CCC Files Response Brief in MFGI Bankruptcy, Seeks Order for Customer Priority Interest to Follow Funds to Any Entity to Which they Flowed; to be Joined by Brokerage Firms
Commodity Customer Coalition (“CCC”) filed a Response Brief to the Memorandum from the SIPA Trustee and CFTC regarding the distribution and allocation of customer property in the MF Global, Inc, (“MFGI”) bankruptcy. The Brief seeks an order from the court that customers are entitled to a first-priority interest in the estate of MFGI, that this first-priority right follows customer funds to each and every entity to or through which those funds flowed and that the Trustee pursue those funds even if it means such an entity be required to give up alternative funds to satisfy this customer interest. A copy of the Brief may be obtained at http://goo.gl/Wp8TK.
James Koutoulas, attorney and co-founder of the CCC, issued the following statement:
The CCC is asking the court to order what the law requires: that the segregation protection of commodity customer funds travels with those funds as the FCM moves them throughout its organization. The Trustee has an obligation to trace customer funds wherever they travelled and claw them back to the estate of MF Global, or sue the entity who accepted them to recover them, so he may distribute those funds to customers.
The CCC filed this Brief with the support of several commodity brokerage firms, who will be adding their signatures in the coming days. An update will be added to the filing early next week.
The brief is intended to provide the legal framework to return customer funds to the MFGI estate that can be traced to MFGI subsidiaries, affiliates and counterparties. The CCC believes that the estate of MFGI is not in control of the customer funds that it will need to return all property to commodity customers and that the Trustee needs to be able to go after those funds no matter where they have been transferred.
John L. Roe, co-founder of the CCC, added:
If the segregation rule that protects commodity customer funds can be undermined simply by transferring those funds to an affiliate, then the protection is a paper tiger. The segregation protection must follow customer funds wherever a broker sends them.