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Entwistle & Cappucci LLP, Berger & Montague, P.C. and the Trustee for the MF Global Liquidation Announce Proposed Settlement of Claims Against JPMorgan

Posted: March 19, 2013
Source: Business Wire
Outcome: Settlement
Practice Areas: Commercial Litigation, Commodities and Options

NEW YORK, NY, March 19, 2013 - (BUSINESS WIRE) - Co-Lead Counsel for the Class of MF Global Inc. ("MFGI") customers and James W. Giddens, the trustee ("Trustee") for the liquidation of MFGI, have announced a settlement ("Settlement") of all potential claims against JPMorgan Chase Bank, NA and its parents, subsidiaries and affiliates ("JPMorgan"). The proposed Settlement will be contemporaneously presented by motions for approval to both District Court Judge Victor Marrero and to Bankruptcy Court Judge Martin Glenn.

The proposed Settlement, which will resolve all of the Customer Representatives' and Trustee's potential claims against JPMorgan arising both from transfers of Customer Property during the days preceding MFGI's collapse and from JPMorgan's conduct as one of MFGI's primary banks and repositories of Customer Property, provides a sizable benefit to the Settlement Class of former customers of MFGI. Subject to Court approval, the Settlement provides for a $100 million cash payment from JPMorgan for distribution to MFGI's former customers.

In addition to the $100 million cash payment, the Settlement also provides for the return of approximately $29 million in proprietary MFGI funds held by JPMorgan to secure potential obligations under a certain revolving credit facility agreement and JPMorgan's clearance and other agreements with MFGI, as well the release of JPMorgan's retained liens and set off rights in approximately $417 million of proprietary MFGI funds it previously remitted to the Trustee, permitting these funds to be made available to MFGI's customers and creditors.

Upon approval, the Settlement will enable the Trustee to immediately seek to allocate $250 million to the 4d Customer Estate for the benefit of MFGI customers who engaged in commodity transactions on domestic exchanges ("4d Customers") and $50 million to the 30.7 Customer Estate for the benefit of customers who transacted on foreign exchanges ("30.7 Customers"). Moreover, the Settlement with JPMorgan will satisfy an important condition to the effectiveness of the settlement between the Trustee and the Joint Special Administrators of MF Global UK Limited ("MFGUK"), approved by the Bankruptcy Court on January 31, 2013, which will facilitate the recovery from MFGUK of approximately $500-$600 million (over time) for additional distribution to customers and general creditors. All told, the Settlement will ultimately enable the Trustee to distribute to customers an amount approaching $1 billion.

The Class is continuing to pursue its claims against the former directors and officers of MFGI, including Jon Corzine, and against MFGI's former auditor, PricewaterhouseCoopers and MFGI's primary regulator, the CME Group.

Co-Lead Counsel for the customers, Andrew Entwistle of Entwistle & Cappucci LLP and Merrill Davidoff of Berger & Montague, P.C., were especially pleased with the Settlement. Attorney Entwistle observed that: "This Settlement reflects the cooperative efforts of our team and the Trustee over many months of investigation and negotiations with JPMorgan; represents a favorable and economically sound resolution to what would otherwise have been a costly and protracted legal battle; and is a key recovery for the Customers both in its own right and as the
lynchpin to the UK settlement recently approved by Judge Glenn." Attorney Davidoff observed that: "We are pleased JPMorgan elected to resolve these claims early enough to enable the Trustee to return significant sums to customers, and especially that the contemporaneous release of liens asserted by JPMorgan will free up hundreds of millions of dollars that can be distributed once the Settlement becomes final."

Entwistle also observed that: "While a substantial shortfall will still remain for 4d and 30.7 Customers, the $800m-900m that this Settlement will cause to be paid to customers over time is a tremendous step forward in this process." Davidoff further stated that: "Nearly a year and a half has passed since the management of MFGI improperly transferred hundreds of millions of dollars in segregated customer property for use by the firm, while PwC and CME Group enabled their reckless behavior. It is time that the remaining parties pay for their improper behavior and make MFGI's former customers whole."

More information about the case can be found at http://www.entwistle-law.com/resources/index. The filed case number is 11-cv-7866 (VM) (U.S. Dist. Ct., S.D.N.Y.).

About Entwistle & Cappucci LLP
Entwistle & Cappucci is a national law firm providing top-flight legal representation and exceptional service to clients that include major public corporations, a number of the nation's largest public pension funds, governmental entities, leading institutional investors, domestic and foreign financial services companies, emerging business enterprises and individual entrepreneurs.

The lawyers who founded the firm in 1998 did so with a commitment to excellence, integrity and creativity. Its strong reputation among clients, adversaries and the judiciary is not inherited from prior generations. Instead, the firm has earned its reputation day-by-day, client-by-client and matter-by-matter. The firm's approach to the practice of law is business-oriented and pragmatic.

About Berger & Montague, P.C.
Berger & Montague, P.C., based in Philadelphia, PA, consists of over 60 attorneys who represent plaintiffs in complex and class action litigation. The firm has played lead roles in major cases for over 40 years resulting in recoveries of over $22 billion for their clients and the classes they represent. On the Web: www.bergermontague.com.

If you wish to discuss this action or have any questions concerning this press release, or your rights or interests with respect to this matter, please contact: Andrew J. Entwistle, Esq. (aentwistle@entwistle-law.com) of Entwistle & Cappucci LLP, 280 Park Avenue, 26th Floor West, New York, NY 10017, Telephone: (212) 894-7200; or Merrill G. Davidoff (mdavidoff@bm.net) or Michael Dell'Angelo (mdellangelo@bm.net) of Berger & Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, Telephone: (215) 875-3000.