On Friday, U.S. Bankruptcy Judge Martin Glenn in Manhattan approved an agreement for settlement reached in June between CME and the trustee of MF Global, James Giddens. According to the agreement, about $130 million will go to former customers of MF Global. The agreement had the support of Commodity Futures Trading Commission and the Securities Investor Protection Corp.
The judge said about the agreement that it “clearly falls within the range of reasonableness” required under the law and also “provides immediate benefit” to the estate of the brokerage. Following the declaration of bankruptcy, the customer accounts of MF Global had been frozen.
Last week, Giddens had said that a $1.6 billion shortfall remained even after distributing 80 percent of what customers were owed with respect to their segregated accounts. The trustee said closing the gap would require a lot more money than was originally segregated for the customers including the cash in MF Global’s own trading account, CME shares, seats at CME exchanges etcetera.
The settlement proposed by Giddens had met with opposition from Louis Freeh, who is the trustee in charge of unwinding MF Global. Freeh also questioned the authority of Giddens, who is representing the former customers of MF Global to ask for such a settlement.
However, after having the deal delayed by raising his objections Freeh reached an agreement with Giddens and decided not to challenge the present settlement without prejudice to his right to challenge the settlement or similar allocations retroactively.
On last Monday, Giddens said that he had received about 35,000 claims related to MF Global’s bankruptcy including almost 28, 000 commodities customer claims. Based on the data received he had calculated the total value of commodities customer claims to be around $7 billion.