The MF Global Inc. brokerage trustee treats foreign futures customers “differently,” favoring U.S. clients, RWA Raiffeisen Ware Austria AG, a cooperative agricultural group, told a judge in New York.
RWA, which used the MF Global broker-dealer to hedge farmers against market risk, said today that customers with “any substantial amount” of foreign futures positions received nothing from trustee James Giddens’s first two transfers of collateral to clients.
As the trustee continues to distribute assets to U.S. customers, he is depleting “what appears to be a limited pool of assets” and creating doubts about when foreign customers will get any money, the co-op said in a court filing.
“There is considerable confusion in the market as to how the trustee is categorizing asset pools and account classes and, moreover, how and when foreign futures customers will see the return of their property,” it said.
RWA has described itself in court filings as one of the largest companies of its kind in Austria, engaged in activities that “substantially and directly impact Austria’s agricultural industry and farmers.” It asked Giddens to provide information to clear up the confusion.
The co-op is seeking details on a so-called omnibus account of the U.S. brokerage’s customer assets held by the U.K. affiliate’s estate, and wants to know why segregated customer funds were held by a non-U.S. affiliate and were commingled with other funds.
Asking for Information
RWA also asked how much of these customers’ funds are outside of Giddens’s jurisdiction, what he is doing to recover the funds from administrators of the U.K. affiliate, and when he might return assets to these customers.
“We are urgently working on responses to all our objectors,” Kent Jarrell, a Giddens spokesman, said in an e-mail.
Giddens, who is liquidating the brokerage, has transferred about 38,000 commodity accounts to other firms and said he plans to sell 330 securities accounts. Three transfers of collateral made and pending will give commodity customers about $4 billion of their assets, according to court filings.
The parent company’s Oct. 31 bankruptcy filing, the eighth-largest in U.S. history, listed assets of $41 billion. Jon Corzine, the former co-chief executive officer of Goldman Sachs Group Inc., quit as MF Global’s CEO on Nov. 4.
RWA, founded in 1994, is based in Vienna. Its commodity positions, which hedged Austrian farmers against market risk on wheat, corn, rapeseed and other commodities, were mostly traded on the Euronext exchange in France and cleared by LCH Clearnet SA, it said in the filing.
Because few of its positions were traded on the Chicago Mercantile Exchange, it didn’t benefit from Giddens’s bulk transfers of accounts and received none of its collateral, it said.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).