New York, NY – December 24, 2014 – The U.S. Commodity Futures Trading Commission (CFTC) has secured a consent order against MF Global Holdings Ltd. (MFGH), requiring the firm to pay $1.212 billion in restitution to customers of its subsidiary, MF Global Inc. (MFGI). This order, entered by Judge Victor Marrero of the U.S. District Court for the Southern District of New York on December 23, 2014, also includes a $100 million civil monetary penalty, payable after customer claims and prioritized creditor obligations are met.
The action stems from charges that MFGH unlawfully used customer funds and failed to adequately supervise MFGI’s operations. The CFTC previously settled charges against MFGI for similar violations, requiring a $1.212 billion restitution payment and a $100 million penalty. MFGH’s obligation is joint and several with MFGI, meaning a substantial portion of the restitution has already been paid.
According to the CFTC’s amended complaint, filed December 6, 2013, MFGH controlled MFGI and was responsible for the misuse of customer segregated funds during the final week of October 2011. The complaint detailed failures to promptly notify the CFTC of account deficiencies, the filing of inaccurate reports concealing those deficits, and the improper use of customer funds for risky, illiquid investments – all violations of CFTC regulations.
MFGH has admitted to the allegations pertaining to its liability, as outlined in the consent order and amended complaint. The CFTC acknowledges MFGH’s cooperation and expects continued assistance in the ongoing litigation against remaining defendants, including Jon S. Corzine and Edith O’Brien.
The CFTC collaborated with 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 throughout the investigation. David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan of the CFTC’s Division of Enforcement led the case.
Source: CFTC.gov
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