EXPEDITED RELIEF REQUESTED 

James B. Kobak, Jr. 

Christopher K. Kiplok 

Josiah S. Trager 

Anson B. Frelinghuysen 

Meaghan C. Gragg 

HUGHES HUBBARD & REED LLP 

One Battery Park Plaza 

New York, New York 10004 

Telephone: (212) 837-6000 

Facsimile: (212) 422-4726 

Attorneys for James W. Giddens, 

Trustee for the SIPA Liquidation of MF Global Inc. 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF NEW YORK

In re 

MF GLOBAL INC., 

Debtor. 

Case No. 11-2790 (MG) SIPA 

EXPEDITED MOTION OF JAMES W. GIDDENS, TRUSTEE FOR THE 

LIQUIDATION OF MF GLOBAL INC., FOR AN ORDER APPROVING FURTHER 

EMERGENCY TRANSFERS AND DISTRIBUTIONS TO CUSTOMERS 

James W. Giddens (the “Trustee”), as Trustee for the liquidation of the business 

of MF Global Inc. (“MFGI”) under the Securities Investor Protection Act of 1970, as amended 

(“SIPA”), 15 U.S.C. § 78aaa et seq., by and through his undersigned counsel, respectfully makes 

this expedited motion (the “Expedited Motion”), pursuant to SIPA section 78fff-1(b), sections 

105(a), 764, and 766(c) of title 11 of the United States Code (the “Bankruptcy Code”), and 17 

C.F.R. §§ 190.01 through 190.10 (the “Part 190 Regulations”), for entry of an order approving 

the transfer and distribution to customers of cash of MFGI’s commodity clients (“Customer 

Cash”) via other futures commission merchants (“FCMs”). In support of the Expedited Motion, 

the Trustee respectfully states as follows: 

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PRELIMINARY STATEMENT 

1. Within hours of his appointment, the Trustee moved this Court for—and 

the Court granted—an Order Approving the Transfer of Certain Segregated Customer 

Commodity Positions (the “November 2 Bulk Transfer Order”) (ECF No. 14). At the time, 

former customers of MFGI faced the prospect of a forced, orderly liquidation of these positions, 

as did the markets generally. 

2. Pursuant to the November 2 Bulk Transfer Order, the Trustee authorized 

the bulk transfer of approximately three million open commodity contracts and approximately 

$1.5 billion in associated collateral, thus averting their forced liquidation. 

3. Since that time, the Trustee, his staff, the Securities Investor Protection 

Corporation (“SIPC”), the Commodity Futures Trading Commission (“CFTC”), and others have 

been working around the clock to assess the Debtor’s books and records, and do all that is 

possible to return property to customers, consistent with the law and the records available to the 

Trustee. 

4. In this connection, the Trustee now seeks, on an expedited basis, authority 

to return a sixty-percent distribution to those former MFGI customers that had only cash in their 

accounts as of the commencement of this proceeding on October 31, 2011 (the “Cash-Only 

Customers”)—as many as approximately 21,000 customers with a total of over $869 million in 

cash, according to the books and records of MFGI. 

5. The Trustee, in coordination with the United States Department of Justice, 

the CFTC and other regulators, and SIPC, continues to conduct a thorough, deliberate, and 

independent investigation of, among other things, the apparent shortfall in property that MFGI 

should have segregated for its customers prior to bankruptcy. That investigation continues 

around the clock. The extent of the apparent shortfall is not known at this time, but, aided by the 

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guarantee of the CME, the Trustee has determined that the extraordinary relief sought herein 

within three weeks of the filing date is prudent and consistent with the purpose of SIPA and the 

regulations of the CFTC to provide prompt but fair treatment to customers to the extent possible. 

FACTUAL BACKGROUND 

6. On October 31, 2011, the Honorable Paul A. Engelmayer, United States 

District Court for the Southern District of New York, entered an Order (the “MFGI Liquidation 

Order”) commencing liquidation of MFGI pursuant to the provisions of SIPA in the case 

captioned Securities Investor Protection Corp. v. MF Global Inc., Case No. 11-CIV-7750 (PAE). 

7. The MFGI Liquidation Order, inter alia: (i) appointed James W. Giddens 

as Trustee for the liquidation of the business of MFGI pursuant to SIPA § 78eee(b)(3); (ii) 

appointed Hughes Hubbard & Reed LLP counsel to the Trustee pursuant to SIPA § 78eee(b)(3); 

and (iii) removed the case to this Court as required for SIPA cases by SIPA § 78eee(b)(4) (the 

“SIPA Proceeding”). (MFGI Liquidation Order ¶¶ II, IX.) The MFGI Liquidation Order 

specifically includes a provision authorizing the Trustee to “take other action as necessary and 

appropriate for the orderly transfer of customer accounts and related property,” (id. ¶ X), which 

provision SIPC specifically included in its application for MFGI’s liquidation for this purpose. 

