Many companies encourage employees to purchase company stock through various programs. MF Global was no different. MF Global is a financial firm specializing in commodities trading using financial derivatives and futures to hedge risks. However, employees at MF Global were unaware the brokerage was on the brink of a bankruptcy filing.
On October 31, 2011, MF Global filed for Chapter 11 bankruptcy protection after bad derivatives bets on European sovereign debt. Shortly before the bankruptcy filing $200 million was transferred out of MF Global and to a JP Morgan account, according to Reuters. National Public Radio reports that customer accounts are missing upwards of $1.2 billion.
Federal regulators have questioned whether the brokerage unlawfully tapped into customer funds - which are supposed to be segregated - as its financial situation deteriorated. The practice of mixing funds is a clear violation of industry standards and could lead to civil and criminal penalties.
Employee Lawsuit
MF Global had U.S. employees located in Chicago and New York. According to fins.com, former employees filed a class action lawsuit against the firm's former Chief Executive Jon Corzine along with the other senior executives and the board of directors in early December 2011. Plaintiffs allege that they were given "false information regarding the company's financial condition." The class-action lawsuit also alleges that financial statements "artificially inflated the stock price."
Former employees also argue that the board breached its duty to the employees. This comes after MF Global fired all 1,066 employees on November 11, 2011 as part of a bankruptcy liquidation plan. Employees at MF Global not only lost their jobs, but many lost their retirement savings, which were highly investing in MF Global stock. The employees did not file against MF Global, because the firm is already in bankruptcy proceedings and undergoing liquidation. This evolving story continues to parallel losses that occurred following the Enron scandal.
If you or a loved one lost retirement savings after investing in your employer's stock under the impression that the company was financially sound, you should call 877-DIAL-A-LAWYER and we will put you in touch with an attorney who can protect your rights.
