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CME Group, Inc. (CME), the Customer Class Representatives in the ongoing MF Global multi-district litigation (Customer Representatives), and James W. Giddens, Trustee for the Securities Investor Protection Act (SIPA) liquidation of MF Global Inc. (MFGI) today announced agreements that will resolve any claims by or against CME Group in connection with the MF Global matter, and will further help expedite payments to MFGI's former customers.
In an agreement between the Trustee and CME, CME will be allowed to assert a $29 million claim against MFGI based on expenses incurred by CME as a result of MFGI's bankruptcy. CME's claim was reserved under the prior settlement agreement between CME and the Trustee that allowed the return of over $161 million to the Trustee. Pursuant to an agreement approved by the bankruptcy court, CME Group previously deferred its right to payment of any of its claims against MFGI until all customer account balance claims have been paid in full and that continues to be the case.
In a separate agreement between CME and the Customer Representatives, CME has agreed to deliver $14.5 million, one-half of the distribution that it will receive from the Trustee, to the Customer Representatives for distribution to MFGI's former customers.
On behalf of the Customers, Co-Lead Counsel Andrew Entwistle and Merrill Davidoff observed: "This settlement marks an additional commitment by the CME to the Customers of MF Global, which previously included the CME Trust's $50 million contingent commitment and the CME's $100 million commitment to farmers. This settlement dovetails nicely with our related settlement of the Customers' net equity claims against MFGI which will result in the Customers receiving the return of 100 percent of their net equity claims, though significant damages to the Customers and General Estate remain. This settlement allows us to continue our focus on MF Global's former officers and directors and the company's former auditor PwC. It is time for those defendants to pay for their improper behavior."
"We are pleased that today's agreements help customers to finally recover the balance of their property," said CME Group Executive Chairman and President Terry Duffy. "Though CME Group fulfilled all of its responsibilities as a self-regulatory organization, these agreements provide a quicker resolution for our customers — giving them more money back sooner, rather than working through prolonged litigation. Today's announcement is in keeping with other actions we took to assist our clients after the MF Global failure — issuing a $550 million guarantee to the Trustee to speed the return of customer property, pledging $50 million in assets of CME Trust to offset our customers' losses if necessary, and establishing the $100 million Family Farmer and Rancher Protection Fund to provide additional protection to the nation's farmers and ranchers."
The agreements are subject to court approval before they can become effective, and will be presented for approval, as appropriate, to Bankruptcy Court Judge Martin Glenn and District Court Judge Victor Marrero.