8. This Expedited Motion complements the November 2 Bulk Transfer Order 

and also will complement the expedited claims process that the Trustee has moved to establish 

by expedited application, filed today. The Trustee has evaluated whether the relief requested 

herein is appropriate to achieve the purposes of customer protection espoused by SIPA and the 

CFTC rules. With respect to approximately 15,000 customers, the Trustee has determined that a 

cash transfer of approximately $520 million to customers through one or more transferee FCMs 

is appropriate and would significantly advance the equitable treatment of MFGI’s former futures 

customers. Approximately 6,000 other customers with small accounts also may be 

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accommodated by the transfer. At the outset, this figure represents a distribution of sixty percent 

of the total cash balances of the Cash-Only Customers. 

9. The distribution covered by this application will be based upon the books 

and records of MFGI, with such reconciliation and other information as the Trustee and his 

professionals deem advisable. At the same time, as part of the expedited claims process,1

 all 

former customers of MFGI will be requested to submit a claim. In compliance with the 

expedited claims process, the Trustee will determine their final pro rata share of the customer 

property—and will, as promptly as is practicable and prudent, true up any difference as between 

the net equity of recipients (taking into account the amounts transferred as part of the November 

2 Bulk Transfer Order) and, if the instant motion is granted, the amounts to be transferred as part 

of the relief requested herein (the “Trueing Up”). The Trustee expects to be able to make one or 

more additional interim distributions as part of the expedited claims process, with the goal of 

ensuring equal treatment of all of MFGI’s customers in advance of the final determination of the 

pro rata share to which they are each entitled. 

10. While the Trustee is still investigating the reasons for and extent of the 

apparent shortfall in customer segregated property, he believes that the proposed distribution of 

approximately sixty percent is prudent and will not result in over-payments. In addition, the 

Chicago Mercantile Exchange Group, Inc. (“CME”) has agreed to continue cooperating in these 

transfers, including providing accountings and other assistance already. Moreover, the CME has 

proposed to provide a $250,000,000.00 guarantee (the “CME Guarantee”) to the estate to provide 

 

1. The Trustee’s expedited application for an expedited claims process (ECF No. 144) is pending before the 

Court, to be heard on November 16, 2011. 

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security for the nonrecovery of potential overpayments (should it ultimately be determined that 

these initial bulk transfers and distributions have led to a customer receiving more than a pro 

rata share of the final distribution). The Trustee and CME continue to discuss the details of the 

CME Guarantee, which will apply to the relief requested herein. This constructive commitment 

from the CME has given the Trustee additional assurance that a distribution of this magnitude is 

prudent and in the best interests of customers and the markets generally. 

11. SIPC approves the relief described in this Expedited Motion. 

JURISDICTION & VENUE

12. Following removal to this Court, this Court has “all of the jurisdiction, 

powers, and duties conferred by [SIPA] upon the court to which the application for the issuance 

of the protective decree was made.” 15 U.S.C. § 78eee(b)(4). 

13. Venue is proper in this Court pursuant to 15 U.S.C. § 78eee(a)(3) and 15 

U.S.C. § 78aa. 

RELIEF REQUESTED

14. By this Expedited Motion, the Trustee respectfully seeks an Order of the 

Court, in the form attached hereto, approving the relief requested herein, in the following 

manner, under the Bankruptcy Code and the Part 190 Regulations, and providing that such 

transfer may not be avoided under Bankruptcy Code section 764(b): 

(a) The Trustee is authorized and shall use his best efforts to complete 

this transfer and distribution through the CME to qualified FCMs that have agreed 

to accept such Customer Cash. 

(b) The Trustee is authorized to use the assistance of the CME, and 

any other registered DCOs that agree to facilitate the transfers and distributions 

outlined in this motion. This order is predicated on the CME’s commitment to 

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guarantee against overpayments to some or all customers in an amount up to $250 

million. 

(c) The CME and any other DCOs facilitating the relief requested in 

this Expedited Motion (collectively, the “Facilitating DCOs”) are hereby 

authorized to consummate the transactions outlined in this motion to the 

Transferees, and to take all other actions reasonably necessary in furtherance 

thereof, as directed by the Trustee, and shall have no liability for any actions 

taken in furtherance of this order consistent with and in accordance with 

applicable law. The automatic stay is vacated to the extent necessary to allow the 

Facilitating DCOs to take any of the actions set forth in this paragraph. 

