NEW YORK, Dec. 23, 2011 (GLOBE NEWSWIRE) -- Shareholders of MF Global Holdings Ltd. ("MF Global" or the "Company") (OTC: MFGLQ.PK) are reminded of the securities class action lawsuit filed against MF Global and certain of its officers. The class action (11 CIV 8271), filed in the United States District Court of the Southern District of New York, is on behalf of all persons or entities who purchased or otherwise acquired the securities of MF Global during the period from November 5, 2009 through and including October 28, 2011 (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). This class action is brought under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a); and SEC Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. § 240.10b-5.
The Complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company was suffering from serious liquidity pressures as a result of its exposure to the European debt crisis; (2) the Company consistently engaged in "window dressing," whereby its reported debt levels at the end of each quarter were far lower than the debt it held throughout the quarter; (3) the Company had leveraged its equity to a staggering ratio of over 30:1 – compared to the 30:1 ratio that ultimately sank Lehman Brothers Holdings, Inc.; (4) the Company lacked adequate internal and financial controls; and (5) as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
On October 24, 2011, rating agency Moody's Investor Services downgraded MF Global's credit rating to nearly junk status, in part, on concerns that the Company's risk management would not be able to "prudently balance risk." On October 25, 2011, the Company reported a net loss of $186 million for the second quarter ended September 30, 2011 and disclosed that the Company had an exposure of $6.3 billion to certain European sovereign debts. On this news, MF Global stock prices declined $1.69 per share, or more than 47%, to close at $1.86.
On October 26, 2011, Standard & Poor's announced that it may downgrade MF Global to junk status, citing its "very high" exposure to European sovereign debt. Similarly, the next day, Fitch Ratings downgraded MF Global's credit rating to junk status as the Company's "increased risk taking activities have resulted in sizable concentrated positions relative to the firm's capital base, leaving MF vulnerable to potential credit deterioration and/or significant margin calls. On this news, MF Global's stock declined an additional $0.66 per share or more than 35% in three consecutive trading sessions, to close at $1.20 per share on October 28, 2011.
On November 2, 2011, shares of MF Global began trading over-the-counter where it declined $0.95 per share, or more than 79%, to close at $0.25 per share on November 2, 2011. On November 4, 2011, The Wall Street Journal reported that at least from late 2009 to middle of 2011, the Company was "window dressing" or manipulating its borrowing habits to artificially lower the quarter-ending borrowing amount that it reported to shareholders.
The Pomerantz Firm, with offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.