Overview
In a ruling yesterday, Judge William Pauley approved $100 million settlements by Moore Capital Management LP and a former MF Global Inc. broker in a class action suit over manipulation of platinum and palladium futures prices. The settlements for alleged commodities fraud and antitrust claims, two by Moore totaling $57.4 million and two by Joseph Welsh of the former MF Global totaling $42 million, overruled objections by the liquidating trustee for MF Global and a potential class member Susan Levy. They resolved claims over the alleged scheme of “banging the close” where traders enter buy orders in the final seconds of the day in order to increase futures contract prices. The plaintiffs originally filed suit in 2010 after the U.S. Commodity Futures Trading Commission accused Moore of attempted manipulation, which they agreed to settle for $25 million. Under Tuesday’s agreement, the hedge fund will pay $48.4 million to a class of plaintiffs that bought palladium futures contracts between June 2006 and April 2010, and will pay $9.4 million to a class of plaintiffs that bought physical platinum or palladium during the same time frame. Claims against MF Global, a former defendant in the suit, were stayed after the brokerage firm went bankrupt. The MF Global trustee, objecting to the approved pacts, wished to make clear that the settlements would not preclude claims against the firm and that any admission by Welsh was not binding on the company, according to Tuesday’s order. The potential class member alleged that the settlements were the result of collusion. Judge Pauley ruled that “The proposed settlements appear to be the results of informed, noncollusive negotiations, have no obvious deficiencies, do not improperly grant preferential treatment to any class members, and are within a reasonable range for approval.” The judge denied plaintiff’s motion to intervene in a separate class action against former MF Global executives related to the firm’s 2011 collapse. Those plaintiffs wish to recover money from the very insurance policies that have been requested to fund Welsh’s settlement. However, according to the Judge’s order, the former broker’s insurers have denied him coverage on the claims. Read more about MF Global here