MF Global Holdings Ltd. investors are seeking final approval of
a $74 million settlement stemming from their lawsuit against
several financial institutions.
In a Friday filing with U.S. District Court in Manhattan,
lawyers for the plaintiffs urged a judge to approve the settlement,
calling it "very favorable in light of the risks of continued
litigation."
The institutions, including units of Goldman Sachs Group Inc.,
J.P. Morgan Chase & Co. and Citigroup Inc., served as
underwriters for the sale of MF Global's stocks and bonds before
its collapse. The deal, which has already received preliminary
approval, "dismisses and releases" all claims against them.
The investors, now led by Virginia Retirement System, sued the
financial institutions as part of a larger 2011 suit against former
MF Global Chief Executive Jon S. Corzine and other company
executives, accusing the parties of not disclosing the risks
associated with MF Global's European sovereign debt trades using
repurchase-to-maturity transactions.
Mr. Corzine, a former Goldman Sachs chairman and once New
Jersey's governor, has denied wrongdoing, as have the other former
executives.
Other parts of the suit not including these financial
institutions remain alive. Judge Victor Marrero will decide on the
settlement at a hearing scheduled for June 26.
MF Global imploded nearly 3 1/2 years ago, as investors fled the
firm after its bets on European sovereign debt came to light. The
exodus created what was believed to be a $1.6 billion shortfall in
customer accounts that should have been segregated from MF Global's
money pool.
Funds have been recovered to satisfy the customer claims, but
the creditors of both the MF Global Inc. brokerage and its parent
won't ever get 100% of their money back.
Unsecured creditors of the MF Global Inc. brokerage have already
received nearly $1 billion after their most recent distribution was
approved by a bankruptcy judge last month. The customers of the
brokerage, which is being unwound by trustee James W. Giddens, have
received 100% of their money back.
Even with the customers paid in full, lawsuits against the
company's former officials and other employees--as well as the
firms who did business with MF Global--remain. Mr. Corzine and the
other executives have been tapping two separate insurance policies
to pay for their defense costs. Last year, a bankruptcy judge gave
them permission to tap most of a $200 million directors and
officers insurance policy. Former MF customers have fought their
use of a separate policy for errors and omissions, saying some of
it belongs to them.
Write to Joseph Checkler at joseph.checkler@wsj.com
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