BASIS FOR RELIEF REQUESTED

15. Where, as here, an FCM is liquidated under SIPA, SIPA imposes all of the 

duties of a trustee under the commodity broker liquidation provisions of chapter 7 of the 

Bankruptcy Code,2 to the extent consistent with SIPA, except for the duty to liquidate securities 

positions held in the debtor’s estate. 15 U.S.C. § 78fff-1(b). The CEA and the regulations 

promulgated by the CFTC thereunder set forth different segregation requirements based on the 

type of account that a customer has with the commodity broker (e.g., an account for futures and 

options on futures traded on U.S. contract markets versus an account for futures and options on 

futures traded on foreign contract markets), and a trustee under the Bankruptcy Code’s 

commodity broker liquidation provisions has a duty to allocate and distribute customer property 

under these rules. 17 C.F.R. § 190.08. Pursuant to CFTC rules, and consistent with SIPA, a 

 

2. The Bankruptcy Code’s commodity broker liquidation provisions are found in 11 U.S.C. §§ 761-767. 

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trustee liquidating a commodity broker has a duty to make immediate and best efforts to effect 

the transfer of open customer contracts and equity. 17 C.F.R. § 190.02(e)(1), referencing 17 

C.F.R. § 190.06(e) and (f); see also 1 Collier on Bankruptcy ¶¶ 12.02[2] and 12.06[2]. 

16. The Part 190 Regulations permit the CFTC, in appropriate cases and to 

protect the public interest, to authorize such transfers as it has here. See 17 C.F.R. § 190.06(h). 

17. The transfers proposed in this Expedited Motion may be considered a 

partial distribution, pursuant to the plan set forth herein, made in accordance with 17 C.F.R. 

§ 190.08(d)(5), to those customers who did not have property transferred as part of the 

November 2 Bulk Transfer Order. This partial distribution would be made as part of the Courtapproved plan detailed in the expedited claims process, and, along with the CME Guarantee, 

provides opportunity for equalizing payment of net equity claims, and adequate security to the 

estate for potential nonrecovered overpayments to customers, if any. 

18. Ultimately, the mechanism proposed by this Expedited Motion would be 

that the Trustee would provide cash to the Transferees, which—having accepted assignment of 

the accounts of MFGI’s former Cash-Only Customers—would fund those accounts with sixty 

percent of their Filing Date balances. The relief requested herein, coupled with the November 2 

Bulk Transfer Order, allows nearly all of MFGI’s former customers to have unprecedented 

access to some portion of their positions and assets, in advance of the expedited determinations 

of the claims process. 

19. The Court is empowered to grant this Expedited Motion, under SIPA 

section 78fff-2(f), and section 105(a) of the Bankruptcy Code, which authorizes the Court to 

“issue any order, process, or judgment that is necessary or appropriate to carry out the provisions 

of this title.” 11 U.S.C. § 105(a). In practice, section 105(a) of the Bankruptcy Code grants 

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bankruptcy courts broad statutory authority to enforce the Bankruptcy Code’s provisions either 

under the specific statutory language of the Bankruptcy Code or under equitable common law 

doctrines. See Momentum Mfg. Corp. v. Employee Creditors Comm. (In re Momentum Mfg. 

Corp.), 25 F.3d 1132, 1136 (2d Cir. 1994). 

20. Thus, SIPA, the Bankruptcy Code and the Part 190 Regulations recognize 

that, in appropriate cases—such as this one—the Trustee may be given approval to effect the 

immediate transfer of Customer Cash to one or more new FCMs to assist MFGI’s former 

customers, and to protect the public interest as a whole, without preferring any of MFGI’s 

customers at the expense of any others. The continued cooperation of SIPC and the CFTC and 

the commitments of the CME will continue to play a pivotal role in implementing such relief. 

21. Much like the November 2 Bulk Transfer Order, the relief sought herein 

will result in the orderly and immediate return of substantial property to customers within a few 

weeks of the filing of one of the largest liquidation proceedings in history and will leave MFGI’s 

commodity customers with more alternatives than they would have if these accounts were to 

remain untransferred and subject entirely to the expedited claims process. 

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CONCLUSION

WHEREFORE, the Trustee respectfully requests that this Court enter an Order, in 

the form attached hereto and granting the Trustee such other and further relief as is just and 

proper. 

Dated: New York, New York 

November 15, 2011 HUGHES HUBBARD & REED LLP 

By: s/James B. Kobak, Jr. 

 James B. Kobak, Jr. 

 Christopher K. Kiplok 

 Josiah S. Trager 

 Anson B. Frelinghuysen 

 Meaghan C. Gragg 

 One Battery Park Plaza 

 New York, New York 10004 

 Telephone: (212) 837-6000 

 Facsimile: (212) 422-4726 

 Email: kobak@hugheshubbard.com

 

Attorneys for James W. Giddens, Trustee for 

the SIPA Liquidation of MF Global Inc. 

