* MF Global customers may get $685 mln payout
* Parent company trustee Freeh says no bonus payout to execs
* Shareholder, customer lawsuits combined in Manhattan court
* MF Global, run by Jon Corzine, went bankrupt in October
By Jonathan Stempel, Dave Clarke and Alexandra Alper
April 24 A federal judge on Tuesday authorized
the trustee liquidating MF Global Holdings Inc's
brokerage unit to distribute as much as $685 million to
customers whose accounts had been frozen when the futures
brokerage went bankrupt.
The payout authorized by U.S. Bankruptcy Judge Martin Glenn
in Manhattan is on top of the more than $4 billion that the
trustee James Giddens has already distributed, according to the
trustee's spokesman Kent Jarrell.
It includes as much as $600 million to be paid to U.S.
exchange customers, up to $50 million for customers who traded
on non-U.S. exchanges, and up to $35 million for customers who
held physical property such as gold bars.
Jarrell said the payout leaves Giddens about $750 million in
reserve to cover potential claims by other parties, including
other MF Global affiliates.
It may allow customers who traded on U.S. exchanges to
recover more than 80 percent of their account values. It also
represents a payback of about 10 percent for customers who
traded on foreign exchanges.
Glenn approved the payout on the same day Louis Freeh, the
former FBI director and now trustee for MF Global's parent
company, told Congressional lawmakers he has no plans to pay
bonuses to current or former company employees.
Customers had objected to bonuses in the wake of reports
that executives including Chief Operating Officer Bradley
Abelow, General Counsel Laurie Ferber and Chief Financial
Officer Henri Steenkamp might be eligible for them.
These customers consider it unfair to pay bonuses to people
they hold in part responsible for MF Global's sudden collapse.
"I want to make it very clear, it was never my intention to
pay any bonuses," Freeh told the Senate Banking Committee. He
said he needs to retain 15 employees to help manage the
bankruptcy and secure a $22 million tax refund.
Once run by Jon Corzine, the former Goldman Sachs
chief and New Jersey governor, MF Global filed for Chapter 11
last Oct. 31 amid a liquidity crunch prompted by worries over
its $6.3 billion bet on European sovereign debt.
The collapse has prompted a variety of regulatory and
congressional investigations, in part focused on an estimated
$1.6 billion of customer money that remains missing.
On Monday, the U.S. Judicial Panel on Multidistrict
Litigation consolidated more than 20 lawsuits by MF Global
shareholders and customers into a single case in Manhattan
The panel overruled objections by commodities customers who
thought their claims should be handled separately. U.S. District
Judge Victor Marrero will oversee the combined litigation.
Separately, the National Futures Association, an independent
regulator for the commodities and futures industry, in a letter
dated Tuesday offered U.S. Attorney Patrick Fitzgerald in
Chicago its assistance in probing any potential criminal conduct
surrounding MF Global's collapse.
The cases are In re: MF Global Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 11-02790; and In re: MF
Global Holdings Ltd., U.S. District Court, Southern District of
New York, No. 12-md-02338. The bankruptcy case for MF Global's
parent company is In re: MF Global Holdings Ltd et al, U.S.
Bankruptcy Court, Southern District of New York, No. 11-15059.