This article originally appeared in the June 25, 2013 Financial Times.  To read the full article, please click here.

By Tracy Alloway in New York and Neil Munshi in Chicago

The US regulator charged with overseeing MF Global is planning to file a civil suit against Jon Corzine, the former chief executive of the collapsed brokerage.

The Commodity Futures Trading Commission (CFTC) is likely to allege that Mr Corzine was “negligent in failing to supervise” the staff who worked in MF Global’s office in Chicago, said a spokesman for the former CEO and New Jersey governor.

The commission may also file a civil suit against Edith O’Brien, a former assistant treasurer at MF Global who emerged as a key witness in determining what happened at the firm, according to a person familiar with the potential legal action.

MF Global collapsed in October 2011, sending shockwaves across Wall Street and leaving a $1.6bn hole in customer funds after allegedly dipping into clients’ accounts to make up for part of its own funding shortfall.

Successful litigation by the CFTC against executives at a failed financial group would be a rare win for the US government agency, which has struggled to hold senior bankers to account for alleged misbehaviour in recent years.

Mr Corzine’s spokesman said the former chief executive “would welcome the opportunity to litigate this matter in an impartial venue”, potentially setting the stage for a drawn-out court battle. If the CFTC’s lawsuit proves successful, Mr Corzine could face millions of dollars worth of fines as well as a ban on trading commodities.

“The CFTC apparently intends to bring what would be an unprecedented and meritless civil enforcement action against Mr Corzine,” the spokesman said.

“There is no legal or factual basis for the CFTC’s attempt to blame Mr Corzine for alleged mishandling of customer funds in the last days of MF Global.”

MF Global declared bankruptcy after making billions of dollars worth of wrong-way bets on eurozone government debt. Shortly before its bankruptcy, the company transferred $200m from one of its customer accounts to cover a $175m overdraft, according to a government report.

The company’s failure triggered a complicated cross-border bankruptcy proceeding, with some clients still waiting to recoup their money.

John Roe, a manager of the Chicago-based futures company BTR Trading Group and an outspoken critic of Mr Corzine, said: “We’re glad the Department of Justice has allowed the CFTC to act, and I’m hopeful a civil suit [will] go a long way towards discouraging this type of activity.”

Mr Roe, whose customers had about $20m in accounts with MF Global, has pushed for Mr Corzine and other executives to be held legally accountable for the brokerage’s failure.

Mr Corzine has strenuously denied instructing his employees to make the funds transfer, and the CFTC’s legal action is therefore likely to focus on his alleged failure to supervise employees, rather than improper use of customer funds.

Mr Corzine, who is also a former chief executive of Goldman Sachs, has already appeared before a special congressional committee to defend his role in the broker’s failure. Edith O’Brien, the former assistant treasurer, refused to give evidence to the same congressional inquiry. She has received a notice informing her of potential legal action from the CFTC, the person familiar said.

A spokesman for the CFTC declined to comment, as did Ms O’Brien’s lawyer.