Commenting on today’s Supreme Court judgment on the Lehman case and its implications on the MF Global UK segregated client pool, Richard Heis, joint special administrator and restructuring partner at KPMG, said:
“We welcome that we now have additional clarity from the Supreme Court albeit that there are further uncertainties around who is entitled to participate in the client money pool (CMP), some of which may need to be decided in court.
“Today’s judgment is likely to result in a substantially reduced percentage payout from the CMP as the money will be shared out amongst a much larger number of claimants. We have recovered approximately $1bn of client money which has been actually segregated by the banks (a further $0.1bn being held with affiliates) and recognise $1.1bn of client claims relating to those funds. The $1bn of money recovered will now be divided amongst a larger group, including clients who were entitled to have client money segregated for them as at the date of MF Global UK’s administration, irrespective of whether MF Global UK had in fact segregated client money for them prior to its administration. Any such claims will need to be assessed on their facts and in the light of the judgment.
“While this is good news for some claimants, who are more likely to receive better returns because of an entitlement to share in the client money pool, we expect to receive a very negative response from clients with written confirmation of segregated status.
“In developing our interim distribution model, we accounted for all the eventualities in the Lehman judgment, so our distribution can withstand this outcome and nothing will need to be recouped as a result of this.
“We will spend the next few days analysing the full implications of the judgment on returning MF Global UK client money and will communicate with clients as soon as we are able to.”
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For further information, please contact:
Sorrelle Cooper, Senior PR manager, KPMG
sorrelle.cooper@kpmg.co.uk
020 7694 8527 / 07932 078218
KPMG Press Office: 020 7694 8773
Notes to Editors
Richard Fleming, Richard Heis and Mike Pink of KPMG LLP were appointed joint special administrators of MF Global UK Limited, a UK based broker-dealer business, and MF Global UK Services Limited, which provides employee and pension services in relation to the UK operations, at 5pm on Monday 31st October 2011. MF Global UK Limited is a wholly owned subsidiary of MF Global Europe Limited which in turn is a subsidiary of MF Global Holdings Limited, a company incorporated in Delaware, USA, which filed for chapter 11 bankruptcy protection on 31st October.
The objectives of the administration are:
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To ensure the return of client assets as soon as is reasonably practicable;
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To ensure the timely engagement with market infrastructure bodies and the Authorities pursuant to regulation 13; and
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To either rescue the Investment Bank as a going concern or wind it up in the best interests of creditors.
About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
