CFTC: MF Global to pay more than $1 billion
The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law.
The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.
The consent Order arises out of the CFTC's complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds. In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC's litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O'Brien.
The complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates.
In addition to the misuse of customer funds, the complaint alleged that MF Global unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts and made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts.
The complaint also alleged that MF Global used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents. ■