WASHINGTON — The millions that Jon Corzine amassed as head of Goldman Sachs have become an alluring target for investors who were crushed by the collapse of MF Global, the brokerage firm he led until earlier this month.
And Corzine isn’t the only one who may be financially vulnerable after the eighth-largest bankruptcy in U.S. history. Others include MF Global’s other top execs, auditor PricewaterhouseCoopers and some big Wall Street banks.
Even MF Global itself, which can’t be sued while in bankruptcy protection, could sue its former executives.
Corzine — the Democratic governor of New Jersey from 2006 to 2010 and a U.S. senator from 2001 to 2006 — and other senior executives probably share a liability-insurance policy to cover potential lawsuits against them. But experts say potential damages sought could well exceed its limits.
Corporate bankruptcy is a “litigation nightmare: Everyone ends up suing everyone,” said Charles Elson, a professor and director of the Weinberg Center for Corporate Governance at the University of Delaware.
Litigation already has begun. Two class-action suits on behalf of MF Global shareholders have been filed against Corzine and three other executives. They accuse the firm and its top brass of making false and misleading statements about MF Global’s financial strength, internal controls and cash balances.
MF Global filed for bankruptcy protection Oct. 31 after a disastrous bet on European government debt. In just a week, stock investors lost about $585 million, and more than $600 million in clients’ money is still missing.
