MF Global Update: MF Global Proceedings Test Multiple Insolvency Statutes

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On October 31, the MF Global enterprise collapsed into bankruptcy and a number of related insolvency proceedings. Amid allegations of improper commingling of customer accounts and rumors of misbegotten proprietary Eurobond trades, two unregulated entities – MF Global Finance USA Inc. and MF Global Holdings Ltd. (the Unregulated Debtors) – filed voluntary bankruptcy petitions on October 31, 2011. Later the same day, the Securities Investor Protection Corporation filed a complaint in the U.S. District Court for the Southern District of New York, seeking appointment of a trustee to commence liquidation of MF Global Inc. (MFGI) under the Securities Investor Protection Act (SIPA). By the end of the week, regulated brokerages were also in administration under local insolvency regimes in the United Kingdom, Australia, Singapore, India, Hong Kong and Canada.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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