D&G Law

Class Actions Filed Amidst MF Global Scandal

Reports of large financial institutions mishandling client funds or engaging in risky investments are no longer surprising in the wake of this country’s financial crisis. However, MF Global provides one of the most dramatic examples of a financial institution’s implosion since Lehman Brothers folded in 2008. Apparently, $600 million in clients’ funds are missing. In the midst of MF Global’s bankruptcy filing last week, and subsequent realizations regarding the company’s heavy investment in European sovereign debt and apparently inadequate financial disclosures, two class action lawsuits have been filed against the company on behalf of investors. Both complaints allege that MF Global made false and misleading statements to investors regarding, among other things, inadequate liquidity levels and internal control problems in segregating client funds. MF Global is also under investigation by the Securities & Exchange Commission and the Commodity Futures Trading Commission. The firm’s CEO and former head of Goldman Sachs, John S. Corzine, resigned last Friday. For more information, please see the following stories.

http://dealbook.nytimes.com/2011/11/04/corzine-out-as-search-for-mf-global-funds-continues/

http://www.todayonline.com/World/EDC111107-0000049/Two-class-action-suits-filed-against-MF-Global