On 3 February 2012, the administrators for MF Global UK Ltd announced the first distribution of client money to those affected by the firm’s insolvency. Here we answer some frequently asked questions about the situation and what this means if you were a customer.
- What is the Special Administration Regime (SAR)?
- When will I get my money and how much will I receive?
- What should I do if I was a MF Global customer?
- What is preventing a larger payout?
- What happens if I am in non-segregated account?
- What has the FSA being doing since the administration?
- Can the FSA grant superior status to clients who are unsecured creditors?
- Will a review of the SAR be conducted?
- Can I claim against the FSCS?
- Where can I find further information from the FSCS?
- Where can I find further information from the administrators?
Frequently asked questions
On Monday 31 October 2011, following an application by its directors to the High Court, MF Global entered the Special Administration Regime (SAR). The administrators are from KPMG.
The SAR, introduced by the government in 2011, helps sort out situations where investment firms, which hold client money and assets, fail. It aims to ensure money is returned to customers’ as soon as practicable, and acts in the best interest of those who are owed money.
We are working with the administrators to ensure client money and assets are returned as soon as is practical.
On 3 February 2012, the administrators announced that they are to make a first distribution of 26 cents for each US dollar of an agreed claim for client money.
The administrators are then hoping to make further distributions.
KPMG provides further details on this process and how its administrators work out distribution values here.
We will continue to monitor progress to ensure that further returns of customer money are made as quickly and efficiently as practicable.
You should contact the administrators at KPMG.
To make a claim contact: [email protected]
For all other enquiries contact: [email protected]
Investors may also be able to make a claim via the Financial Services Compensation Scheme (FSCS).
The administrators intend to make a first distribution of 26 cents for each US dollar of an agreed claim for client money. This is the maximum that KPMG has calculated can be returned at this stage.
When making interim distributions of client money, the administrators need to keep funds available to ensure that potential distributions of client money to customers in the future are fair.
This is because:
- There is continued uncertainty about who is entitled to claim a share of the client money pool.
- Many of the parties who are owed money are claiming that their funds should have been separated from the overall total fund. The most significant example of this is $838 million of claims submitted by MF Global Inc. If this did not need to be taken into consideration the administrators could have paid 42 cents to the dollar rather than 26 as an initial distribution.
- You can find more information in the court papers.
Segregated account holders have a claim against the client money pool. Non-segregated account holders do not.
Clients of MF Global with non-segregated accounts have an unsecured claim and are not entitled to make a claim for client money.
We have committed significant resources to resolving this issue and we are working with the administrators to ensure client money is returned as soon as possible. We are also working with global regulators and keeping in contact with the various international firms and stock exchanges involved.
We do not have any powers to alter the status of unsecured claims within the administration process. We are able to ask the administrators to prioritise one of the three SAR objectives (see question 4), but do not have administration powers.
We will use the lessons learned from the MF Global administration process as part of the review into how the Treasury’s Special Administration Regime works. This is planned for early 2013.
Where appropriate, eligible segregated and non-segregated clients are able to submit claims to the Financial Services Compensation Scheme (FSCS).
If customers who have applied to the FSCS are found to be eligible, and have agreed a final balance with the administrators, the FSCS will aim to pay compensation as quickly as possible. In most cases this will be within one month of receiving the information from the administrators.
For investment claims, the FSCS can pay up to £50,000 in compensation per person, and will take into account any interim distribution of client money made by the administrators to those who have already claimed when making compensation payments.
For further details please see the MF Global FAQs on the FSCS website.
KPMG will be providing updates on its website here.
Additionally, there is further information on the following:
- Claim / creditor form
- More FAQs on customers’ claims
- List of clients with open positions as at 31 October 2011