PricewaterhouseCoopers' bid to dismiss a $1 billion lawsuit where it was alleged that the October 2011 bankruptcy of MF Global Holdings Ltd was helped by the professional malpractice of the global accounting firm, was rejected by a federal judge.
MF Global Holdings Ltd is a brokerage firm that was once run by former New Jersey Governor Jon Corzine.
PwC's alleged bad accounting advice was a substantial cause of MF Global's rapid demise, ruled the judge and added that there remained open questions concerning this issue. These were noted by the U.S. District Judge Victor Marrero in Manhattan in a 69-page decision made public recently.
"PwC has not satisfied its burden of demonstrating the absence of any genuine issue of material fact," Marrero wrote.
The lawsuit, which was filed in March 2014 by MF Global's bankruptcy plan administrator does not have Corzine as a defendant in the case.
"PwC stands by its work for MF Global. MF Global's collapse was caused by its own business decisions and adverse market events, not any accounting determination," James Cusick, a lawyer for the firm, said in a statement.
Marrero's decision was termed as "a major victory for the MF Global estate" by Nader Tavakoli, director of the plan administrator in a statement. One of the last remaining pieces of litigation relating to MF Global's Oct. 31, 2011 bankruptcy has been kept aive by the decision.
Despite denying any wrong doing, a $65 million cash settlement with former shareholders and bondholders was reached by PwC in April 2015. Settlements with investors have also been completed by MF Global officials and bank underwriters. Customers have been made whole.
A $6.3 billion wager by Corzine on European sovereign debt, credit rating downgrades, a large quarterly loss, the use of customer funds to shore up liquidity and margin calls led to investors growing anxious and was followed by MF Global seeking Chapter 11 protection.
In the approving of MF Global's accounting for "repurchase-to-maturity" transactions through which Corzine bet on sovereign debt, PwC has been accused of "extraordinary and egregious professional malpractice and negligence" by the administrator.
MF Global had taken a $119.4 million write-off just six days before going bankrupt o the basis of PwC's advice on some deferred tax assets and this has also been faulted by the authorities. This measure had contributed to a $191.6 million quarterly loss for MF Global.
No reasonable jury could find that its advice proximately caused MF Global's bankruptcy, PwC said in papers filed under seal but summarized by Marrero.
The administrator could not prevail because MF Global had been an "active and voluntary participant" in the decision-making and it "stands in the shoes" of the company under the legal doctrine "in pari delicto", it also said.
A 2013 civil lawsuit by the U.S. Commodity Futures Trading Commission would be faced by Corzine and former MF Global Assistant Treasurer Edith O'Brien.
The case is MF Global Holdings Ltd v PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197.
(Source:www.reuters.com)
MF Global Holdings Ltd is a brokerage firm that was once run by former New Jersey Governor Jon Corzine.
PwC's alleged bad accounting advice was a substantial cause of MF Global's rapid demise, ruled the judge and added that there remained open questions concerning this issue. These were noted by the U.S. District Judge Victor Marrero in Manhattan in a 69-page decision made public recently.
"PwC has not satisfied its burden of demonstrating the absence of any genuine issue of material fact," Marrero wrote.
The lawsuit, which was filed in March 2014 by MF Global's bankruptcy plan administrator does not have Corzine as a defendant in the case.
"PwC stands by its work for MF Global. MF Global's collapse was caused by its own business decisions and adverse market events, not any accounting determination," James Cusick, a lawyer for the firm, said in a statement.
Marrero's decision was termed as "a major victory for the MF Global estate" by Nader Tavakoli, director of the plan administrator in a statement. One of the last remaining pieces of litigation relating to MF Global's Oct. 31, 2011 bankruptcy has been kept aive by the decision.
Despite denying any wrong doing, a $65 million cash settlement with former shareholders and bondholders was reached by PwC in April 2015. Settlements with investors have also been completed by MF Global officials and bank underwriters. Customers have been made whole.
A $6.3 billion wager by Corzine on European sovereign debt, credit rating downgrades, a large quarterly loss, the use of customer funds to shore up liquidity and margin calls led to investors growing anxious and was followed by MF Global seeking Chapter 11 protection.
In the approving of MF Global's accounting for "repurchase-to-maturity" transactions through which Corzine bet on sovereign debt, PwC has been accused of "extraordinary and egregious professional malpractice and negligence" by the administrator.
MF Global had taken a $119.4 million write-off just six days before going bankrupt o the basis of PwC's advice on some deferred tax assets and this has also been faulted by the authorities. This measure had contributed to a $191.6 million quarterly loss for MF Global.
No reasonable jury could find that its advice proximately caused MF Global's bankruptcy, PwC said in papers filed under seal but summarized by Marrero.
The administrator could not prevail because MF Global had been an "active and voluntary participant" in the decision-making and it "stands in the shoes" of the company under the legal doctrine "in pari delicto", it also said.
A 2013 civil lawsuit by the U.S. Commodity Futures Trading Commission would be faced by Corzine and former MF Global Assistant Treasurer Edith O'Brien.
The case is MF Global Holdings Ltd v PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197.
(Source:www.reuters.com)
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