The U.S. Commodity Futures Trading Commission is fining MF Global Holdings Ltd. $100 million to settle allegations that the firm participated in wrongdoing that led to its own demise. In addition to the fine, the futures brokerage is responsible for giving back $1.212 billion in client funds that its MF Global Inc. was told to return last year. The company was also told to pay a $100 million penalty.
The consent order, which has just been entered by the U.S. District Court for the Southern District of New York’s Judge Victor Marrero, stems from a CFTC amended complaint charging MF Global Holdings and other defendants with unlawfully using customer money. As part of the settlement, the firm has admitted to the allegations related to its liability, which are related to its agents’ acts and omissions that were named in the complaint and order.
The CFTC said that MF Global Holdings, which ran the operations of MF Global Inc., was accountable for the latter’s unlawful use of segregated customer funds during the final week of October 2011. The Complaint accused MF Global Holdings of being responsible for its unit’s failure to notify the agency right away when it became aware of (or should have known) about the deficiencies that were arising in customer accounts, submission of false statements that did not show these deficiencies in reports to the CFTC, and its use of customer money for investments not allowed in securities that were very liquid or not readily marketable.
The settlement does not resolve the CFTC’s case against former MF Global CFO Corzine and ex-Assistant Treasurer Edith O’ Brien.
MF Global collapsed, declaring bankruptcy in October 2011 after it placed big bets on European-issued bonds that failed. Over $1 billion in customer money was found to be missing. It wasn’t until later that it was discovered that these funds were used to pay for MF Global Holdings’ operations.
Federal Court in New York Orders MF Global Holdings Ltd. to Pay $1.212 Billion in Restitution for Unlawful Use of Customer Funds and Imposes a $100 Million Penalty, CFTC, December 24, 2014
More Blog Posts:
Regulators Also At Fault in MF Global Debacle, Says House Report, Stockbroker Fraud Blog, November 16, 2012