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MF Global Updates

January 30, 2013

1 min read

MF Global clients may get most of their money back

A bankruptcy court is set to consider a plan that would return 93% of MF Global customers' money. That number is an improvement on the 80% that U.S. customers had previously received. Read the full article here. 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.

Peregrine Scion Aims to Clean the Slate

Six months after Peregrine Financial Group Inc. collapsed in scandal, the son of its disgraced founder is struggling to move forward. Russell Wasendorf Jr., who worked under his now-jailed father at Peregrine for 22 years, is fighting a lawsuit from a group of the firm's former clients, who say he missed signs of wrongdoing. At the same time, the 42-year-old is trying to figure out his own next move. He has relocated with his family from Peregrine's base of Cedar Falls, Iowa, to the Orlando, Fla., area, where he is looking for work as a consultant and considering moving to Australia for a fresh start, says his lawyer, Nick Iavarone. Peregrine, a brokerage handling trades in futures and currencies, filed for bankruptcy protection July 10, a day after the elder Mr. Wasendorf, 64-year-old Russell Sr., attempted suicide and left a confession detailing how he siphoned tens of millions of dollars...

Proposed MF Global Settlements Lay Groundwork for Potential 100% Recovery For All Commodity Customers

On December 21, 2012, the MF Global Inc. ('MFGI') trustee entered into two settlement agreements with affiliates that together, if both settlements are approved and effected, provide a roadmap for potential 100% recoveries for all MFGI's commodity customers. Such 100% recoveries would depend on an elimination of the commodity customer asset shortfall through a combination of recovery of assets from affiliates, offsetting of affiliate claims and reallocation of MFGI's proprietary assets. This would be positive for IBs for a number of reasons. The trustee has entered into two separate settlement agreements, one between MFGI and MFGI's UK affiliate (the 'UK Agreement') and another between MFGI and a number of MFGI's domestic affiliates (the 'US Agreement'). The UK Agreement generally resolves a number of disputes and uncertainties, provides for the UK affiliate to pay MFGI between $500M and $600M, and offsets hundreds of millions of dollars in claims between MFGI and...

House report rebukes Corzine for MF Global's collapse

The House Financial Services Subcommittee on Oversight and Investigations released a summary of a report -- expected to be released in full today -- on the collapse of MF Global Holdings. In it, Republicans say CEO Jon Corzine's decisions led to the firm's demise. "Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate," said panel Chairman Randy Neugebauer, R-Texas. Bloomberg Businessweek (11/15), Financial Times (11/14), Wall Street Journal, The (11/14), Hill, The/On the Money blog (11/14)

MF Global Inc. Trustee Begins Processing General Creditor Claims

Many IBs have general creditor claims in the SIPA liquidation of MF Global Inc. based on commissions due to the IBs as shown on October 2011 commission runs. The deadline for filing such general claims was June 2, and the trustee reported in August that he has received $22.8 billion in total general creditor claims. The trustee's attorneys and professionals have begun processing these general creditor claims, according to an interim report filed by the trustee on October 5. The court entered an order approving processes for the trustee to object to and settle certain general creditor claims, including through omnibus objections to up to 200 claims at a time, on October 11. The trustee appears to be using these processes initially to file objections to eliminate duplicative claims, but at some point soon the trustee should begin to process IB claims for commissions. Neal R. Stevens Of Counsel nstevens@SRCattorneys.com...

Vision to take over PFG accounts

By: Daniel P. Collins | Futures Magazine An agreement has been reached between Vision Financial Markets and the trustee for Peregrine Financial Group, pending court approval, that will bulk transfer up to $123 million that was part of the trustee’s planned interim distribution to Vision along with customer accounts qualifying for that distribution. Vision has agreed to pay the trustee $325,000 for the bulk transfer according to a statement on the trustee’s web site. The trustee will submit a proposed order to the Bankruptcy Court on Oct. 5, to authorize the bulk transfer. > Read the full article on the Futures Mag website.

MF Global Trustee's Process for Reviewing IB Security Deposit Status to Gear Up

The MF Global trustee will soon ramp up a process for resolving the status of IB security deposits. Many IBs had such security deposits held in MF Global commodity accounts at MF Global, and the SIPA trustee sent determination letters in mid-June 2012 denying the customer claim status of those deposits. A large number of those IBs then filed objections to those denials prior to the 30 day deadline for doing so. The trustee now has a four month window from the date of each objection filing, from mid-July to mid-November, to work to resolve each claimant's objection before each claimant could file for a more formal hearing process with the court. The resolution process during this four month window will involve direct communication between the trustee's professionals and claimants, and may involve review of facts specific to each claimant, negotiation and settlement talks. Thus, IBs who had such security...

CFTC faults Peregrine trustee $123 million distribution plan

By Linda Sandler | Bloomberg The Peregrine Financial Group Inc.trustee didn’t complete necessary tests before announcing a plan to distribute $123 million to customers of the defunct futures brokerage, the U.S. Commodity Futures Trading Commission said. The tests were essential because Peregrine collapsed amid a fraud and theft of money by founder Russell Wasendorf Sr., the CFTC said in a filing yesterday in U.S. Bankruptcy Court in Chicago. “The CFTC is in favor of distributing money to the debtor’s customers as soon as is reasonable and practicable,” the regulator said. “Because this case involves allegations of fraudulent books and records of the debtor’s estate, however, the CFTC believes that distributions should be made only after reasonable due diligence to ensure that the data underlying the distribution are reliable.” Peregrine filed for Chapter 7 liquidation on July 10, hours after the CFTC filed a lawsuit accusing the firm and Wasendorf of...

NFA Financial Requirements Section 16 - Required Notification of Certain Disbursements from Segregated/Secured Amount Funds and New Requirements Regarding Statement Submitters

Notice to Members I-12-18 August 24, 2012 NFA Financial Requirements Section 16 - Required Notification of Certain Disbursements from Segregated/Secured Amount Funds and New Requirements Regarding Statement Submitters Notification of Certain Disbursements from Segregated or Secured Amount Funds Effective September 1, 2012, any FCM that makes a disbursement or a series of disbursements from its customer segregated funds account(s) or its foreign futures and foreign options customer secured amount funds account(s) that are not for the benefit of customers and that exceed 25% of the FCM's residual interest in either of those funds account(s) based upon the firm's most current daily segregated funds or secured amount funds calculation must comply with the following additional requirements imposed under NFA Financial Requirements Section 16. The FCM is prohibited from making such a disbursement or series of disbursements unless the FCM's CEO, CFO, or a listed principal of the firm who holds a...

FCM Risk Assessment - Trust and Verify

The recent insolvencies of MF Global and PFGBest, along with the near miss of Knight Capital, have sent customers scrambling to confirm the safety of their property and the financial health of their brokers. Prior to October 2011, most futures customers never gave the solvency of their FCM a second thought. Customers now find themselves on the hunt for the canary in the coal mine. In a financial world fraught with rogue traders, Ponzi schemers and high frequency meltdowns, what is the best approach for detecting a Corzine or Wasendorf at your FCM? The quick answer is: there is no quick answer. You must first consider what type of trader you are and on what exchanges you will be trading. There are a number of additional factors to consider, most of which are changing as regulators react to recent collapses. Many reforms are also in the pipeline which may change...

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