In a ruling yesterday, Judge William Pauley approved $100 million settlements by Moore Capital Management LP and a former MF Global Inc. broker in a class action suit over manipulation of platinum and palladium futures prices. The settlements for alleged commodities fraud and antitrust claims, two by Moore totaling $57.4 million and two by Joseph Welsh of the former MF Global totaling $42 million, overruled objections by the liquidating trustee for MF Global and a potential class member Susan Levy. They resolved claims over the alleged scheme of “banging the close” where traders enter buy orders in the final seconds of the day in order to increase futures contract prices. The plaintiffs originally filed suit in 2010 after the U.S. Commodity Futures Trading Commission accused Moore of attempted manipulation, which they agreed to settle for $25 million. Under Tuesday’s agreement, the hedge fund will pay $48.4 million to a class of plaintiffs that bought palladium futures contracts between June 2006 and April 2010, and will pay $9.4 million to a class of plaintiffs that bought physical platinum or palladium during the same time frame. Claims against MF Global, a former defendant in the suit, were stayed after the brokerage firm went bankrupt. The MF Global trustee, objecting to the approved pacts, wished to make clear that the settlements would not preclude claims against the firm and that any admission by Welsh was not binding on the company, according to Tuesday’s order. The potential class member alleged that the settlements were the result of collusion. Judge Pauley ruled that “The proposed settlements appear to be the results of informed, noncollusive negotiations, have no obvious deficiencies, do not improperly grant preferential treatment to any class members, and are within a reasonable range for approval.” The judge denied plaintiff’s motion to intervene in a separate class action against former MF Global executives related to the firm’s 2011 collapse. Those plaintiffs wish to recover money from the very insurance policies that have been requested to fund Welsh’s settlement. However, according to the Judge’s order, the former broker’s insurers have denied him coverage on the claims. Read more about MF Global here
In his latest MF Global ruling, issued today, Judge Marrero denied PriceWaterhouseCooper’s motion to dismiss a $1 billion malpractice and negligence suit brought by the bankrupt brokerage firm’s plan administrator. PwC had acted as an outside auditor and accountant for MF Global before it went bankrupt. The plan administrator alleged that PwC “engaged in ‘extraordinary and egregious professional malpractice and negligence.’” According to the complaint, MF Global relied on PwC’s advice in accounting for proprietary investments it had made in European sovereign debt that ultimately backfired and led to the firm’s bankruptcy in 2011. PwC moved to dismiss the claims on the grounds of in pari delicto, arguing that MF Global was equally guilty of malpractice because of its “business strategy and decision-making” in implementing PwC’s strategies. Judge Marrero held that PwC’s “broad reading of the doctrine,” was “not in line” with New York law and would “insulate an auditor from liability whenever a company pursues a failed investment strategy after receiving wrongful advice from an accountant.” Nonetheless, Judge Marrero cautioned, “this is not to say that MF Global and its officers will play no role in the outcome” of the case, as it must prove that it “innocently accepted PwC’s negligent advice.” Our prior posts on the MF Global litigation can be found here.
In an opinion issued yesterday, Judge Marrero granted in part and denied in part the latest motion to dismiss one of a “plethora” of lawsuits against MF Global, Jon Corzine and other former employees and directors of the now-defunct firm. With this his third ruling in the past several months on claims based on the same set of operative facts, Judge Marrero praised the parties for recognizing that certain of their arguments had been ruled upon in the prior decisions, while noting that they were still re-arguing some points that had already been decided:
As the parties forthrightly admit, the Court’s ruling in the Commodities Customer Action effectively disposes of several of Sapere’s claims. The Court appreciates the extent to which the parties have acknowledged areas of agreement and consensus. However, the Complaint filed here contains claims beyond those made in the Commodities Customer Action. Sapere raises causes of action for fraud and violation of New York state law, and it has brought claims against defendants not sued in the Commodities Customer Action. To this extent, Sapere repeats the failures made by the plaintiffs in the Commodities Customer Action: it has “brought claims that fly in the face of clear precedent” and “brought other claims against some defendants who could not plausibly bear responsibility for any of the harm [Sapere] allege[s]. And Sapere’s lengthy, 75 page opposition memorandum of law cannot save those claims because “[n]o amount of argument can overcome the lack of legal support for several of the claims [Sapere] filed in this action.
Prior posts on the MF Global cases are here.
In a 79-page decision today, Judge Marrero largely denied a series of motions to dismiss a class action brought by customers of MF Global against the company and others formerly affiliated with the company. Echoing an earlier 105-page ruling denying a motion to dismiss a securities class action brought by MF Global shareholders, Judge Marrero lamented that the parties could not reduce or eliminate the extensive motion practice:
In a 105-page ruling today, Judge Marrero denied the defendants’ motion to dismiss a securities fraud class action arising from the collapse of MF Global. The ruling forcefully rejected as “extreme” the notion that none of the 23 defendants could be legally responsible for the sudden loss of billions of dollars:
Yesterday, Judge Keenan dismissed a complaint against several producers of fossil fuels that asked the court to address the producers’ role in the effects of climate change. The complaint, filed by the City of New York, alleged that the defendants had known for decades about the effects of their fossil fuel emissions on the global climate but continued to promote these fuels. The City alleged it was harmed when it had to take additional steps to protect the City and its infrastructure from the effects of climate change, including rising sea levels and intense storms like Hurricane Sandy.
Judge Keenan held that the state law claims alleged in the complaint were preempted by the federal Clean Air Act. According to Judge Keenan: Continue Reading Judge Keenan: Addressing Climate Change is “Squarely Within the Purview of the Political Branches”