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Hearing Date: November 22, 2011 at 3:00 p.m. (Prevailing Eastern Time)

James B. Kobak, Jr. Christopher K. Kiplok Jeffrey S. Margolin Dustin P. Smith 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. OPPOSITION OF THE TRUSTEE TO (i) THE MOTION FOR AN ORDER AUTHORIZING THE APPOINTMENT OF AN OFFICIAL COMMITTEE OF COMMODITY BROKER CUSTOMERS AND APPROVING COMPENSATION OF ALLOWED FEES AND EXPENSES OF COMMITTEE PROFESSIONALS AND (ii) THE MOTION FOR AN APPOINTMENT OF AN OFFICIAL COMMITTEE OF COMMODITY BROKER 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, files this opposition to (i) the Motion for Order Authorizing the Appointment of an Official Committee of Commodity Broker Customers and Approving Compensation of Allowed Fees and Expenses of Committee Professionals (the Steering Motion, ECF No. 161) brought by a steering committee of certain commodity broker customers (the Steering Movants), and (ii) the Motion for Appointment of an Official Committee of Commodity Broker Customers (the Coalition Motion, ECF No. 354, and collectively with the Steering Motion, the Motions) brought by a Case No. 11-2790 (MG) SIPA

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coalition of certain commodity broker customers (the Coalition Movants, and collectively with the Steering Movants, the Movants), and respectfully states as follows: PRELIMINARY STATEMENT 1. Through the Motions, the Movants improperly attempt to establish an

official committee of commodity broker customers to be paid from MFGIs commodity customer property estate. There is no authority or precedent for the relief the Movants seek. SIPA does not provide for appointment of a creditors committee, and no such committee has been appointed in the forty-year history of the statute. The establishment of a self-nominated committee of commodity broker customers with self-selected counsel that is unrepresentative of differently situated commodities claimants, securities claimants, and other creditors, in the unorthodox manner requested by the Movants, would only serve to cause a duplication of efforts and a waste of customer assets in a proceeding in which efficient administration and preservation of customer assets is the paramount concern. 2. While the Trustee opposes the Movants request for the appointment of an

authorized customer committee whose expenses would be paid from the commodity customer property estate, the Trustee has told counsel to the Steering Movants that, as in the SIPA liquidation of Lehman Brothers Inc. and other SIPA liquidations, he is prepared to report regularly to appropriate ad hoc committees and industry groups. These professional interactions can take place without eroding the fund of segregated customer property with professional fees and expenses and without duplicating the roles already played by the Securities Investor Protection Corporation (SIPC), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC). Since his appointment, the Trustee and his
professionals have responded to calls, emails, and other correspondence from customers of MFGI, and the Trustees professionals have met with claimant constituencies, including certain

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representatives of the Movants, to attempt to address their issues and concerns. The Trustee will continue to meet and work with appropriate ad hoc and industry groups without the need for a committee.

3.

The factual predicates for the Movants applications also ignore the record

to date. The Movants attempt to justify the creation of a customer committee on the possibility of delay in distributing assets to certain customers. Within hours of his appointment on October 31, 2011, and against a backdrop of shortfalls in segregated funds and records that are far from wholly reliable, the Trustee moved and has already effected the transfer of three million open
positions associated with over 14,500 commodity customer accounts. This means that over $1.5 billion in collateral associated with those positions was returned to customers and to the market within a few days of the commencement of this liquidation. The Trustee is now effecting the transfer of an additional approximately $500 million to the holders of 23,300 commodities client accounts that held only cash in their accounts on October 31, 2011. The Trustee also moved within days of his appointment to establish an expedited claims process in order to allow the quick and efficient distribution of funds to customers on a rolling basis. The Trustee has announced publicly and in open Court that he is actively exploring whether further transfer can be presently made with the assistance and approval of SIPC, the CFTC, and the CME Group Inc. (CME).

4.

The Steering Movants incorrectly refer to this proceeding as two cases.1

The liquidation of MFGI is a single proceeding, involving a single broker-dealer, initiated by a single District Court order. SIPA does not provide for the appointment of a creditors committee, let alone a committee to represent only a subset of customers. There has never been

See Steering Motion at 1.

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a creditors committee or a customer committee appointed in a SIPA proceeding in the statutes forty-year history. 5. The Movants request that their professional fees and expenses be paid

from the commodity customers fund is also unfounded. There is no statutory authority for the compensation of a creditors committee out of estate assets or segregated commodity or securities funds. 6. If granted, the Motions could have far reaching consequences in the

administration of this and other future broker-dealer liquidations. The Steering Motion was filed without any effort to hold a meeting of creditors or to assemble a representative group of creditors or even commodity claimants. The Coalition Motion was filed on a Friday evening with an expedited return date of 10:00 a.m. the following Monday. FACTUAL BACKGROUND 7. On October 31, 2011 (the Filing Date), the Honorable Paul A.

