by: JAMES FROST From:The Australian August 30, 201212:00AM
MF Global's Australian customers have scored a significant win after a court ruled that a pool of $62.7 million being fought over by creditors be distributed in their favour.
Justice Ashley Black of the NSW Supreme Court ruled yesterday that the $16m being pursued by MF Global Singapore and the $46m being pursued by ordinary creditors of MF Global Australia should be regarded as client funds and distributed accordingly.
The ruling represents a milestone for MF Global Australia's client base of investors and traders who had $313m in accounts frozen when its US parent collapsed amid claims of misappropriation of client money.
Justice Black's 42,000-word ruling also delivered fresh hope that some investors would see money within weeks while traders of contracts for difference and foreign exchange products on margin welcomed the news that they would also be entitled to interest on what was owed.
. . . Administrators Deloitte said that notwithstanding further changes those clients who had money paid into their MF Global accounts after the administrators were appointed should have their funds returned in "a matter of weeks, not months".
But investors with cash-only positions were not so lucky, with Justice Black ruling that they should be treated the same as the rest of the failed broker's clients.
A long-running argument over the calculation of gross liquidation value or the total value of individual positions has also been decided for now with a ruling directing Deloitte to determine client entitlements as of its appointment on October 31, rather than the value at which positions were closed out, subject to submissions to orders that were expected in two weeks.
The result has buoyed the spirits of many of MF Global's Australian CFD clients who were facing the prospect of recovering as little as 20c in the dollar if MG Global Singapore and ordinary creditors had been successful.
Former client Ross Anderson said the drawn-out process for refunding client funds was an indictment on Australia's regulatory environment and capital would flow overseas as a direct result.
"Many clients have opened accounts in Canada where they are protected by a regulatory environment with an insurance scheme," he said. Canadian brokers' clients are protected against investment dealer bankruptcy by Canada's Investor Protection Fund, which has made payments of $36m to date.
