Former MF Global Execs Settle Claim for $64.5 Million

The lawsuit accused Jon Corzine and other executives, including two former CFOs, of inflating the brokerage's ability to manage risk.
Katie Kuehner-HebertJuly 8, 2015
Former MF Global Execs Settle Claim for $64.5 Million

Former CEO Jon Corzine and nine other former MF Global officials, including two CFOs, on Tuesday settled for $64.5 million a class-action claim that they were liable for the futures brokerage’s 2011 bankruptcy, according to Reuters.

1024px-MF_Global_logo.svgU.S. District Judge Victor Marrero in Manhattan Tuesday granted preliminary approval of the settlement and scheduled a Nov. 20 hearing to consider final approval. Other settling defendants besides Corzine included former chief financial officers J. Randy MacDonald and Henri Steenkamp, and seven former independent directors. All denied wrongdoing, and their insurers will cover the settlement payments, court papers show.

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MF Global filed for Chapter 11 protection due to mounting concerns about its sovereign debt exposure, credit rating downgrades, margin calls, and news that customer funds had been used to cover liquidity shortfalls, Reuters said.

Investors led by the Virginia Retirement System and the Canadian province of Alberta accused MF Global officials of inflating the company’s ability to manage risk, obscuring risks from Corzine’s $6.3 billion bet on European sovereign debt, and improperly accounting for deferred tax assets.

The resolution of the last major litigation regarding MF Global’s bankruptcy by its stock, bond, and convertible bond investors would boost the investors’ overall recovery to $204.4 million, including $74.9 million from underwriters and $65 million from the auditor PricewaterhouseCoopers.

In a court filing, the investors’ lawyers said the $204.4 million recovery represents 18% of the maximum reasonably possible, an “excellent” result given that MF Global went bankrupt.