Two former employees of failed brokerage MF Global have sued its top executives and directors, including ex-CEO Jon Corzine, the former governor and senator from New Jersey.
The two employees say the executives lied about MF Global's finances and encouraged workers to put their retirement savings into company stock that later plummeted.
The two are Monica Rodriguez, who was MF Global's head of credit for the Americas, and Cyrille Guillaume, managing director of its commodities and stock division in London. Guillaume and Rodriguez are seeking class-action status for everyone who got company stock as a benefit of working for MF Global after May 2010.
A Corzine spokesman declined to comment on the suit, which was filed Monday in U.S. District Court in Manhattan.
MF Global failed after making a disastrous bet on European debt. It filed for bankruptcy court protection Oct. 31. Corzine resigned as chairman and CEO a few days later.
An estimated $1.2 billion or more may be missing from MF Global customer accounts. Regulators are investigating whether MF Global used money from customers' accounts for its own needs as its financial condition worsened. That would violate securities rules. The FBI is investigating whether the firm violated any criminal laws.
MF Global employees were required to take part of their compensation in company stock, the suit says. A separate plan also allowed them to buy company shares at a discount. If they had known the firm's actual financial condition, "they could have refused to buy in or insisted on compensation arrangements that were all cash," said Jacob Zamansky, one of the attorneys representing Rodriguez and Guillaume.
"Corzine encouraged MF Global employees to invest their retirement savings and compensation in company stock, and he destroyed their wealth with his risky and outsized bets on (European) debt," Zamansky said. "He should be held personally accountable for his actions."
After Moody's Investors Service downgraded MF Global's credit rating on Oct. 24, the company's stock dropped from $3.55 a share to $1.86 the following day. With MF Global in bankruptcy, the shares are nearly worthless; in May 2010, they traded around $8.
Several other class-action suits on behalf of MF Global shareholders also have been filed against Corzine and other top executives, and they are being consolidated by the court.
On Friday, the House Agriculture Committee voted to subpoena Corzine to testify at a hearing Thursday about his role leading MF Global. A committee spokeswoman said Corzine was served the subpoena.
Two other congressional panels announced plans to vote on subpoenas for Corzine.