NEW YORK -- The trial between bankrupt brokerage MF Global, run by former New Jersey Gov. Jon Corzine, and its former accounting firm, PricewaterhouseCoopers, ended abruptly Thursday, with both parties saying they have reached a settlement.
Terms of the settlement were not disclosed.
"The case was settled to the mutual satisfaction of the parties," said PricewaterhouseCoopers spokesman Andrew Wilson.
MF Global sued PricewaterhouseCoopers, alleging that negligence by the firm's accountants led to confusion about the current financial health of MF Global at a time of global market turmoil. That confusion eventually led MF Global to file for bankruptcy in late 2011.
PricewaterhouseCoopers alleged that MF Global's business decisions, including its purchase of European government bonds, were the reason why MF Global failed -- not because PricewaterhouseCoopers did not account for those assets as MF Global says the accountants should have.
The trial, in the U.S. District Court of the Southern District of New York, was supposed to last five weeks. The settlement came before PricewaterhouseCoopers' lawyers were even able to call witnesses to its defense.
At the center of the trial were $6.3 billion in assets tied to European government bonds that MF Global purchased from Italy, Spain, Belgium, Ireland and Portugal. Another issue is how PricewaterhouseCoopers accounted for $72 million in what's known as tax-deferred assets that further caused uncertainty about MF Global's financial health.
Those two issues caused MF Global to be downgraded by the credit rating agencies like Moody's, and counterparties eventually cut off business from the firm.
Corzine testified earlier this month, saying that the European bonds that MF Global invested in were relatively low-risk, and the firm expected to get its money back. All of the bonds were from countries with investment-grade ratings, and at the time, the European Central Bank created a $500 billion facility to help eurozone countries meet their obligations.
"We believed the bonds would be paid in their own right," Corzine said. The thesis later proved to be correct, as all the bonds that MF Global purchased were paid back in full -- but some months after MF Global filed for bankruptcy.
The trial caught the public's attention not only because it involved Corzine, but also because the trial started shortly after the Oscars, where a mistake by PricewaterhouseCoopers' accountants led to La La Land being announced as Best Picture, when the winner was Moonlight.
Business on 03/24/2017