Feb. 23 (Bloomberg) -- MF Global Inc. customers who had money trapped when the U.S. broker collapsed can sell their claims for as much as 88 cents on the dollar, while clients of its British unit may not get as much.
MF Global’s customers have started to sell their claims to distressed debt investors, including hedge funds, to get some money quickly, rather than waiting for payouts from the trustee in New York and U.K. administrators.
The lower value of U.K. claims reflects the slower return of funds and disputes about the status of the London unit’s customer accounts. James Nicholls, a London lawyer specializing in insolvency and claims trading, has seen U.K. customers offered 70 percent to 77 percent of face value for their claims.
“The client account protection rules don’t work in this country the way they are supposed to,” he said in a phone interview.
When MF Global Holdings Ltd., the broker’s parent company, declared bankruptcy in October after bets on European sovereign debt resulted in margin calls, thousands of customers had money trapped in trading accounts. Customers on both sides of the Atlantic face a lengthy wait for refunds amid an investigation into how cash went missing from U.S. accounts, leaving an estimated $1.6 billion shortfall.
The return of customer funds has been faster in the U.S., where James Giddens, the trustee for the New York brokerage, has returned about $3.9 billion, or 72 percent of the total. KPMG LLP, the administrator of the U.K. unit, is this month planning to pay back about $400 million, or 26 percent of money in protected accounts.
Keydata Founder Seeks Probe Ban on FSA Workers Who Saw E-Mails
Keydata Investment Services Ltd.’s founder told a judge the Financial Services Authority should exclude from its probe of the company anyone who saw protected attorney-client e-mails improperly obtained by the U.K. regulator.
The FSA, which lost a ruling over the e-mails in October, should also hand over communications with other agencies to which it sent the material, including the Serious Fraud Office and the Insolvency Service in Britain and financial watchdogs in Luxembourg and the Cayman Islands, lawyers for Stewart Ford said at a hearing in London.
“We want to know who at the FSA has seen the material,” said Hodge Malek, one of Ford’s lawyers. “We say those people should be taken off the case.”
Keydata administered 2.8 billion pounds ($4.4 billion) of assets when the FSA asked a court to place it in administration in 2009. The watchdog had started investigating the company two years earlier, examining whether it targeted investors with potentially misleading advertisements, and for tax irregularities.
The e-mails sent by Ford and other directors to legal advisers were covered by the attorney-client privilege and improperly obtained by the FSA, Judge Ian Burnett ruled in October. The so-called judicial review prompted the regulator to suspend its four-year-old investigation into Keydata.
Peacocks Administrators Sell Business to Edinburgh Woollen Mill
Peacocks’s administrators at KPMG announced the sale of the business to Edinburgh Woollen Mill Ltd.
Edinburgh Woollen Mill bought the Peacocks brand, 388 stores and concessions, as well as the headquarters and logistics functions in Wales. The remaining 224 stores stopped trading, resulting in 3,100 redundancies, KPMG said in an e-mailed statement.
UniCredit Wins Order Dismissing Some of Madoff Trustee’s Claims
UniCredit SpA won a ruling dismissing racketeering and other claims filed by the trustee liquidating Bernard Madoff’s shuttered firm, narrowing the trustee’s suit against the bank.
U.S. District Judge Jed Rakoff in Manhattan threw out claims by the trustee, Irving Picard, against UniCredit, Pioneer Global Asset Management SpA, UniCredit Bank Austria AG and Alessandro Profumo, Milan-based UniCredit’s former chief executive officer. The ruling, which wasn’t released publicly, was faxed to attorneys in the case.
Picard’s claims under the racketeering statute, which allows for triple damages, accounted for most of the $59 billion he demanded. Rakoff also dismissed common-law claims including unjust enrichment. He directed that the remaining claims be returned to bankruptcy court.
Picard’s racketeering claims that the defendants “fed, perpetuated and profited from” Madoff’s Ponzi scheme is a “casual assertion” that fails to establish a direct enough relationship between the alleged criminal acts and resulting injuries, Rakoff wrote in the opinion.
Madoff, 73, is serving a 150-year sentence in a federal prison in North Carolina for running a Ponzi scheme.
Shandong Helon Plans to Repay Debts With Power Plants, Land
Shandong Helon Co., the fiber maker that was China’s first company to lose its investment-grade credit rating, said its Xinjiang unit reached an agreement to repay debts by handing over power plants and land.
The two plants, each with capacity of 15 megawatts, and the land they were built on, will be used to repay 253 million yuan ($40 million) of borrowings to Xinjiang Talimu Agriculture Development, Shandong Helon said in a statement to the Shenzhen Stock Exchange.
Shares of Shandong Helon have been suspended since August when the company said it had discovered a matter that may have a “relatively large” impact on its stock price and which hadn’t been disclosed. The company said in June the securities regulator had started investigating the company on suspicion of a violation of securities law.
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