MF Global, Ltd. (“MF” or the Company, NYSE:MF) is a global financial derivatives broker.
A class action lawsuit was filed on behalf of purchasers of the common stock of MF in its Initial Public Offering on July 19, 2007 and on the open market through February, 28, 2008 (the “Class Period”). The Complaint asserts claims against Defendants for violations of Sections 11, 12(2) and 15 of the Securities Act of 1933. The Complaint alleges that the Registration Statement and Prospectus issued in connection with the IPO were materially false and misleading.
On June 23, 2008, the Judge Victor Marrero granted the motion to appoint Iowa Public Employees' Retirement System; Policemen's Annuity & Benefit Fund of Chicago; Central States, Southeast, Southwest Areas Pension Fund; and State-Boston Retirement System as lead Plaintiffs. Further, according to the order, the law firms of Barrack, Rodos & Bacine and Cohen, Milstein, Hausfeld & Toll, P.L.L.C. were approved to serve as co-lead Counsel. On September 12, 2008, the lead Plaintiffs filed a Corrected Consolidated Class Action Complaint.
On January 12, 2009, the Defendants filed motions to dismiss the Consolidated Class Action Complaint. On July 16, 2009, the Court entered the Decision and Order signed by Judge Victor Marrero granting the Defendants’ motion to dismiss. Plaintiffs were allowed to submit a request for leave to amend their Complaint within twenty days of the date of this Order.
On September 18, 2009, the lead Plaintiffs filed a Notice of Appeal in the Second Circuit Court of Appeals.
According to an article dated September 16, 2010, Plaintiffs may get a second chance to go after MF and other Defendants for the drop in the firm's stock price following revelations one of its traders lost $141.5 million in a single morning on wheat futures. In its latest discussion of the "bespeaks-caution" rule, the 2nd U.S. Circuit Court of Appeals vacated a lower court judge's dismissal of a claim that MF's prospectus for its 2007 public offering failed to disclose weaknesses in its risk management system. Judge Victor Marrero of the U.S. District Court for the Southern District of New York had dismissed that claim under the bespeaks-caution rule -- a judicial doctrine that holds that "soft" information in a prospectus, such as forecasts, estimates and other forward-looking statements, cannot be substantially misleading to investors. 2nd Circuit Judges Dennis Jacobs, Barrington D. Parker Jr. and Peter W. Hall vacated that dismissal as an over-broad application of the rule in Iowa Public Employees' Retirement System v. MF Global Ltd., 09-3919-cv. The panel remanded the case for the judge to apply the correct standard to the Plaintiffs' remaining allegations.
On November 5, 2010, the Plaintiffs file a First Amended Consolidated Class Action Complaint.
According to a press release dated January 20, 2011, MF announced it was pleased to reach a preliminary agreement among principals to settle class action litigation brought on behalf of purchasers of MF stock between July 2007 and February 2008. MF will contribute $2.5 million to the overall settlement of $90 million. MF joins this settlement without admitting liability and in the interest of avoiding unnecessary litigation expense. The preliminary settlement and complete documentation will be subject to Court review and final approval. As a result of this settlement, the only remaining financial issue involving the unauthorized trading incident in February 2008 will be the resolution of MF’s claim for insurance coverage.
On August 11, 2011, an unopposed motion for preliminary approval of settlement was filed. The settlement was preliminarily approved on August 15, 2011. The Settlement Hearing was set for November 18, 2011. On November 18, 2011, the Court approved the final settlement, the plan of distribution of settlement funds, and awarded attorneys' fees and expenses. The action is now dismissed with prejudice and closed.
