MF Global Holdings on Friday will seek court approval of a plan to liquidate its assets and repay creditors, signaling the final stages of its large and politically-charged bankruptcy. The collapsed brokerage would repay the bulk of lender JPMorgan Chase & Co’s claim, and would pay unsecured creditors as much as 34 cents on the dollar under a plan slated to go before Judge Martin Glenn in the U.S. Bankruptcy Court in Manhattan. MF Global, led by former New Jersy Gov. Jon Corzine, filed for Chapter 11 in October 2011 after investors were spooked by its $6.3 billion exposure to European sovereign debt. It became a political firestorm when regulators discovered billions of dollars were missing from the accounts of MF’s commodity trader customers. More in the Chicago Tribune [...]
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A federal judge dealt a devastating blow to a lawsuit against JPMorgan Chase that accused the nation’s largest bank and its affiliates of duping investors into buying troubled mortgage-backed securities. In a ruling on Tuesday, Judge Jed S. Rakoff dismissed claims from Dexia, a Belgian-French bank that had sued JPMorgan over losses on $1.6 billion in 65 residential mortgage investments, according to court documents. FSA Asset Management, another plaintiff, can continue to pursue its claims over five of the soured investments, with losses of more than $5 million. Read New York Times report [...] Former MF Global Holdings Ltd. (MFGLQ) Chairman and Chief Executive Officer Jon S. Corzine’s risky business strategies and mismanagement helped accelerate the futures brokerage’s demise, according to a report by bankruptcy trustee Louis Freeh. The 124-page report blames Corzine and his management team for bungling an expansion of the company’s traditional business model while ignoring deficiencies in its risk controls. Corzine’s “aggressive trading strategy” that invested heavily in European sovereign debt produced no significant revenues, and he and Chief Financial Officer Henri Steenkamp knew that the company’s controls were flawed as early as May 2010, according to the filing today in U.S. Bankruptcy Court in Manhattan. More on Bloomberg [...] SALT LAKE CITY — There is a saying that goes, “If something seems to good to be true, then it probably is.” Had the people in charge of monitoring the nation’s financial markets heeded that warning, the country might have avoided the disastrous fallout from the worst affinity fraud plan ever perpetrated, according to one of the men responsible for uncovering the multibillion-dollar scam. More in The Deseret News [...] As head of the Securities and Exchange Commission for the past four years, Mary Schapiro failed to win a major civil action against any Wall Street executive connected to what may be the worst financial fraud in history, the subprime-mortgage scam that led to the 2008 crash. As head of the Justice Department’s criminal division for the past four years, Lanny Breuer failed to accomplish the same with criminal action. And now both are headed back over to the other side: deep-pocketed firms that earn their keep largely from Wall Street. In Schapiro’s case, that’s Promontory Financial Group, which advises financial firms on regulation; in Breuer’s, it’s Covington & Burling, a major law firm that defends financial clients. If this sounds like a dog-bites-man story, it is. Actually it’s more like, Wall Street bites everybody. But that too is pretty predictable these days. “It used to be called ‘selling out,’ ‘cashing in,’ or ‘influence peddling.’ Now it’s referred to politely as the ‘revolving door,’ ” said Dennis Kelleher, president of Better Markets, a Washington nonprofit that advocates for better regulation of financial markets. “But whatever it’s called, nothing is more corrosive to the American people’s trust in government than when former senior public officials turn their so-called public service into multimillion-dollar riches unimaginable to almost all Americans.” More in The National Journal [...] The creditors of MF Global Holdings Ltd. overwhelmingly approved the failed brokerage firm’s liquidation plan, as the company moves closer to a judge’s final approval of that proposal. In a Monday filing with the U.S. Bankruptcy Court in Manhattan, MF Global said that in all but two of the classes allowed to vote on the proposal, 100% said yes. The only two classes of voters that didn’t accept it at 100% ratified it at 99.97% and 86.92%, respectively. “The fact that Holders of Allowed Claims–the parties most affected by the Plan and the Revised Interco Settlement–overwhelmingly support the Plan is the best evidence that the Revised Interco Settlement is in the paramount interests of creditors,” MF Global said in a separate filing made Tuesday supporting its proposal. “Interco” refers to the intercompany settlements that were made in the months leading up to the proposal being filed by a group of hedge funds. See Fox Businessnews report [...] After more than three decades of policing Wall Street, Mary L. Schapiro is going to work for some if its biggest players. The Promontory Financial Group, a consulting firm that steers banks and other financial firms through regulatory scrutiny, announced on Tuesday that it had hired Ms. Schapiro as chairwoman of its governance and markets practice. The move comes after a grueling four-year period for Ms. Schapiro, who ran the Securities and Exchange Commission in the wake of the financial crisis. “Mary is an outstanding advocate for investors and was a strong and decisive regulator during one of the most volatile periods in our financial history,” Eugene A. Ludwig, the head of Promontory, said in a statement. Some $506 million has been returned to victims of Bernard Madoff’s Ponzi scheme, the largest in history, according to a Monday announcement by the office of trustee Irving Picard and the Securities Investor Protection Corp. That means that a total of $5.44 billion has been returned to victims of Madoff. But more than four years after Madoff’s conviction, more than two-thirds of the stolen money is either unaccounted for, or is yet to be returned to burned investors. Investigators say that $17.5 billion was lost to Madoff’s scam, which crumbled with his arrest in December 2008. Since that time, investigators have recovered assets — including property, jewelry and a yacht — and reached settlements totaling some $9.32 billion. More on CNN [...] The trustee’s office liquidating the assets of Bernard Madoff’s collapsed Ponzi scheme said Monday a total of $5.44 billion has been returned to former Madoff clients whose claims have been approved for repayment. The new total was reached after the latest distribution of $506.2 million was made last week to victims of the fraud. Madoff, believed to have masterminded the biggest financial fraud in history, was arrested in December 2008 and is now serving a 150-year prison term. More on Fox Business News [...] Looks can be deceiving when it comes to assessing the U.S. criminal investigation of SAC Capital Advisors LP founder Steven A. Cohen. Federal prosecutors have enjoyed a steady drumbeat of indictments over the past few years, punctuated by headline- grabbing 6 a.m. knocks at the door as Federal Bureau of Investigation agents arrest the latest member of the inner circle of the $15 billion hedge fund. The insider trading indictment last week of SAC fund manager Michael Steinberg, a 16-year veteran of the firm, involved the most senior member of Cohen’s firm charged so far. The splash of his Good Friday arrest followed the charges last year of SAC portfolio manager Mathew Martoma, bringing to nine the number of current or former SAC traders or analysts linked to illegal trades. More on Bloomberg Businessweek [...] |
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