MF Global Blames Accountants for Fiasco

      MANHATTAN (CN) - PricewaterhouseCoopers' "egregious professional malpractice" and bad advice caused MF Global Holdings' collapse, the company claims in a billion-dollar federal lawsuit.
     MF Global claims PricewaterhouseCoopers' "extraordinary and egregious professional malpractice" as MF Global's longtime auditor and accountant caused the company to lose billions of investment dollars in European "debt instruments."
     The company wants at least $1 billion for malpractice and negligence, as well as $10.8 million for unjust enrichment.
     MF Global claims it used the accounting firm's bogus advice to make investments by using a so-called "repurchase-to-maturity" financing transactions, or "Euro RTM" transactions.
     The company's attorneys say it's the first case seeking to hold PwC liable for its alleged malpractice in connection with its advice.
     MF Global, formerly known as Man Financial, declared bankruptcy in 2011.
     "PwC incorrectly and negligently advised the company to account for these Euro RTM transactions as if they were 'sales' by immediately booking revenues from these purported 'sales' up to 21 months before the company actually received those revenues and using off-balance-sheet accounting for those investments," the lawsuit states.
     MF Global's then-CEO Jon S. Corzine's bets on European sovereign debt were revealed after the company's collapse. Corzine is the former governor of New Jersey.
     Plaintiff MF Global Holdings Ltd., as Plan Administrator, is represented by Daniel Fetterman with Kasowitz, Benson, Torres & Friedman.