CORRECTED-BRIEF-American Savings Bank reports Q1 net income of $15.8 mln
* American Savings Bank net income of $15.8 million for Q1 of 2017 compared to $12.7 million in Q1 of 2016
NEW YORK, March 13 PricewaterhouseCoopers LLP on Monday said it may seek a mistrial in a $3 billion malpractice case over the collapse of Jon Corzine's MF Global Holdings Ltd, saying it was blindsided when the plaintiff changed its theory of why the brokerage failed.
The auditor has been accused by MF Global's bankruptcy administrator of accounting negligence that let the former New Jersey governor invest $6.3 billion in European sovereign debt, leading to a liquidity crisis and an Oct. 31, 2011 bankruptcy.
But PwC said that, in a trial that began last Tuesday in federal court in Manhattan, the administrator has instead argued that Corzine's bet was sound and that the market's "confusion" and "crisis of confidence" in MF Global was "somehow" the result of PwC's accounting advice.
PwC urged that evidence and arguments supporting this theory, including from Corzine, be stricken, or else a mistrial declared.
The plaintiff's lawyers "have clearly shifted their causation theory," PwC's lawyer, James Cusick, told U.S. District Judge Victor Marrero before Corzine began a third day of testimony. "It amounts to a trial by ambush."
The administrator's lawyer, Daniel Fetterman, rejected that contention.
"This motion is extremely untimely," he said. "We are entitled to try causation as the evidence comes in. ... This is way too late, highly prejudicial. It is gamesmanship."
Marrero gave the administrator a day to respond formally.
"This is obviously a major issue, a complicated subject," the judge said.
Corzine, who is also a former New Jersey senator and Goldman Sachs co-chairman, has said the wager on short-maturity debt from five western European countries had been a low-risk investment that the market simply did not understand.
MF Global's final week was also marred by credit rating downgrades that referred to the debt, which had been moved onto the brokerage's balance sheet as of Sept. 30, 2011, and a tax-related writedown.
Under cross-examination on Monday, Corzine resisted Cusick's effort to blame his business strategy for MF Global's failure.
"The problem, really, sir, was not that the market was confused," Cusick suggested to him. "The problem was that the marketplace perfectly understood."
Corzine responded, "The market could do an analysis, but the sovereign debt exposure was there on March 31, June 30 and September 30. There was nothing new."
Corzine, 70, has said little publicly about MF Global since testifying in December 2011 before Congress. He has settled claims by investors and the U.S. Commodity Futures Trading Commission, without admitting wrongdoing.
The case is MF Global Holdings Ltd as Plan Administrator v PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197. (Reporting by Jonathan Stempel in New York; Editing by Jonathan Oatis)
* MX Gold Corp. Continues to earn interest in durango smelter project in Mexico