| NEW YORK, March 13
NEW YORK, March 13 PricewaterhouseCoopers LLP on
Monday said it may seek a mistrial in a $3 billion malpractice
case over the collapse of Jon Corzine's MF Global Holdings Ltd,
saying it was blindsided when the plaintiff changed its theory
of why the brokerage failed.
The auditor has been accused by MF Global's bankruptcy
administrator of accounting negligence that let the former New
Jersey governor invest $6.3 billion in European sovereign debt,
leading to a liquidity crisis and an Oct. 31, 2011 bankruptcy.
But PwC said that, in a trial that began last Tuesday in
federal court in Manhattan, the administrator has instead argued
that Corzine's bet was sound and that the market's "confusion"
and "crisis of confidence" in MF Global was "somehow" the result
of PwC's accounting advice.
PwC urged that evidence and arguments supporting this
theory, including from Corzine, be stricken, or else a mistrial
The plaintiff's lawyers "have clearly shifted their
causation theory," PwC's lawyer, James Cusick, told U.S.
District Judge Victor Marrero before Corzine began a third day
of testimony. "It amounts to a trial by ambush."
The administrator's lawyer, Daniel Fetterman, rejected that
"This motion is extremely untimely," he said. "We are
entitled to try causation as the evidence comes in. ... This is
way too late, highly prejudicial. It is gamesmanship."
Marrero gave the administrator a day to respond formally.
"This is obviously a major issue, a complicated subject,"
the judge said.
Corzine, who is also a former New Jersey senator and Goldman
Sachs co-chairman, has said the wager on short-maturity
debt from five western European countries had been a low-risk
investment that the market simply did not understand.
MF Global's final week was also marred by credit rating
downgrades that referred to the debt, which had been moved onto
the brokerage's balance sheet as of Sept. 30, 2011, and a
Under cross-examination on Monday, Corzine resisted Cusick's
effort to blame his business strategy for MF Global's failure.
"The problem, really, sir, was not that the market was
confused," Cusick suggested to him. "The problem was that the
marketplace perfectly understood."
Corzine responded, "The market could do an analysis, but the
sovereign debt exposure was there on March 31, June 30 and
September 30. There was nothing new."
Corzine, 70, has said little publicly about MF Global since
testifying in December 2011 before Congress. He has settled
claims by investors and the U.S. Commodity Futures Trading
Commission, without admitting wrongdoing.
The case is MF Global Holdings Ltd as Plan Administrator v
PricewaterhouseCoopers LLP, U.S. District Court, Southern
District of New York, No. 14-02197.
(Reporting by Jonathan Stempel in New York; Editing by Jonathan