JP Morgan And MF Global Agree Over $546M Settlement

JPMorgan Chase & Co. (NYSE:JPM) has agreed to pay $100 million to MF Global Holdings Ltd (PINK:MFGLQ) and will return $29 million in funds that it holds since MF Global declared bankruptcy in 2011, reports NewYorkTimes.

JP Morgan And MF Global Agree Over $546M Settlement

Court trustee James Giddens told that as a result of this payment the investors of failed brokerage MF Global Holdings Ltd (PINK:MFGLQ) will witness a return rate of 93 percent on the dollar for their investments. The appointed trustee, in charged with recovering funds for clients will also the release $417 million in funds from JPMorgan Chase & Co. (NYSE:JPM), this amount has already been transferred by the bank.

For foreign investors also the settlement will enhance the return rate from 75 percent to 82 percent of their investment, told the bank appointed trustee. Giddens revealed that, for the clients of MF Global, the settlement with the JP Morgan was a better option than taking the issue to court.

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“This is a favorable and economically sound agreement ending what would have been a costly, protracted, and uncertain legal battle. Without the agreement, additional substantial distributions would have been delayed for at least two or three years,” Giddens said.

MF Global filed for bankruptcy in late 2011 and have lost about $1.6 billion in client funds in the weeks leading up to its collapse. The trustee informed that in the firm’s final week of business about $105 billion in cash was distributed.

The firm’s top executive also a former New Jersey Gov. Jon Corzine told he had no information about the missing funds until few weeks before the company declared bankruptcy. However, it has been revealed that the form was using investor’s money to cover its own obligations. Though no criminal charges have yet been levied.

JPMorgan Chase & Co. (NYSE:JPM) was one of the primary clearing banks for MF Global Holdings Ltd (PINK:MFGLQ)and was also a lead on a $1.2 billion loan to the firm. Previously the bank has retained claims on some of the collateral posted by MF Global that resulted in a legal fight.

As per the filing, the trustee will ask the bankruptcy court to allow the distribution of $250 million to former MF Global Holdings Ltd (PINK:MFGLQ) customers who traded on U.S. exchanges and $50 million to investors who invested through foreign exchanges.

The settlement between JPMorgan Chase & Co. (NYSE:JPM) and MF Global Holdings Ltd (PINK:MFGLQ) is subjected to approval from the courts.