Bloomberg News

MF Global Seeks Judge’s Consent to $90 Million Accord

November 17, 2011

(Updates with excerpt from filing in fourth paragraph.)

Nov. 11 (Bloomberg) -- MF Global Holdings Ltd. asked a bankruptcy judge to allow it to participate in a $90 million settlement of a lawsuit over a 2008 wheat-trading loss incurred at the company’s commodity brokerage.

MF Global and other defendants won preliminary approval in August of the settlement of a lawsuit brought on behalf of investors. The investors claimed they lost $1.1 billion on the company’s stock in February 2008 after an employee lost $141.5 million making bad wheat futures trades. MF Global’s $2.5 million contribution to the settlement will be fully reimbursed, the company said in a court filing today.

MF Global was a defendant with Man Group, its former owner; underwriters of MF Global’s initial public offering in July 2007; and some former and current officers and directors. The settlement of the lawsuit, which claimed MF Global deceived investors by misrepresenting its risk management measures, needs a district judge’s approval on Nov. 18 to go forward.

“If the settlement agreement is not approved, a complex securities class action will resume,” according to today’s filing. Such costs would be “extensive” and “key executives would be meaningfully distracted.”

Mark Rosen, a lawyer for the investors, didn’t immediately return a call seeking comment. He previously said that the $90 million settlement would proceed if Glenn approved MF Global’s contribution.

The case is Rubin v. MF Global, 08-cv-2233, U.S. District Court, Southern District of New York (Manhattan). The bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--With assistance from David Glovin in New York. Editors: Stephen Farr, Andrew Dunn

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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