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MF Global Judge Tells Trustee to Disclose More on Firmís Work for JPMorgan

Christopher Elias (UK)

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Dec. 6, 2011

MF Global Inc. brokerage trustee James Giddens must disclose more details of his work for JPMorgan Chase & Co. (JPM) and PricewaterhouseCoopers LLP before a judge determines whether he can handle the case disinterestedly.

U.S. Bankruptcy Judge Martin Glenn in a court order today told the trustee to say whether PwC or JPMorgan, agent for a $300 million loan to MF Global’s parent, or any of the company’s other lenders are currently clients of Giddens’s law firm, Hughes Hubbard & Reed LLP, and if so, the fees billed or collected.

Glenn, in Manhattan, also wants to know whether any of the law firm’s other current clients are creditors of the brokerage and how much they have paid in fees. In addition, he asked whether JPMorgan was a creditor of the brokerage, and whether Giddens could sue the bank if necessary. The information must be in the judge’s hands by 5 p.m. on Dec. 12, Glenn said.

“The status of an entity as a current client (as opposed to a former client) can make an important difference in evaluating conflicts and disinterestedness,” the judge said in the order.

Glenn directed Giddens to disclose his business ties to New York-based JPMorgan after two brokerage customers said the trustee’s links to the parent company’s lender might influence his treatment of the brokerage’s customers. Giddens’s initial disclosure failed to give details of his firm’s current work for JPMorgan, the judge said.

‘Sparse’ Disclosures

The brokerage’s parent, MF Global Holdings Ltd., is in a separate court proceeding, also being handled by Glenn. The parent and its brokerage have made “sparse” disclosures about the facts leading to the companies’ collapse, the judge said.

Press reports have “raised questions” about whether funds or property were transferred from the brokerage to JPMorgan before the bankruptcies, Glenn said in explaining why he wants more disclosure.

“We believe that HHR’s representation of the Trustee in this matter is appropriate and there are already existing procedures in place to deal with any apparent conflicts concerning legal actions going forward,” Kent Jarrell, a Giddens spokesman, said in an e-mailed statement. “We will be submitting answers to questions asked by the court.”

Account Transfers

Giddens, who is liquidating the brokerage, has transferred about 38,000 commodity accounts to other firms, and said he plans to sell 330 securities accounts. Three transfers of collateral made and pending will give commodity customers about $4 billion of their assets, according to court filings.

The parent company’s Oct. 31 bankruptcy filing, the eighth- largest in U.S. history, listed assets of $41 billion. Jon Corzine, the former co-chief executive officer of Goldman Sachs Group Inc., quit as MF Global’s CEO on Nov. 4.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at

To contact the editor responsible for this story: John Pickering at