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Insights, analysis, and updates from the National Introducing Brokers Association

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MF Global Updates
2 min read

MF Global Trustee to Boost Distributions to Ex-Customers

MF Global Inc.’s former customers should get “significantly” increased distributions in coming months, and the goal is still 100 percent recoveries, the failed brokerage’s trustee said. Customers who traded on U.S. exchanges may get distributions starting in early September that would bring their percentage recoveries into “the high nineties” while customers who traded on foreign exchanges may get “in the sixties,” trustee James Giddens said in a statement today. “These further distributions are dependent on final approval of a motion by the trustee to confirm the allocation of property already received,” Giddens said. His projections assume that agreements with MF Global’s U.K. unit and JPMorgan Chase & Co. (JPM) take effect in mid-August. A prior projection in June estimated customers would get 94 cents on their dollar. Giddens said at the time that disputes including a lawsuit against directors and officers delayed the potential for full recovery. Most customers have...

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MF Global Updates
2 min read

MF Global Agrees to Pay Customers 100% to Settle CFTC Suit

Last week, CFTC and MF Global Inc. agreed to a settlement whereby MF Global Inc. would pay restitution to its former commodity customers to bring them to a 100% return of their accounts. This restitution, which requires judicial approval, would likely involve the trustee sending out checks bringing both 4d domestic futures customers and 30.7 foreign futures customers to 100% toward the end of 2013. The trustee indicated in a consent order filed on the MF Global Inc. docket that the trustee will wait to receive a payment from the MF Global UK affiliate before requesting court authority to make the 100% restitution payments. The trustee expects to receive that payment from the affiliate around September 10, 2013, and the trustee would then file the request within five days of receiving the payment. The processes of achieving court approval and mailing checks may each then take several months, bringing customer...

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MF Global Updates
4 min read

MF Global’s Jon Corzine said to face CFTC lawsuit on collapse

Jon S. Corzine, the former New Jersey Governor and Goldman Sachs Group Inc. co-chairman, probably will be sued by the Commodity Futures Trading Commission for his role in the collapse of MF Global Holdings Ltd., said a person with direct knowledge of the situation. The CFTC, the federal agency that regulated MF Global until the brokerage filed for bankruptcy in 2011, could sue Corzine as soon as this week, said the person, who asked for anonymity because the case isn’t public yet. Steve Adamske, a spokesman for the CFTC in Washington, declined to comment. The suit against Corzine, 66, would mark a new low for the Wall Street veteran, who rose to the top of Goldman Sachs before being elected New Jersey’s senator and then governor. He could face millions of dollars in fines and a ban from trading commodities if he’s found liable, the New York Times reported late...

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MF Global Updates
2 min read

MF Global ends bankruptcy as trustee Freeh steps down

Collapsed brokerage MF Global Holdings Ltd on Tuesday effectively ended its bankruptcy, saying court-appointed trustee Louis Freeh will step down and hand the estate's remaining wind-down duties to a new three-member board. The commodities broker, 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 company's liquidation plan put together by Freeh, a former FBI director, and MF Global's creditors, was approved by bankruptcy Judge Martin Glenn in April, and the plan went into effect on Tuesday. "With the plan approved and a new board in place, I am confident the liquidation process can be effectively administered to the satisfaction of the creditors," Freeh said in a statement. The plan could not go into effect until certain conditions were met or waived, one of which was that the estate had enough...

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MF Global Updates
3 min read

Outlook for IB Claims in MF Global Bankruptcy Improves, Claim Sale Opportunities Arise

Many IBs have general unsecured claims in the MF Global Inc. SIPA liquidation. As demonstrated by the recent sale of a large general unsecured claim at 90% of the claim amount, institutional players believe such claims have very strong prospects for recovery. For IBs, the good news is that not only is the market consensus that IBs should recover a high amount before too long but also that IBs may be able to sell their claims for high amounts. IB general unsecured claims in the MFGI bankruptcy stem from unpaid commission splits and float for October 2011 and also from security deposits. For commission splits and float, an IB's claim may be based on a payout report document that the IB has been able to request from the MFGI trustee. For a security deposit claim, the MFGI trustee has been willing to stipulate to the amount of the claim if...

