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Recovery of MF Global Convertible Senior Note Investment Losses

Do you have concerns about losing your investment in MF Global convertible senior notes or another MF Global bond due to MF Global’s bankruptcy? If so, the attorneys of The White Law Group may be able to help you.

This year MF Global made 2 convertible senior note offerings. On July 28th MF Global “…announced the pricing of an underwritten public offering of $325 million aggregate principal amount of 3.375% Convertible Senior Notes due August 1, 2018.” Additionally on February 8th MF Global “…announced the pricing of an underwritten public offering of $250 million aggregate principal amount of 1.875% convertible senior notes due February 1, 2016.” Both of these notes are said to be “senior, unsecured obligations of MF Global Holdings Ltd.”

According to the prospectus filed with the SEC for the 3.375% Convertible Senior Notes, the joint book-running managers for the notes are Goldman, Sachs & Co. and Citi and the Co-Managers are BofA Merrill Lynch, J.P. Morgan, Deutsche Bank Securities and RBS. The prospectus for the 1.875% Convertible Senior Notes state that the joint book-running managers for that offering are Goldman, Sachs & Co., Citi, Deutsche Bank Securities, BofA Merrill Lynch, J.P. Morgan, and Sandler O’Neill + Partners, L.P.

The purpose of each of the senior convertible note offerings are stated in publicly available press releases from MF Global. The proceeds from the offering of the 3.375% convertible senior note were to go toward “…the cost of entering into the convertible note hedge transactions…,” the repurchase of some MF Global 9% convertible senior notes, and finally “any remaining net proceeds from the offering for general corporate purpose.” Similarly the 1.875% convertible senior offering proceeds were to find the convertible note hedge transactions and the remainder was meant “to repay outstanding indebtedness under its $1.2 billion revolving credit facility and for general corporate purposes.”

Given that MF Global has now filed for bankruptcy, it may be fair to question whether the MF Global was already in rough fiscal shape throughout this year. The fact that the stated purpose of one of the bond offerings was to pay off indebtedness and both the senior convertible note offerings proceeds were made available for general corporate use seems to indicate that MF Global may have been aware of significant financial distress at the time of the convertible senior note offerings.

Brokerage firms have a fiduciary duty to their customers to perform due diligence on any investment prior to recommending it for sale and to ensure that the investment is appropriate.  Brokerage firms also are responsible for determining whether an investment is appropriate in light of a particular investor’s age, investment experience, and investment objective.  Given what is now known about MF Global it appears possible that brokerage firms that sold the MF Global 3.375% and 1.875% convertible senior notes failed to perform the necessary due diligence.

If you have invested in an MF Global bond like the MF Global 3.375% or 1.875% convertible note or some other MF Global unsecured senior note and would like to speak to a securities attorney about your ability to recover your investment, please call our Chicago office at 312/238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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