* MF Global administrator seeks $3 billion in damages
* Former N.J. governor called "mastermind" of failed
(Adds expected Corzine testimony, paragraph 13)
By Jonathan Stempel
NEW YORK, March 7 PricewaterhouseCoopers LLP
pinned blame for MF Global Holdings Ltd's collapse
squarely on the commodity brokerage and its former chief
executive officer, Jon Corzine, as a trial over the auditor's
own responsibility got under way on Tuesday.
Jurors in Manhattan federal court are considering whether
PwC should pay roughly $3 billion for its alleged negligence in
causing MF Global's October 2011 bankruptcy.
MF Global's bankruptcy plan administrator blamed the
collapse on PwC's "egregious" accounting advice on Corzine's
risky $6.3 billion European sovereign debt wager, and on
so-called deferred tax assets.
But PwC said the administrator is trying to pass blame for
decisions by Corzine, the former New Jersey governor and senator
and Goldman Sachs Group Inc co-chairman, and the
brokerage's own accountants.
"MF Global was a sophisticated financial company," and "Mr.
Corzine was the mastermind and the driver" behind the European
debt strategy, James Cusick, a lawyer representing PwC, told a
standing-room-only courtroom in his opening statement.
"Pricewaterhouse did not commit negligence," and "is not at
all to blame, not one bit, for the bankruptcy," he added.
Daniel Fetterman, a lawyer representing the administrator,
told jurors that PwC's failures led to a "crisis of confidence"
for investors and counterparties, who fled MF Global upon
learning its true financial condition.
"PwC had a job, one job," Fetterman said. "It was a job to
properly audit MF Global's financial statements. PwC botched its
job. It failed."
MF Global plunged into Chapter 11 in less than a week,
battered by news about the European debt, an unexpected large
quarterly loss, credit rating downgrades and margin calls.
A resulting panic caused an estimated $1.6 billion shortfall
in customer funds that were supposed to remain segregated. That
money was later recovered.
The expected five-week trial is the last major piece of
litigation to recover money for MF Global creditors.
PwC in April 2015 reached a separate $65 million settlement
with MF Global investors, but denied wrongdoing.
Corzine has not been accused of intentional misconduct, but
in January reached a $5 million civil settlement with the U.S.
Commodity Futures Trading Commission. He is expected to testify
later this week.
Lynn Turner, a former chief accountant at the U.S.
Securities and Exchange Commission and the administrator's first
witness, testified that PwC made an "incorrect certification" of
MF Global's financials by treating the European debt and tax
"Did PwC do their job?" Steven Thomas, a lawyer for the
administrator, asked him.
"No, I don't believe so," Turner answered.
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 Cynthia
Osterman and Lisa Shumaker)