New York, NY – November 18, 2013 – The U.S. Commodity Futures Trading Commission (CFTC) has secured a consent order against MF Global Inc., requiring the firm to pay $1.212 billion in restitution to customers who suffered losses when the company collapsed in 2011. A $100 million civil monetary penalty was also imposed, to be paid after full restitution to customers and prioritized creditors is completed.
The order, entered November 8, 2013, by U.S. District Court Judge Victor Marrero in the Southern District of New York, stems from a CFTC complaint filed June 27, 2013, alleging unlawful use of customer funds. MF Global admits to the allegations outlined in both the consent order and the original complaint, relating to the actions of its employees.
While this order focuses on MF Global Inc., the CFTC’s legal battle continues against MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien. The agency alleges that MF Global unlawfully used customer segregated funds during the final week of October 2011 to bolster its own proprietary operations and those of its affiliates.
Beyond the misuse of funds, the CFTC complaint detailed failures by MF Global to promptly notify the agency of deficiencies in customer accounts, filing false reports concealing these deficits, making impermissible investments in illiquid securities, and failing to adequately supervise its employees and agents.
“Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses,” stated Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement. “The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”
The Trustee for MF Global has been authorized to utilize funds from the general estate to cover any shortfall in customer restitution. The CFTC acknowledged the assistance of various agencies in the investigation, including the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the FBI, the SEC, and the Financial Conduct Authority in the United Kingdom.
The CFTC’s case was led by Sheila Marhamati, David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan.
Source: CFTC.gov
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