* Rogue trader caused $141.5 mln loss
* IPO documents said to mislead about MF risk management
(Adds details from settlement, background)
NEW YORK Aug 11 MF Global Holdings Ltd MF.N,
its former parent and more than three dozen underwriters agreed
to pay $90 million to settle a lawsuit by investors who claimed
they were misled about risk management at the brokerage, which
surfaced when a rogue broker caused a big trading loss.
The settlement agreement covers investors from July 2007 to
February 2008 and was made public in a filing on Thursday with
the U.S. District Court in Manhattan. It requires court
approval. An agreement in principle had been reached in
Investors led by four pension funds sued after MF Global
revealed on Feb. 28, 2008 that the broker's trades resulted in
a $141.5 million loss on wheat futures in roughly six to seven
hours, which the commodities and derivatives brokerage would
have to absorb.
The investors said this disclosure revealed flaws in MF
Global's risk management system that should have been made
clear the previous July, when Britain's Man Group Plc (EMG.L)
spun off MF Global in a $2.92 billion initial public offering.
Following the disclosure, MF Global shares plunged 40
percent over two days, wiping out more than $1.1 billion of
market value, the investors said.
MF Global is based in New York and has been led since March
2010 by Jon Corzine, a former New Jersey governor and chief of
Goldman Sachs Group Inc (GS.N).
A spokeswoman said MF Global will contribute $2.5 million
toward the settlement and that there will be no material impact
on the company from the payment.
Lead plaintiffs are the Iowa Public Employees' Retirement
System; the Policemen's Annuity & Benefit Fund of Chicago; the
Illinois-based Central States, Southeast and Southwest Areas
Pension Fund, and the State-Boston Retirement System.
The case is Rubin v. MF Global Ltd et al, U.S. District
Court, Southern District of New York, No. 08-02233.
(Reporting by Jonathan Stempel; editing by Andre Grenon)