Former MF Global CEO and New Jersey Governor Jon Corzine has been sued by the CFTC for filing false reports, commingling funds, and other violations. If approved, Corzine could be heavily fined and banned from the futures industry, which would effectively make him ineligible to run a major Wall Street firm which all have a futures desk. While jail time is off the table, this would likely be the end of his career on Wall Street if the CFTC suit is approved by the court.

The U.S. Commodity Futures Trading Commission (CFTC) today filed an enforcement action in the United States District Court for the Southern District of New York against MF Global Inc. (MF Global), a registered futures commission merchant (FCM), MF Global Holdings Ltd. (Holdings), former Chief Executive Officer of MF Global and Holdings Jon S. Corzine, and former Assistant Treasurer of MF Global Edith O’Brien based on, among other violations, MF Global’s unlawful use of customer funds that harmed thousands of customers and violated fundamental customer protection laws on an unprecedented scale.

MF Global collapsed after heavily leveraged bets on European bonds lost favor with the market as the firm was initially unable to account for its clients money which had been commingled with other funds in violation of standard procedures.

If approved by the United States District Court and the United States Bankruptcy Court, the proposed settlement of all charges against MF Global will require 100% restitution of all remaining commodity customer claims. The proposed order also includes the imposition of a $100 million penalty, which can be paid to the extent MF Global has not fully exhausted all available funds and assets paying customers and then other creditors entitled to priority under bankruptcy law.

The CFTC also seeks full restitution and penalties against Holdings, Corzine, and O’Brien, in addition to trading and registration bans and injunctions against Corzine and O’Brien.

As the former CEO of Goldman Sachs, Corzine was responsible for one of the largest futures trading desks in the world. Corzine attempted to turn MF Global into a major trading firm with risky bets on European debt, when the market lost confidence in MF Global’s positions. the firm paid back its larger clients and counter-parties with funds taken from other clients, including small farmers who use the futures market to manage risks for their harvests.

Whether or not Corzine will be fighting the CFTC’s proposed fine and industry ban is not known at this time.