WASHINGTON, D.C., U.S. — The U.S. Commodity Futures Trading Commission (CFTC) said on Dec. 24 that it has received a federal court consent order fining MF Global Holdings Ltd. (MFGH) and ordering it to pay restitution for its wrongdoing during the collapse of the futures brokerage in 2011.
The CFTC said its litigation continues against the remaining defendants, former Chief Executive Officer Jon S. Corzine and former Assistant Treasurer Edith O’Brien.
The company will pay $1.212 billion in restitution to its customers as well as a $100 million penalty. The CFTC previously filed and settled charges against the company’s subsidiary, MF Global Inc. (MFGI). MFGI was required to pay $1.212 billion in restitution to its customers, as well as a $100 million penalty.
MFGH’s restitution obligation is joint and several with MFGI’s restitution obligation, pursuant to which a substantial portion of the restitution obligation has already been paid, CFTC said.
The consent order arises out of the CFTC’s amended complaint, filed on Dec. 6, 2013, charging MFGH and the other defendants with unlawful use of customer funds. In the consent order, MFGH admits to the allegations pertaining to its liability based on the acts and omissions of its agents as set forth in the consent order and the amended complaint.
The CFTC’s amended complaint charged that MFGH controlled MFGI’s operations and was responsible for MFGI’s unlawful use of customer segregated funds during the last week of October 2011. In addition to the misuse of customer funds, the amended complaint alleged that MFGH is responsible for MFGI’s failure to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts; filing of false statements in reports with the CFTC that failed to show the deficits in the customer accounts; and use of customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid, in violation of CFTC regulations.