Plaintiffs Get Green Light in MF Global Class Action

, The Litigation Daily

   |0 Comments

In a sometimes caustic 105-page decision issued on Tuesday, U.S. District Judge Victor Marrero in the Southern District of New York refused to dismiss an investor class action against MF Global Holdings Ltd.'s underwriters and directors, including former CEO Jon Corzine. The defendants drew Marrero's scorn by claiming there's no conceivable way they violated securities laws.

"Defendants seem convinced that no one in this lawsuit could possibly have done anything wrong," Marrero wrote. "Defendants' contentions would suggest that the fall of MF Global Plaintiffs portray either never happened, or, if it did occur, that—since no one associated with the company played a causal role in the events—perhaps this debacle must have been the fateful work of supernatural forces, or else that the explanation for a spectacular multi-billion dollar collapse of a global corporate giant is simply that 'stuff happens.'"

The judge in Manhattan capped off the rant by paraphrasing Frank Sinatra: "If on this record as pled Plaintiffs cannot make out a plausible claim here, they could not make it anywhere."

The ruling is a win for two plaintiffs firms—Bernstein Litowitz Berger & Grossmann and Labaton Sucharow—which are seeking to represent a class of individuals who purchased MF Global securities between May 2010, when Corzine took over MF Global's leadership, and November 2011, when the brokerage firm began liquidation.

"This decision is extremely important for securities investors because it allows them to begin discovery and to prosecute their claims," said Bernstein Litowitz partner Salvatore Graziano. Graziano added that while MF Global's commodities customers have been reimbursed through a bankruptcy court proceeding, there has so far been no recovery of investor losses.

Lawyers at Dechert represent Corzine. Neil Binder of Binder & Schwartz represents former MF Global CFO Henri Steenkamp. Akin, Gump, Strauss, Hauer & Feld represents former MF Global director J. Randy MacDonald. Davis Polk & Wardwell is advising MF Global's former board members. Gibson, Dunn & Crutcher represents a group of underwriter defendants, including Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and Goldman Sachs & Co.

Benjamin Rosenberg of Dechert, one of the lawyers representing Corzine, was not immediately available for comment.

Correction: A previous version of this story incorrectly identified Neil Binder as a defendant in the case. Binder is defense lawyer for defendant Henri Steenkamp. We regret the error.

What's being said

Comments are not moderated. To report offensive comments, click here.

Preparing comment abuse report for Article# 1202627516370

Thank you!

This article's comments will be reviewed.