Attorney Diane Nygaard: MF Global Clients Face Deadline to File Claims

- by

Chicago, ILClients who had money frozen and are considering an MF Global lawsuit should check their client agreements. According to Diane Nygaard, a securities and commodities attorney at Kenner Schmitt Nygaard, LLC, clients affected by MF Global securities fraud will likely have to file an arbitration, which is actually good news, because it means claimants will not have to wait until bankruptcy is over before receiving their MF Global funds. But it also means that time is of the essence for clients to file a claim.

"The MF Global Customer Agreement is interesting," Nygaard says. "It has an arbitration clause and it requires clients to file a claim within one year of the date of loss. So that means clients only have another six months (until October) to file their claims."

It's important for clients to realize that they should not wait until October to contact an attorney. Nygaard is in the process of putting together group arbitrations, which requires her to evaluate claims, obtain the necessary documents and file the arbitration. The sooner clients contact her, the sooner they can get the arbitration process underway.

"I'm sending a contingency fee agreement to clients who contact me, so it doesn't cost them anything right now other than their portion of the filing fees," Nygaard says. "We're filing group arbitrations before the National Futures Association [NFA] because it is mentioned in the MF Global Customer Agreement. We're going to meet with clients who are interested in participating in group arbitration in two weeks in Chicago."

That does not mean that clients must live in or near Chicago to be part of group arbitration; the meeting is in Chicago because that is where the NFA is. But Nygaard is speaking with clients across the US who were affected by MF Global. Clients who do not live in Chicago should still contact her to join a group arbitration.

Clients who had introducing brokers—meaning they were trading commodities but not using MF Global directly—can still file a claim against MF Global. Nygaard says that simply choosing MF Global as the clearing firm would not make the introducing broker liable for MF Global's actions.

"People with an introducing broker most likely do not have a client agreement with an arbitration clause in it," Nygaard says. "Based on what I know right now, I don't think there's liability on the part of introducing brokers. MF Global was the largest clearing firm, so using them would not be considered negligent. There was nothing going on that should have put the introducing brokers on alert or raised any red flags."

But, such clients could still have a claim against Jon Corzine and other controlling persons of MF Global, and the arbitration would be filed against such people. Controlling persons of MF Global would have errors and omissions coverage, which is where missing funds would be recovered from. Because controlling people are named in the arbitration, instead of the company itself, arbitration would not be stayed by bankruptcy.

Clients may be considering an MF Global lawsuit to recover their missing money—which could still amount to hundreds of thousands of dollars, despite some returns from the trustee. But a lawsuit is more expensive than arbitration and will take much longer to conclude. A lawsuit could also be affected by MF Global bankruptcy.

"I anticipate the bankruptcy will take four to five years, minimum," Nygaard says. "That's typical of these situations. But it's too long for people to wait. If they wait for a lawsuit, their other claims will be barred by the statute of limitations and their arbitration agreement. Lawsuits take a lot of time and are expensive because they require depositions. Arbitrations can be done more quickly and less expensively. But clients should contact me as soon as possible so we can get started on the arbitration."

MF Global Legal Help

If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to a securities fraud lawyer who may evaluate your MF Global claim at no cost or obligation.

Add Your Comment on This Story

Please read our comment guidelines before posting.

Note: Your name will be published with your comment.

Your email will only be used if a response is needed.

Request Legal Help