MF Global damaged by rogue trade problems from the past
MF Global, the brokerage spun out of Man Group two years ago, has seen problems caused by a rogue trader come back to haunt it.
Man, the London-listed hedge fund giant, sold its remaining stake in the firm in August 2009.
It is still partially liable for lawsuits relating to the time before then, it became clear today, after Man was one of several parties that settled a suit for $90 million (£56 million).
Some investors claimed they were misled about risk management at the brokerage, which surfaced when a rogue broker caused a trading loss of $141.5 million on wheat futures in less than seven hours.
The investors said this revealed flaws in MF Global's risk-management system that should have been made clear the previous July, at the time of the flotation. The settlement covers investors from July 2007 to February 2008.
MF Global is based in New York and has been led since March 2010 by Jon Corzine, a former chief of Goldman Sachs. MF Global will contribute $2.5 million towards the settlement.
A spokesman for Man said: "We recognised these sums in our 2011 accounts and the settlement extinguishes all related and adjacent claims arising out of the MF Global flotation."