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Exhibit A 

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UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF NEW YORK

In re 

MF GLOBAL INC., 

Debtor. 

Case No. 11-2790 (MG) SIPA 

[PROPOSED] ORDER GRANTING EXPEDITED MOTION OF JAMES W. GIDDENS, 

TRUSTEE FOR THE LIQUIDATION OF MF GLOBAL INC., 

FOR AN ORDER APPROVING FURTHER EMERGENCY 

TRANSFERS AND DISTRIBUTIONS TO CUSTOMERS

Upon consideration of the expedited motion (the “Expedited Motion”) of James 

W. Giddens (the “Trustee”), as Trustee for the liquidation of the business of MF Global Inc. 

(“MFGI”) under the Securities Investor Protection Act of 1970, as amended (“SIPA”), 15 U.S.C. 

§ 78aaa et seq., pursuant to SIPA section 78fff-1(b), sections 105(a), 764, and 766(c) of title 11 

of the United States Code (the “Bankruptcy Code”), and 17 C.F.R. §§ 190.01 through 190.10 

(the “Part 190 Regulations”), for entry of an order approving the transfer to other futures 

commission merchants (“FCMs”) of cash of MFGI’s commodity clients (“Customer Cash”); and 

the Court having jurisdiction to consider the Expedited Motion and relief requested therein 

pursuant to SIPA § 78eee(b)(4); and it appearing that due and proper notice of the Expedited 

Motion and the relief requested therein having been given, and no other further notice needing to 

be given; and SIPC supporting and approving the transfers and distributions as described in the 

Expedited Motion; and the Court having reviewed the Expedited Motion and determined that the 

legal and factual bases set forth in the Expedited Motion establish just cause for the relief granted 

herein, to wit, that the transfers and distributions described in the Expedited Motion and set forth 

below will effectuate the terms and purpose of the Order of the District Court entered on October 

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31, 2011 commencing this liquidation (the “MFGI Liquidation Order”) and are appropriate 

exercises of the Trustee’s authority pursuant to the MFGI Liquidation Order, SIPA section 78fff1(b), Bankruptcy Code sections 105(a), 764, and 766(c), and the Part 190 Regulations; and after 

due deliberation and sufficient cause appearing therefore, it is hereby 

ORDERED that the Expedited Motion is granted in all respects; and it is further 

ORDERED that, under SIPA section 78fff-1(b), Bankruptcy Code section 766(c) and the 

Part 190 Regulations, the Trustee is authorized and shall use his best efforts to complete (a) the 

transfers and distributions to qualified FCMs that have agreed to accept such Customer Cash (the 

“Transferees”) for the benefit of MFGI’s commodities futures customers and (b) the Trueing Up 

described in the Expedited Motion; and it is further 

ORDERED that the Trustee—upon advice and approval of SIPC—will seek and may use 

the assistance of the Chicago Mercantile Exchange, and other registered derivatives clearing 

organizations (“DCOs”) that agree to facilitate the transfers (collectively, the “Facilitating 

DCOs”), and the Facilitating DCOs will cooperate in the transfers, including providing 

accountings and other assistance already and continuing to do so; and it is further 

ORDERED that the transfers may not be avoided under Bankruptcy Code section 764(b); 

and it is further 

ORDERED that the Facilitating DCOs are hereby authorized to consummate the transfers 

to the Transferees, and to take all other actions reasonably necessary in furtherance thereof to 

complete the transfers directed by the Trustee, and shall have no liability for any actions taken in 

furtherance of this order consistent with and in accordance with applicable law; and it is further 

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ORDERED that the automatic stay is vacated to the extent necessary to allow the 

Facilitating DCOs to take any of the actions described in the foregoing paragraph; and it is 

further 

ORDERED that the completion of the transfers is a necessary step to implement the 

MFGI Liquidation Order and the purposes of this SIPA liquidation as described at the time of 

execution of the MFGI Liquidation Order; and it is further 

ORDERED that the Trustee is authorized to execute, deliver, implement and fully 

perform any and all obligations, instruments, documents and papers and to take any and all 

actions reasonably necessary to consummate the transfers; and it is further 

ORDERED that the Court shall retain exclusive jurisdiction to implement and enforce the 

provisions of this Order, including all disputes related to the transfers; and it is further 

ORDERED that the failure to specifically include any particular provision in this Order 

shall not diminish or impair the effectiveness of such provision, it being the intent of the Court 

that the Trustee’s implementation of the transfers and distributions be approved in their entirety; 

and it is further 

ORDERED that any stay of this Order provided by the Bankruptcy Rules or other 

applicable law shall not be applicable to this Order, and this order shall be effective and 

enforceable immediately upon entry. 

Dated: November __, 2011 ____________________________ 

 Hon. Martin Glenn 

 United States Bankruptcy Judge 

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