The Commodity Futures Trading Commission (CFTC), the federal agency that regulated MF Global, plans to approve the lawsuit as soon as this week, the NY Times said. (http://link.reuters.com/mej29t)

MF Global, led by former New Jersey Gov. Jon Corzine, went into court-protected bankruptcy in 2011 after investors were spooked by its exposure to $6.3 billion in European sovereign debt.

The bankruptcy became a political firestorm when investigators found that MF Global had misappropriated money in customers' trading accounts. Corzine and his management team have not faced criminal charges, but face civil allegations of breaching a fiduciary duty. Corzine has denied wrongdoing.

CFTC will probably blame Corzine for failing to prevent the breach at a lower rung of the firm, without directly linking him to the disappearance of more than $1 billion in customer money, the newspaper said. The agency is not expected to accuse Corzine of authorizing the breach of customer money, the NYT said.

If found liable, Corzine could face millions of dollars in fines and possibly a ban from trading commodities.

In a statement issued to the New York Times, Steven Goldberg, a spokesman for Corzine, denounced CFTC for planning to file what he called an "unprecedented and meritless civil enforcement action."

"If the CFTC brings this enforcement action, Corzine would welcome the opportunity to litigate this matter in an impartial venue, free from politically influenced prejudice and unfounded assertions, which have been frequently repeated despite the lack of a factual basis," Goldberg told the NYT.

MF Global effectively ended its bankruptcy earlier this month, saying court-appointed trustee Louis Freeh would step down and hand the estate's remaining wind-down duties to a new three-member board.

The company could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; editing by Patrick Graham)