Lead Plaintiffs in Combined MF Global Lawsuit Out $19 Million: Report

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New York, NYIt's not just the small investor embroiled in an MF Global lawsuit. Larger players, such as the Province of Alberta in Canada, and the Virginia Retirement System (VRS), have been reportedly burned by alleged misdeeds that led to the collapse of MF Global Holdings Ltd.

According to a recent report from Bloomberg in the Edmonton Journal (1/27/12), lawsuits against Jon Corzine, a former state governor who headed the now-defunct firm, have been combined through an order by US District Judge Victor Marrero. The group lawsuit will be led by the Province of Alberta and the VRS, which both suffered losses with the sinking of MF Global stock and the collapse of MF Global Holdings.

The two lead plaintiffs reportedly are out a combined $19 million through the demise of MF Global securities.

According to various court documents, executives charged with steering the MF Global funds made "materially misleading" statements regarding the liquidity of the MF Global shares and financial controls that were or were not in place preceding the failure. Plaintiffs further allege the bank involved in the alleged MF Global securities fraud, JPMorgan Chase & Co., should have noted a "depletion" of client funds and should have subsequently investigated.

It has been reported that plaintiff Joseph DeAngelis, who brought the first of 12 similar MF Global lawsuits just combined, named Henri Steenkamp—who served as CFO of MF Global Holdings—and Bradley Abelow, its president, together with Jon Corzine, the former Governor of New Jersey.

DeAngelis alleged that each of the defendants "had the power and influence—and exercised such power and influence—as to cause MF Global to engage in the unlawful conduct and practices," DeAngelis alleged. "Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of MF Global common stock."

The MF Global lawsuit alleges that the company's Q2 results released October 25 "falsely stated" the company had strengthened its capital and liquidity, when in fact the company was struggling and at the brink of collapse.

Six days after issuing its Q2 results, MF Global filed for bankruptcy after betting on European sovereign debt and getting margin calls. MF Global listed $41 billion in assets at the time of bankruptcy, while the parent company's commodity brokerage is missing $1.2 billion in customer assets.

Some are calling the alleged MF Global securities fraud a blatant MF Global scam.

The judge's order combining the lawsuits was signed January 20 and entered into the court docket five days later. The two lead plaintiffs of the combined actions in the MF Global lawsuit are reported to have won the lead position over competition from investment funds and union pension trusts.

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