INTL FCStone Reacts to Sentinel Judgment
NEW YORK, Jan. 8, 2013 (GLOBE NEWSWIRE) -- INTL FCStone Inc. (Nasdaq:INTL)
today announced that it is considering its legal alternatives, including
appeal, in response to the judgment rendered by the U.S. District Court,
Northern District of Illinois, on January 4, 2013 against its subsidiary,
FCStone, LLC ("FCStone"), in the matter of Frederick J. Grede (as Liquidation
Trustee of the Sentinel Liquidation Trust) vs FCStone, LLC. In the view of
FCStone, a futures commission merchant regulated by the CFTC, the court's
ruling, if upheld, could undermine the integrity of the futures industry's
system of segregated customer accounts and the CFTC regulations which are
designed to protect those accounts from the claims of creditors.
Unless successfully appealed, the court's ruling would result in a net pre-tax
loss to FCStone of between $4 million and $6 million. FCStone is committed to
the protection of its customers, and the court's ruling will not affect its
customers in any way.
The case arises from the 2007 bankruptcy of Sentinel Management Group, Inc.
("Sentinel"), an SEC-registered investment adviser and CFTC-regulated futures
commission merchant. Sentinel, in accordance with CFTC regulations, invested
customer funds on behalf of FCStone and many other futures commission
merchants. Sentinel also invested funds deposited by hedge funds and other
securities investors. In August 2007, Sentinel declared bankruptcy. Shortly
thereafter, a Chicago federal district court ordered Sentinel to return all
remaining customer funds which had been deposited by the futures commission
merchants, including FCStone, and Sentinel did so. At that time, FCStone
itself covered any account shortfall in order to ensure that its customers
suffered no harm due to the insolvency of Sentinel.
Approximately a year later, the Sentinel bankruptcy trustee filed virtually
identical lawsuits against FCStone and approximately a dozen other futures
commission merchants, seeking a return of the August 2007 distribution of
customer funds. The trustee has never alleged any wrongdoing on the part of
FCStone or the other futures commission merchants. Rather, the trustee simply
claimed that the futures commission merchants, including FCStone, received a
greater percentage of their account balances than the other Sentinel
customers. The trustee has argued that FCStone and the other futures
commission merchants should receive, from the bankruptcy estate, the same
percentage as the other Sentinel customers, and no more. On January 4, 2013,
in a "test case" decision, the federal district court ruled that FCStone
should return its original distribution of $15.6 million and receive a revised
distribution based on an equal distribution to all of Sentinel's customers,
which would result in a net pre-tax loss to FCStone of between $4 million and
"We are surprised and disappointed by the court's ruling. In the wake of MF
Global and other futures commission merchant bankruptcies, we believe that the
regime of heightened protection for futures market customer funds has special
relevance, not just to FCStone, but the industry as a whole," said Sean
O'Connor, CEO of INTL FCStone."We are considering all of our legal
alternatives at this point, including the possibility of an appeal."
About INTL FCStone Inc.
INTL FCStone Inc. (INTL) provides execution and advisory services in
commodities, currencies and international securities. INTL's businesses, which
include the commodities advisory and transaction execution firm FCStone Group,
serve more than 20,000 commercial customers in more than 100 countries through
a network of offices in twelve countries around the world.
Further information on INTL is available at www.intlfcstone.com.
Forward Looking Statements
This press release includes forward-looking statements including statements
regarding the combined company. All statements other than statements of
current or historical fact contained in this press release are forward-looking
statements. The words "believe," "expect," "anticipate," "should," "plan,"
"will," "may," "could," "intend," "estimate," "predict," "potential,"
"continue" or the negative of these terms and similar expressions, as they
relate to INTL FCStone Inc., are intended to identify forward-looking
These forward-looking statements are largely based on current expectations and
projections about future events and financial trends that may affect the
financial condition, results of operations, business strategy and financial
needs of the company. They can be affected by inaccurate assumptions,
including the risks, uncertainties and assumptions described in the filings
made by INTL FCStone Inc. with the Securities and Exchange Commission. In
light of these risks, uncertainties and assumptions, the forward-looking
statements in this press release may not occur and actual results could differ
materially from those anticipated or implied in the forward-looking
statements. When you consider these forward-looking statements, you should
keep in mind these risk factors and other cautionary statements in this press
These forward-looking statements speak only as of the date of this press
release. INTL FCStone Inc. undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Accordingly, readers are cautioned not to place undue
reliance on these forward-looking statements.
CONTACT: INTL FCStone Inc.
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