MF Global's underwriters to settle suit for $74 mln

Written By Unknown on Minggu, 14 Desember 2014 | 16.47

Fri Dec 12, 2014 5:40am EST

Dec 12 (Reuters) - Seven underwriters of the failed MF Global Holdings Ltd reached a partial settlement with investors, who had filed a lawsuit in 2011 seeking to hold them and some of the brokerage's executives, including its CEO, responsible for its collapse.

The proposed settlement calls for the seven underwriters to pay the plaintiffs $74 million, according to court papers filed in a New York court on Thursday.

The underwriters cited in the settlement are Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, Pierce, Fenner & Smith, RBS Securities and Sandler O'Neill.

Once run by former Goldman Sachs co-chairman and New Jersey Governor Jon Corzine, MF Global collapsed amid worries about Corzine's $6.3 billion bet on European sovereign debt and the use of customer money to cover liquidity shortfalls.

Former stockholders and bondholders, led by the Virginia Retirement System and the province of Alberta, Canada, had accused MF Global of inflating its ability to manage risk, obscuring the risks of its big bet on European sovereign debt, and improperly accounting for deferred tax assets.

The investor lawsuit, which seeks class-action status, covers investors in MF Global common stock, convertible bonds and senior notes between May 20, 2010, and November 21, 2011.

The settlement must be approved by a federal judge, according to the court papers.

The case is in Re: Mf Global Holdings Limited Securities Litigation, U.S. District Court, Southern District of New York, No. 11-07866. (Reporting By Aurindom Mukherjee in Bangalore; Editing by Saumyadeb Chakrabarty)

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