Engelmayer, United States District Court for the Southern District of New York, entered an Order (MFGI Liquidation Order, ECF No. 1) 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). 8. 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.)

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9.

Within hours of his appointment, the Trustee moved this Court forand

the Court grantedan 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. Pursuant to the November 2 Bulk Transfer Order, approximately three million open commodity contracts related to approximately 14,500 commodity customer
accounts with open positions have been transferred to other future commission merchants, along with approximately $1.5 billion in collateral associated with those positions.

10.

On November 15, 2011, the Trustee filed an expedited motion for an

Order Approving Further Emergency Transfers and Distributions to Customers (the Second Transfer Motion, ECF No. 193). On November 17, 2011, the Court granted the Second Transfer Motion and entered an Order Approving Further Emergency Transfers and Distributions to Customers (the November 17 Transfer Order, ECF No. 316). The November 17 Transfer Order authorized the Trustee to transfer of 60% of the cash, or approximately $500
million, attributable to approximately 23,300 commodities client accounts that held only cash in their accounts on the Filing Date. Once completed in the next several days, nearly all of the 38,000 customer account holders will have received some distributions, and in the majority of cases, substantial distributions within three weeks of the filing. The Trustee is exploring possible additional transfers of assets with regulators and the CME.

11.

Immediately upon his appointment, the Trustee began the process of

securing and analyzing MFGIs books and records and investigating the business of MFGI pursuant to the special provisions of SIPA. See 15 U.S.C. 78fff-1(d) (directing the Trustee to begin conducting an investigation of the failed-broker dealers business as soon as practicable). The Trustee, in coordination with the United States Department of Justice, SIPC, the CFTC, and

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other regulators, 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. 12. On November 15, 2011, the Steering Movants filed the Steering Motion

which requested that the Court: (i) create a commodity customer committee with the Steering Movants as members, and (ii) approve the professional fees and expenses of such a committee as administrative expenses to be paid from the commodity customer fund. The Steering Movants assert that they represent a group of 66 former commodity customers of MFGI who traded through the New York exchanges run by the CME and the Intercontinental Exchange (ICE). See Steering Motion at 4, n. 6. 13. On November 18, 2011, at approximately 6:45 p.m. on a Friday evening,

the Coalition Movants filed the Coalition Motion, ostensibly returnable at 10:00 a.m. the following Monday, which requested that the Court (i) direct the Office of the United States Trustee to appoint a committee comprised of various factions which comprise commodity creditors only in the MFGI liquidation, and (ii) approve the professional fees and expenses of such a committee as administrative expenses. The Coalition Movants assert that they represent a group of 7,000 former commodity clients of MFGI. See Coalition Motion at 2. 14. Neither the Steering Movants nor the Coalition Movants have held a

general meeting of creditors or attempted to represent a broader cross section of the commodity customers, such as commodity customers with claims to the segregated pool of 30.7 property or claims to specific identifiable property, or the securities customers and general creditors of MFGI.

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ARGUMENT I. There Is No Legal Basis for the Formation of a Commodity Customer or any Other Official Committee in a SIPA Proceeding. 15. SIPA does not provide for the appointment of a creditors committee or a

customer committee in a SIPA liquidation. There has never been a creditors committee or a customer committee appointed in a SIPA proceeding in the statutes forty-year history. Movants provide scant legal authority, appearing only to rely on Bankruptcy Code 705, to justify their request for the appointment of a commodity customer committee. 16. However, a plain reading of Bankruptcy Code 705 shows that it is

inconsistent with, and cannot be applied to, a SIPA liquidation. Bankruptcy Code 705 states that creditors that may vote for a trustee under section 702(a) of this title may elect a committee. 11 U.S.C. 705. SIPA, on the other hand, specifically provides that a Trustee is appointed by SIPC in its sole discretion. See 15 U.S.C. 78eee(b)(3). Accordingly, no creditors are entitled to vote for a Trustee in a SIPA proceeding. Sections of the Bankruptcy Code are only applicable in a SIPA proceeding to the extent that they are consistent with the provisions of SIPA, and the provisions of Bankruptcy Code 705 are plainly inconsistent.2 See 15 U.S.C. 78fff(b) (to the extent consistent with the provisions of this chapter, a liquidation proceeding shall be conducted in accordance with, and as though it were being conducted under chapters 1, 3 and 5 of subchapters I and II of chapter 7 of title 11.) Thus, Bankruptcy Code 705 is not applicable in a SIPA liquidation and does not provide a basis by which Movants can elect a commodity customer committee in this proceeding.
2. In the Steering Motion, the Steering Movants admit this inconsistency and state that the statutory provisions for an election of a trustee and committee are somewhat inconsistent with SIPA and commodity broker liquidations. Steering Motion at 8, n.8.

