(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
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