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MF Global Updates
2 min read

Series of Settlements Moves Ball Forward for MF Global Commodity Customers

A number of settlements between three MF Global administrators and JP Morgan Chase has opened the door for substantial distributions to be made to former commodity customers of the US futures commission merchant. Several conditions must be met before the settlements become effective, but those conditions are foreseen to be met around August 1, 2013. The trustee for the U.S. futures brokerage is currently in the process of making distributions to bring 4d / domestic futures customers from 80% to 89% of their claim amount and 30.7 / foreign futures customers from 5% to 18%. Once the settlements become effective and projected payments are made between the estates, further distributions should be able to bring 4d / domestic futures customers to about 96% and 30.7 / foreign futures customers to about 80% to 85%. If the conditions to the settlements are all met as projected, the latter distributions would likely...

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MF Global Updates
6 min read

Corzine Blasted in MF Global Autopsy

Courtesy The Wall Street Journal Jon S. Corzine, the former New Jersey governor who revved up risky trading as chief executive at MF Global Holdings Ltd., deserves much of the blame for the firm's 2011 demise, according to a bankruptcy trustee's report released Thursday. The report mentioned Mr. Corzine's name a total of 284 times—an average of more than once per page—and concluded that he and his management team engaged in "negligent conduct." The 174-page document, filed shortly after midnight Thursday in a federal bankruptcy court by former Federal Bureau of Investigation chief Louis J. Freeh, represents the most thorough look into management's role in MF Global's failure—and the toughest yet on Mr. Corzine. The findings in the report could help decide how much money Mr. Corzine and others potentially have to pay to settle private cases from MF Global customers and creditors in coming months. Those settlement talks are...

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MF Global Updates
3 min read

J.P. Morgan, Trustee for MF Global Reach Pact

J.P. Morgan Chase & Co. has reached a settlement that will return an estimated $546 million to MF Global Holdings Ltd. customers, likely bringing an end to a major chapter in customers' effort to recover money from the securities firm's 2011 collapse. J.P. Morgan, the trustee for the failed company's brokerage unit, and lawyers representing customer plaintiffs in the case filed their settlement agreement after finalizing terms in recent days, according to a person familiar with the process. Under terms of the settlement, filed in court Tuesday, J.P. Morgan is set to pay $100 million to reimburse customers, while also releasing claims it had on $417 million in MF Global funds that it had previously returned to the trustee representing customers, James W. Giddens. J.P. Morgan also is returning $29 million related to agreements including an MF Global credit facility. J.P. Morgan is expected to incur an expense of about...

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MF Global Updates
1 min read

CFTC Consumer Outreach for March 2013

Source: CFTC Consumer Outreach/March 2013 In this month’s Consumer Outreach Update the CFTC highlights a new section of the web site that provides information and resources on the most frequently confronted frauds under CFTC jurisdiction. Read the CFTC Consumer Outreach Update for March 2013.   The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

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MF Global Updates
2 min read

Judge Approves Significant MF Global Settlement and Customer Distributions

On January 31, 2013, the judge presiding over the MF Global, Inc. (“MFGI”) bankruptcy approved a settlement between MFGI and its UK affiliate and also green-lighted further distributions. The trustee indicated in court that he immediately will make distributions to bring non-affiliate 4d / domestic futures customers up to a 93% level of recovery and 30.7 / foreign futures customers up to an 18% level. Additional recoveries should occur on behalf of 30.7 customers over time that the trustee expects will result in staggered distributions bringing 30.7 customers up to about 54% within a few months and then around 80% a little later. Notably, the trustee and major creditors of MFGI’s domestic affiliates have indicated in a recent court filing that they now project 100% recovery for non-affiliate commodity customers. Notwithstanding that projection from these highly sophisticated and engaged parties, the MFGI trustee appears to estimate a continued customer asset...

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