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Order Signed on 1272011 Directing SI - Mg Order GENERIC

Order Signed on 1272011 Directing SI - Mg Order GENERIC

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Published by englishbob618
Judge Orders MF Global Trustee Giddens to Provide Additional Disclosures
Judge Orders MF Global Trustee Giddens to Provide Additional Disclosures

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Published by: englishbob618 on Dec 07, 2011
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In re:MF GLOBAL INC.,Debtor.Case No. 11-2790 (MG) SIPA
 A P P E A R A N C E S:
Counsel for James W. Giddens, Trustee for the SIPA Liquidation of MF Global Inc.
One Battery Park PlazaNew York, New York 10004By: Anson Frelinghuysen, Esq.James B. Kobak, Jr., Esq.Christopher K. Kiplok, Esq.Jeffrey S. Margolin, Esq.ROBERT MARTIN
Pro Se
 3 Kenwood RoadSaddle River, New Jersey 07458MITCH FINE
Pro Se
575 San Pablo AvenueEmeryville, California 94608-3325
James W. Giddens (“Giddens” or the “Trustee”), the liquidation trust
ee of MF Global
Inc. (“MFGI”), has moved the Court to determine the disinterestedness of the Trustee and his
counsel, Hughes Hubbard & Reed LLP (
). (ECF Doc. #45). Giddens is a partner inHHR. The Trustee and HHR were selected for their respective roles in this SIPA liquidation
11-02790-mg Doc 660 Filed 12/07/11 Entered 12/07/11 13:32:08 Main DocumentPg 1 of 7
(“SIPA Liquidation”) by the Securities Investor Protection Corporation (“SIPC”)
pursuant to the
Securities Investor Protection Act of 1970 (“
”), as amended, 15 U.S.C. §
78eee(b)(3)(2006). Two customers of MFGI filed obj
ections, focusing on “connections” between HHR and
JP Morgan Chase & Co. and its affiliates (collectively,
) and Pricewaterhouse Coopers
LLP (“
”). (ECF Doc. #202, #414 &
653). Under SIPA, a person is not disinterested if (i)
such person is a creditor (including a customer),stockholder, or partner of the debtor;(ii)
such person is or was an underwriter of any of theoutstanding securities of the debtor or within five years prior to thefiling date was the underwriter of any securities of the debtor;(iii)
such person is, or was within two years prior to the filingdate, a director, partner, officer, or employee of the debtor or suchan underwriter, or an attorney for the debtor or such anunderwriter; or(iv)
it appears that such person has, by reason of any otherdirect or indirect relationship to, connection with, or interest in thedebtor or such an underwriter, or for any other reason, an interestmaterially adverse to the interests of any class of creditors(including customers) or stockholders,except that SIPC shall in all cases be deemed disinterested, and anemployee of SIPC shall be deemed disinterested if such employeewould, except for his association with SIPC, meet the standards setforth in this subparagraph.15 U.S.C. § 78eee(b)(6)(A).The initial disclosure made by HHR in support of the motion did not mention JPM byname. (ECF Doc. #45, Exs. A & B). The objections nevertheless show (based on informationtaken from the HHR Web site) that JPM is or was a client of HHR. At the November 22, 2011heari
ng on this matter, the Trustee’s counsel acknowledged that HHR has represented JPM in
other matters. At the hearing, the Court directed the Trustee
s counsel to file a supplementaldisclosure regarding any connections between HHR and JPM. The supplemental declarationfiled by HHR states that total fees received by HHR from JPM have been minimal as a
11-02790-mg Doc 660 Filed 12/07/11 Entered 12/07/11 13:32:08 Main DocumentPg 2 of 7
3percentage of revenue of HHR, but the declaration does not clearly disclose whether JPM is acurrent client of HHR.
(ECF Doc. #509).
The status of an entity as a current client (as opposedto a former client) can make an important difference in evaluating conflicts anddisinterestedness.Numerous press reports and statements by counsel in this case, and in the parallel chapter11 case,
 In re MF Global Holdings Ltd.
, Case No. 11-15059 (Bankr. S.D.N.Y.), haveacknowledged that JPM is the agent and a lender to MF Global Holdings Ltd. and serves as theadministrative agent of a $300 million secured facility between MFGI and several other lenders.Disclosures to the Court by the parties in these two cases regarding the facts andcircumstances leading to the collapse of MFGI have been sparse, but press accounts have raisedquestions whether funds or property were transferred from MFGI to JPM in the days leading upto the filing of the SIPA Liquidation and chapter 11 case. Press accounts, of course, are not
The supplemental declaration states:As a general practice firm of over 300 attorneys, the Firm represents manyentities, including financial entities or investors, who may have been involved in
the past with transactions in which MFGI, MFGI’s parent, or some MFGI
affiliate was involved or may have been a counterparty. Some of these entitiesinclude parties-in-interest in this proceeding such as JPMorgan Chase Bank 
(“JPMC”) and PricewaterhouseCoopers LLP (“PwC USA”), which the Firm
may from time to time represent on other unrelated matters. . . .In 2009 and 2010, fees generated from [representation of JPMC] constituted lessthan one-tenth of one percent of total Firm revenue for each year. In 2011, anysuch syndicate or other representations are projected to generate revenueconstituting less than one one-thousandth of one percent of total Firm revenuefor the year. . . .In 2009 and 2010, fees generated from [representation of PwC USA and itsforeign affiliates] constituted 3.08% and 1.89% percent [sic] respectively of the
Firm’s revenue. In 2011, the
se representations are projected to generate feesconstituting less than one-
half of one percent of the Firm’s revenue.
 (ECF Doc. 509, ¶¶ 2-4 (footnotes omitted)).
11-02790-mg Doc 660 Filed 12/07/11 Entered 12/07/11 13:32:08 Main DocumentPg 3 of 7

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