Federal regulators sued former MF Global CEO Jon Corzine and the brokerage Thursday for alleged unlawful abuse of nearly $1 billion in customer funds as the brokerage collapsed in 2011, marking a new setback for the nationally known finance executive and ex-politician.

The civil lawsuit, filed in federal court in New York by the Commodity Futures Trading Commission, also targeted former MF Global assistant treasurer Edith O’Brien for allegedly participating in the abuse.

MF Global agreed to settle the case by repaying all of the lost customer funds, the CFTC said.

According to the lawsuit, Corzine made risky MF Global bets in European sovereign debt and other investments while trying to transform the brokerage into a major Wall Street investment bank after he became CEO in March 2010.