James Giddens

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James Giddens
Occupation Partner, Corporate Reorganization and Bankruptcy
Employer Hughes Hubbard & Reed LLP
Location New York
Website www.hugheshubbard.com

James Giddens is a partner and co-chair of the corporate reorganization and bankruptcy practice at Hughes Hubbard & Reed LLP in New York.[1] Giddens was also named trustee in the bankruptcy filing by broker-dealer MF Global Holdings Ltd.[2] In February 2012, Giddens revealed that $105 billion had been moved during MF Global's final days. Giddens said in a statement that the firm regularly used customer segregated funds for daily company activities.[3]

On April 3, 2014, Giddens announced the final distribution of 100% of the money to satisfy all claims of former MF Global customers. This distribution returned a total of $6.7 billion to over 26,000 securities and commodity futures customers. [4]

Background

Giddens has represented the Securities Investor Protection Corporation (SIPC) in several cases since its creation in 1970, including the liquidation of MF Global, Weis, Hanover Square, A.R. Baron, New Times Securities and Lehman Brothers Inc. He has represented clients in smaller restructuring and Ch. 11 filings including those by Merrill Lynch, Goldman Sachs, Alcoa, Ford Motor Company, Continental Airlines and others.

He also handles securities matters for Hughes Hubbard and has been a special funds administrator for the Securities and Exchange Commission (SEC).[5]

Education

  • LL.B., Yale Law School (1966)
  • A.B., Dartmouth College (1959)

Professional Activities

  • ABA Committee on Business Bankruptcy
  • Association of the Bar of the City of New York
  • International Bar Association Committee on Insolvency and Creditors’ Rights
  • New York State Bar Association
  • President and member of Board of Trustees, Berkshire Theatre Festival

Court Admissions

  • U.S. Court of Appeals for the Second Circuit 1974
  • U.S. District Court (SDNY) 1972
  • U.S. District Court (EDNY) 1988

Work With Liquidation Of MF Global Inc.

James W. Giddens, the trustee for the liquidation of MF Global Inc., on March 15, 2012 filed a motion with the United States Bankruptcy Court for the Southern District of New York seeking authority for additional distributions to former MF Global Inc. commodities futures customers who traded on U.S. exchanges, and for a first distribution to former MF Global Inc. commodities futures customers who traded on foreign exchanges. The trustee was seeking authority for a distribution of up to approximately $600 million of customer property held as segregated by MF Global Inc. for its former commodities futures customers who traded on U.S. exchanges (4d funds); up to approximately $50 million of customer property associated with commodity transactions in foreign markets (30.7 funds); and up to approximately $35 million of customer property to a domestic delivery class, which the trustee identified as consisting of physical customer property that had been or would be reduced to cash in any manner.[6]

Trustee Report

On June 4, 2012, MF Global trustee Giddens filed a report on his independent investigation into the failure of the broker-dealer with the United States Bankruptcy Court for the Southern District of New York, the Honorable Martin Glenn, presiding.[7]

“As attempts were made to transform MF Global into a full-service global investment bank, management failed to add to its Treasury Department and technology infrastructure, which was needed to meet the demands on global money management and liquidity,” Giddens said. “My investigation has concluded that management’s actions, along with the lack of sufficient monitoring and systems, resulted in customer property being used during the liquidity crisis to fund the extraordinary liquidity drains elsewhere in the business, including margin calls on European sovereign debt positions.

In light of these conclusions, I have determined there may be valid claims against individuals and entities. In my capacity as Trustee, I will make every effort to ensure that such claims result in the greatest possible returns to customers in an efficient and fair manner, whether those claims are pursued by my office or others,” Giddens said in the report.

The Trustee’s findings in the report were based on his counsel’s interviews of more than one hundred people, along with review of hundreds of thousands of documents, and an extensive forensic investigation conducted with the assistance of forensic accountants at Ernst & Young LLP.

Because the trustee did not have law enforcement or regulatory authority, the report drew no conclusions about possible criminal liability or whether sanctionable regulatory violations occurred.

The report also included a discussion of the trustee’s recommendations for legislative, regulatory or other reforms that might help avert similar liquidations in the future, or at least alleviate their consequences:

  • Abolish the alternative calculation method and implement a requirement to segregate an amount in excess of 100% of customer funds.
  • Eliminate the segregated versus secured distinction in Commodity Futures Trading Commission (CFTC) Regulation 30.7, ensure consistency of customer protection when trading overseas, and monitor compliance abroad closely.
  • Create a protection fund for futures and commodities customers under a certain threshold, and implement suitability standards for customers of Futures Commission Merchants (FCMs).
  • Provide for civil liability for officers and directors in the event of a commodities segregation shortfall.
  • Consider simplifying some CFTC rules for bulk transfers and claims in an FCM liquidation proceeding.
  • Enact legislation explicitly authorizing Trustee standing on behalf of customers.

References

  1. James W. Giddens. Hughes Hubbard.
  2. MF trustee to begin transferring customer accounts. Reuters.
  3. MF Brokerage Trustee Traced $105 Billion in Cash Movements in Final Week. Bloomberg.
  4. Finally! MF Global customers to be made whole. Futures Magazine.
  5. James Giddens. LinkedIn.
  6. Press Release. PR Newswire.
  7. The SIPA Liquidation of MF Global Inc.. Epiq11.com.