JPMorgan, MF Global Inc trustee reach $546 million settlement

Wed Mar 20, 2013 6:45am EDT

Two men walk past the front desk inside of the headquarters of JPMorgan Chase & Co bank in New York, March 15, 2013. REUTERS/Lucas Jackson

Two men walk past the front desk inside of the headquarters of JPMorgan Chase & Co bank in New York, March 15, 2013.

Credit: Reuters/Lucas Jackson

(Reuters) - JPMorgan Chase & Co has reached a $546 million settlement with the trustee liquidating the failed broker-dealer unit of MF Global Holdings, a court filing showed, an amount that will help repay the brokerage's customers.

As part of a settlement reached with James Giddens, the trustee who is tasked with liquidating MF Global Inc, JPMorgan will pay $100 million that will be made available for distribution to former MF Global customers.

JPMorgan will also return more than $29 million of the brokerage's funds held by the bank, while releasing claims on $417 million that was previously returned to Giddens.

"The settlement agreement resolves claims by the trustee and customer representatives against JPMorgan that would otherwise result in years of costly litigation between the parties with an uncertain outcome," Giddens said in the filing.

JPMorgan was the lead on a $1.2 billion loan to MF Global, and was also one of its primary clearing banks before the broker-dealer went bankrupt. The bank had previously retained claims on some of the collateral posted by MF Global that led to the legal tussle.

Giddens will also request the bankruptcy court to authorize distribution of $250 million to former MF Global Inc customers who traded on U.S. exchanges and $50 million to customers who traded on foreign exchanges, according to the filing.

MF Global declared bankruptcy in 2011. Commodity traders with personal accounts lost millions of dollars when, according to Giddens, the firm improperly used client money to cover corporate transactions as the firm sank. MF Global customer accounts were frozen in the wake of the bankruptcy.

The case became a political firestorm when regulators discovered an estimated $1.6 billion hole in the trading accounts of the broker's trading customers.

The case is In re: MF Global Inc, case No. 11-2790, in U.S. Bankruptcy Court, Southern District of New York.

(Reporting by Sakthi Prasad in Bangalore; Editing by Paul Tait and Miral Fahmy)

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Comments (1)
TheWarbler wrote:
…and yet the Honorable Jon “I simply don’t know where the $ is” Corzine is still a free man. Hmm let’s see Jon, could it be that you commingled accounts and utilized segregated customer funds to post when that margin call came? don’t worry, when grand larceny or fraud is perpetrated by the likes of such well-connected and upstanding public servants such as yourself, we just make you squirm for a few hours in front of your cronies in congress, lest we let the american people come to believe that certain individuals are above the rule of law.

Mar 20, 2013 2:27am EDT  --  Report as abuse
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