SOURCE: Kaplan Fox & Kilsheimer LLP

November 15, 2011 18:32 ET

Kaplan Fox Files Securities Class Action on Behalf of Purchasers of MF Global Holdings Ltd. Securities During the Period May 20, 2010 Through October 28, 2011

NEW YORK, NY--(Marketwire - Nov 15, 2011) - Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has filed a class action suit against Jon S. Corzine, J. Randy MacDonald, Henri J. Steenkamp and certain other individuals that alleges violations of the Securities Exchange Act of 1934 on behalf of purchasers of the securities of MF Global Holdings Ltd. ("MF Global" or the "Company") (NYSE: MF) (OTCQB: MFGLQ) (PINKSHEETS: MFGLQ) during the period May 20, 2010 through October 28, 2011, inclusive, including investors who purchased MF Global common stock previously traded on the New York Stock Exchange under the symbol "MF" and purchasers of the Company's debt securities.

The case is pending in the United States District Court for the Southern District of New York. A copy of the complaint may be obtained from Kaplan Fox or the Court.

The complaint alleges that in March 2010, Corzine, a former CEO of Goldman Sachs Group, Inc. and former Governor of New Jersey, became Chairman and CEO of MF Global and that after Corzine became Chairman and CEO of MF Global, the Company increased its risk and used its own money to trade, including making investments in European sovereign debt that has plummeted in value. Reportedly, Corzine's strategy was to transform the Company from a futures broker into a boutique investment bank.

The complaint further alleges that Corzine's push into more risky and principal trading with the Company's money was central to MF Global's profit-growing plan and transformation, and that Corzine and the other defendants represented that they could grow and transform the business without taking on excessive risk, while maintaining adequate capital and liquidity. Further, it is alleged that while making this transformation, Corzine and the other defendants failed to disclose that the Company was undercapitalized, exposed to excessive risk due to massive bets on debt issued by certain European governments, and did not have proper risk controls in place to manage these risks.

The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements to investors by misrepresenting and failing to disclose that: (a) MF Global was materially undercapitalized; (b) MF Global lacked adequate capital to support its transformation and expansion into risky and principal transactions, including investments in European sovereign debt; (c) MF Global had been warned by regulators that it was operating out of compliance with regulatory capital requirements; (d) MF Global's internal and risk controls were not as represented and inadequate to allow the Company to properly balance risks and rewards as it underwent its transformation and expansion into risky and principal transactions; (e) MF Global's liabilities were materially understated on MF Global's balance sheet due to the Company's temporary reduction of its short-term borrowings each quarter shortly before reporting its quarterly financial results, a technique known as "window dressing"; (f) MF Global was masking its true risk levels by materially reducing short-term borrowings each quarter shortly before reporting its quarterly results; (g) MF Global's reported financials were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (h) MF Global was suffering from serious liquidity pressures based on its exposure to European sovereign debt; and (i) MF Global was diverting customer funds to support its own risky and principal transactions, including investments in European sovereign debt.

The Complaint alleges that the truth began to emerge on October 24, 2011, when Moody's slashed MF Global's credit-rating to Baa3, or nearly junk status, citing the Company's significant risk exposure to European debt. The complaint further alleges that on October 25, 2011, the Company disclosed more than $6 billion in European sovereign debt exposure. It is alleged that following the Moody's downgrade and MF Global's release of quarterly results, including $6.3 billion in European sovereign debt, MF Global's common stock price declined by about 50% from a close of $3.68 per share on October 21, 2011 to close at $1.86 per share on October 25, 2011 on heavy trading volume.

If you are a member of the proposed Class, you may move the court no later than January 3, 2012 to serve as a lead plaintiff for the Class. You need not seek to become a lead plaintiff in order to share in any possible recovery.

Plaintiff seeks to recover damages on behalf of the Class and is represented by Kaplan Fox & Kilsheimer LLP. Our firm, with offices in New York, San Francisco, Los Angeles, Chicago and New Jersey, has many years of experience in prosecuting investor class actions and actions involving financial fraud. For more information about Kaplan Fox & Kilsheimer LLP, or to review a copy of the complaint filed in this action, you may visit our website at www.kaplanfox.com.

Contact Information

  • If you have any questions about this Notice, the action, your rights, or your interests, please contact:

    Pamela A. Mayer
    KAPLAN FOX & KILSHEIMER LLP
    850 Third Avenue, 14th Floor
    New York, New York 10022
    (800) 290-1952
    (212) 687-1980
    Fax: (212) 687-7714
    E-mail address: pmayer@kaplanfox.com

    Laurence D. King
    KAPLAN FOX & KILSHEIMER LLP
    350 Sansome Street, Suite 400
    San Francisco, California 94104
    (415) 772-4700
    Fax: (415) 772-4707
    E-mail address: lking@kaplanfox.com