officer Kevin Uebelein said.
"We are pleased to have secured this settlement on behalf of all applicable investors in MF Global."
"The [plaintiffs'] claims alleged that MF Global misrepresented to the market its risk controls and liquidity position, failed to disclose its overexposure to European sovereignty debt, and failed to properly account for its deferred tax assets," AIMCo said in a news release Thursday.
The co-lead plaintiffs "reviewed millions of documents from defendants and third parties, and conducted over 50 depositions of former employees of MF Global and other key witnesses, including four days of testimony from MF Global's former CEO Jon Corzine."
The $204.4-million is in the form of several partial settlements, including $64.5-million from claims against Mr. Corzine, two other senior executives and MF Global's former independent directors; $74.93-million from certain underwriter defendants, led by Goldman Sachs; and $65-million from MF Global's outside auditor, PricewaterhouseCoopers LLP.
Litigation against the remaining underwriters, which are led by Jefferies LLC, continues.