Our law firm is investigating claims against underwriters of Notes issued by MF Global (OTC: MFGLQ.PK) including MF Global 6.250% Senior Notes due 2016, MF Global 3.375% Convertible Senior Notes due 2018 and MF Global 1.875% Convertible Senior Notes due 2016. Particularly, we are investigating what these underwriters knew or should have known concerning the financial problems of MF Global, and whether material information concerning MF Global was adequately disclosed in the Notes’ prospectuses. It has been reported that in retrospect, prospectuses for certain MF Global bond offerings appear to be misleading. Underwriters of MF Global Notes include Jefferies (NYSE: JEF), BofA Merrill Lynch (NYSE: BAC), BMO Capital Markets (NYSE: BMO), Lebenthal & Co., Commerzbank, Sandler O’Neill + Partners, Natixis and US Bancorp (NYSE: USB).
On November 10, 2011, Fitch Ratings said that owners of MF Global’s senior unsecured debt will recover 30 cents to as low as 10 cents on the dollar of their investment, in the company’s bankruptcy. What MF Global noteholders will actually receive from the bankruptcy or how long the bankruptcy process will take to play out remains to be seen. Accordingly, MF Global noteholders should avail themselves of all available remedies in attempting to recover their losses, including filing an individual securities arbitration claim against the underwriter broker-dealer where they purchased MF Global Notes.
Underwriters of MF Global securities were faced with legal action only three years ago. In early 2008, a class action lawsuit was filed against various underwriters for failure to conduct an adequate due diligence investigation into MF Global before its IPO and they also failed to reveal, that at the time of the IPO, that MF Global lacked basic risk management and trading risk safeguards. The Complaint further alleged that the Registration Statement and Prospectus issued in connection with MF Global’s IPO were materially false and misleading. In 2011, a $90 million settlement was reached with MF Global and the Underwriter Defendants. MF Global’s contribution to the settlement was only $2.5 million.
Underwriters of a securities offering have an obligation to conduct adequate due diligence of the issuer during the underwriting process. Further, underwriters are charged with the duties of ensuring the accuracy of the securities registration statements and prospectuses, and that investors are provided with full and fair disclosure of material information concerning the securities and issuing company. The Securities Act of 1933 subjects underwriters to potential liability for any material misrepresentations or omissions contained in a registration statement or prospectus. Investors alleging violations of the Securities Act do not need to demonstrate that the underwriters who approved the offerings’ disclosure documentation intended to deceive investors, but only that the documents were deficient.
Retail and institutional investors who purchased MF Global Notes can contact KlaymanToskes to explore their legal rights and options.