MF Global bondholders reach $29.8 mln settlement with banks

By Jonathan Stempel
NEW YORK, March 11 (Reuters) - Investors who lost money when
Jon Corzine's MF Global Holdings Ltd collapsed reached a $29.83
million settlement with five underwriters that helped the
futures brokerage sell bonds in the summer of 2011, less than
three months before it went bankrupt.
The preliminary accord resolves class action claims against
Leucadia National (NYSE:LUK) Corp's LUK.N Jefferies LLC unit; units of
Bank of Montreal BMO.TO , Natixis SA CNAT.PA and US Bancorp (NYSE:USB)
USB.N ; and Lebenthal & Co, according to papers filed on Friday
in the U.S. District Court in Manhattan. All denied wrongdoing.
Investors led by the Virginia Retirement System and the
Canadian province of Alberta accused the defendants of making
false and misleading statements when they helped MF Global sell
$325 million of 6.25 percent senior notes in August 2011, or
were liable for misstatements in the bonds' offering materials.
The settlement requires court approval.
It would boost the investors' total recovery to about $234
million, including $74.9 million from other underwriters, $65
million from the auditor PricewaterhouseCoopers, and $64.5
million from Corzine and other MF Global officials.
"We are pleased to have resolved this matter, and this
resolution will have virtually no impact on our 2016 results," a
Jefferies spokesman said.
A spokesman for US Bancorp declined to comment. The other
defendants did not immediately respond to requests for comment.
MF Global filed for Chapter 11 protection on Oct. 31, 2011
as worries mounted about its sovereign debt exposure, credit
rating downgrades, margin calls and news that customer funds had
been used to cover liquidity shortfalls.
Before taking over MF Global, Corzine had been a U.S.
senator and governor from New Jersey, and a co-chairman of
Goldman Sachs (NYSE:GS) GS.N .
Lawyers for the bond investors plan to seek legal fees of 19
percent of the settlement fund, court papers show.
The case is In re: MF Global Holdings Ltd Securities
Litigation, U.S. District Court, Southern District of New York,
No. 11-07866.