After a judge ruled against Pricewaterhouse Coopers LLP (PwC) on one issue related to MF Global Holdings Ltd (OTCMKTS:MFGLQ), those controlling the company in bankruptcy and trying to return funds to creditors are urging a judge not to throw out a case for alleged faulty accounting advice.

PriceWaterhouseCoopers PwC

MF Global doesn’t have the standing to sue PWC

The Wall Street Journal is reporting that a filing last week with the U.S. District Court in Manhattan, lawyers representing MF Global’s administrator fought PwC’s argument that MF doesn’t have the standing to sue PWC.

PwC’s accounting practices have been criticized as being intentionally obfuscating and not properly accounting for sovereign debt trades.  The sovereign debt trades underpinned the company’s eventual collapse, a Halloween 2011 implosion that resulted in the mysterious disappearance of $1.8 billion of customer segregated account deposits.

No criminal charges have been filed in the case. Independent documentation shows the investigation into Jon Corzine, MF Global’s powerful president, was blocked.  The press was told the case is cold by official sources before investigators even interviewed the primary suspects.

At the time, it was the sovereign debt trades that were being watched and resulted in the dismissal of MF Global’s then risk manager Michael Roseman.

Analysis suggests sovereign debt trades would lead to the downfall of MF Global

Critics say Roseman conducted the type of standard risk analysis that should have been applied by MF Global’s accounting, as his research accurately predicted that the sovereign debt trades in question would lead to the downfall of the company. He was fired by MF Global for questioning what has become known as “Corzine’s trades.”

The accounting firm PwC made no mention of such issues that were evident to many inside the derivatives industry. This absence of critique of MF Global’s financial condition was followed by the issuance of accounting reports that were called intentionally confusing, leading many MF Global customers to question the firm.

Earlier this spring the estate of MF Global sued PwC for $1 billion, charging that improper accounting advice helped cause MF Global’s 2011 collapse, saying PwC delivered “flatly erroneous” advice regarding its accounting for the European sovereign debt that was the tipping point to push MF Global into bankruptcy.

Judge Victor Marrero has ruled in the matter on one part, rejecting PwC’s request to dismiss the case on the grounds it involved two wrongdoers. Known as the “in pari delicto” doctrine, which translated from Latin means “in equal fault,” the judge was quoted in the article saying a ruling in PwC’s favor on that matter “would effectively put an end to all professional malpractice actions against accountants.”

MF Global’s former customers had charged PwC allegedly failed to investigate and report on MF Global’s accounting issues, but a federal judge dismissed this lawsuit earlier this year.

While all customer money “lost” during the questionable asset transfers has been returned to customers, creditors of the firm are still in the lurch for money they are owed.