The U.S. Commodity Futures Trading Commission on Thursday announced that MF Global will now begin making $1.212 billion in payments to customers for losses sustained in the company's 2011 demise.
The payments are pursuant to a consent Order entered on November 8, 2013, which required MF Global to begin making final restitution payments after obtaining permission from the bankruptcy court to remedy any shortfall with funds of the MF Global general estate.
Following an unsuccessful appeal by parties to related litigation, the bankruptcy court's order allocating estate funds to satisfy customer claims has now become effective, the CFTC said.
In addition to full restitution, the consent Order imposed a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law.
According to Gretchen Lowe, Acting Director of the CFTC's Division of Enforcement, ensuring full restitution to customers has been a primary focus throughout the investigation and ongoing litigation.
"I am pleased that the terms of the consent Order are now being fulfilled and that these final restitution payments will satisfy the remaining shortfall," she said in a statement. "The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be held accountable."
The consent Order arose out of the CFTC's complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds.
In the consent Order, MF Global admitted to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint.
The CFTC's Complaint charged MF Global with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect Futures Commodity Merchant customer funds and requiring diligent supervision by registrants.
Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates, among other complaints.