The MF Global saga may finally be reaching a finality after the bankrupted commodities firm reached a $132 million accord to help end the majority of remaining litigation over the brokerage’s 2011 upheaval and eventual collapse, according to a Reuters report.
One of the key figures in the case has been Jon Corzine, one of nine accused of making improper transfers that totaled more than $891 million from client funds to cover the group’s losses. Corzine was the former governor of New Jersey, who was also chief executive of the brokerage.
Corzine had sought to turn MF Global from a brokerage into a mid-tier investment bank. As such, the company took on more principal risk, including a European sovereign portfolio, which ultimately left MF Global insolvent.
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MF Global originally filed for bankruptcy back in October 2011 amidst investors angst and worry over its repeated credit rating downgrades and margin calls. Corzine’s unsuccessful $6.3 billion wager on European sovereign debt was largely seen as the last straw.
Per the latest regulatory action, lawyers for the trustee Nader Tavakoli and MF Global’s bankruptcy plan administrator this week asked a US bankruptcy judge to approve the payout, reiterating its closure whilst maximizing recoveries to the estates’ creditors.
Consequently, a substantial majority of the payout will be made insurers on behalf of Corzine and a panel of defendants, including some of MF Global’s top brass. This includes former Chief Operating Officer Bradley Abelow and former Chief Financial Officer Henri Steenkamp. Despite the verdict, neither individual admitted to mismanaging MF Global, nor did they ultimately admit liability in agreeing to settle.
Almost one year ago, a preliminary $64.5 million all-cash settlement was approved by a US Federal Judge. The aforementioned July 2015 settlement was part of a string of lawsuits related to MF Global’s downfall. In April 2015, PricewaterhouseCoopers (PwC) settled a lawsuit with MF Global investors, who accused the auditor of fraudulent deceit. Investors claimed that PwC, which agreed to pay $65 million in cash to settle the lawsuit, failed to disclose MF Global’s fatal issues despite being aware of them.