12/06/2011 03:57 pm ET

Jon Corzine Warned About MF Global's Europe Bets Before Collapse: Report

A top official within MF Global warned the company's former CEO John Corzine about the firm's growing bet on European bonds -- a risk that likely plunged MF Global into bankruptcy.

Michael Roseman, MF Global's chief risk officer, warned Corzine in meetings between the two of them as well as in huddles with others present that the company didn't have enough cash on hand to withstand a fallout from its position in Italian, Portuguese, Spanish and Belgian bonds, according to the Wall Street Journal. Still, MF Global's board allowed the firm's exposure to European debt to grow from $1.5 billion at the end of 2010 to $6.3 billion right before the company declared bankruptcy at the end of October.

Corzine wasn't the first top dog of a scandal-ridden company to ignore warnings from other company officials. Sherron Watkins, a former vice president of Enron, warned the company's founder, Kenneth Lay, in August 2001 that off-the-books structures known as Raptors could harm the firm, according to The New York Times. Enron collapsed into bankruptcy in 2001 and dozens of its former employees have faced criminal charges.

MF Global filed for bankruptcy on October 31 after losing big on its European bets, and revealed that it was missing more than $600 million in customer funds, prompting regulators to launch a broad probe. Corzine, a former senator and governor of New Jersey, resigned days after the bankruptcy and the company fired its entire brokerage arm or more than 1,000 employees.

Two former employees filed a lawsuit against Corzine and other top executives Monday, claiming they lied to workers about the firm's finances and encouraged them to put retirement savings into company stock that ultimately plunged.

Even if he isn't forced to pay up in the lawsuit, Corzine likely won't get off scot-free. Congress called Corzine to testify this month to answer questions about how MF Global fell into bankruptcy so quickly. In addition, the Commodity Futures Trading Commission, a government regulator, approved a rule Monday tightening restrictions on how trading firms can invest their clients' money -- a provision Corzine lobbied against.