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17.

That neither the Bankruptcy Code, the Bankruptcy Rules, nor SIPA

provide for U.S. Trustee3 involvement in a SIPA proceeding further supports the conclusion that Bankruptcy Code 705 cannot be read to apply in a SIPA proceeding. Under 28 U.S.C. 586, the U.S. Trustee has the duty to monitor creditors committees appointed in cases under title 11 of the Bankruptcy Code. See 28 U.S.C. 586(a)(3)(E). However, a SIPA liquidation is not a case under title 11, and the U.S. Trustee does not have an oversight role in a SIPA proceeding as this responsibility is performed by SIPC. SIPC, which is a party of interest by statute, actively participates in, and takes positions on, many issues in a SIPA proceeding(as it already has been doing here), and is explicitly given the role of reviewing fees. See 15 U.S.C. 78eee(6)(d); 15 U.S.C 78eee(b)(3); 15 U.S.C. 78eee(b)(5)(C). Additionally, the Trustee can only take certain actions in a SIPA liquidation with the approval of SIPC. See, e.g., 15 U.S.C. 78fff-2(f) (stating that a SIPA trustee may only effectuate account transfers with the consent of SIPC); 15 U.S.C. 78fff-1(a)(1) (stating that a SIPA trustee must get court approval to hire and fix compensation for personnel). 18. Even if Bankruptcy Code 705 was applicable in the present SIPA

proceeding, the relief sought in the Steering Motion should be denied because the Steering Movants have failed to satisfy the requirements of Bankruptcy Code 341 yet simply ask the Court to appoint them as representatives of 66 of approximately 38,000 commodity customers. For this reason alone, the Steering Motion should be denied. In addition, neither Movant makes any showing that they are representative of all commodity customers (such as customers with

3.

The limited role of the U.S. Trustee in a SIPA liquidation is reflected in Federal Rule of Bankruptcy Procedure 2002(k) which specifies that no documents in a SIPA case need to be served upon the U.S. Trustee.

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claims against the segregated pool of 30.7 property or customers with claims to specifically identifiable property), let alone securities customers or general creditors of the MFGI estate. II. There Is Also No Equitable Basis for the Appointment of a Commodity Customer Committee. 19. In lieu of relying principally on legal authority for their argument, the

Movants believe that a customer committee is necessary in order to: (i) protect the interest of commodity customers and ensure transparency in the liquidation of MFGI, (ii) ensure the prompt distribution of assets to commodity customers, and (iii) assist the Trustee with his investigation of the affairs of MFGI. 20. The appointment of a customer committee is unnecessary and wasteful in

a SIPA proceeding where the traditional oversight role of a creditors committee is performed by SIPC and the SEC (and, in the case of a SIPA broker-dealers commodity business, also involves the participation of the CFTC). There are no examples of a court appointing a creditors committee in a SIPA proceeding in the more than forty-year history of SIPA. The supervisory functions that otherwise typically would be performed by a creditors committee in a bankruptcy case are, in a SIPA case, performed by SIPC, and, in some cases, the SEC, both of which have expertise in the oversight of SIPA proceedings. See 1 Collier on Bankruptcy 12.04[3] (16th ed. 2011) (SIPC is closely involved in the oversight of every SIPA liquidation.) SIPC monitors SIPA liquidations carefully and is involved in every aspect of the claims review, determination, and satisfaction process. See id. SIPC also takes an active role to ensure that the provisions of SIPA are correctly and uniformly enforced and that the SIPA trustee is fulfilling his statutory duties (including his duties under subchapter IV of chapter 7 of the Bankruptcy Code, which deals with commodity broker liquidations). In this liquidation, the CFTC has also taken an active role in advising and working with the Trustee with respect to the CFTC regulations

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applicable to commodity broker-dealer liquidations. In addition to the fiduciary role played by the Trustee himself, powerful and experienced customer advocates are already playing their role in the proceeding. 21. The Movants assert that a customer committee is needed because the

Trustee will be administering separate customer funds for commodity and security customers in MFGIs liquidation. See Steering Motion at 1, 8. The Movants seem to believe that the Trustees administration of the fund of commodity customer property requires the appointment of a committee solely to protect the interest of commodity customers. However, this very scenario was envisioned by the drafters of SIPA, and SIPA states that a trustee shall be subject to the same duties as a trustee in a case under chapter 7 of Title 11, including, if the debtor is a commodity broker, as defined under section 101 of such title, the duties specified in sub chapter IV of such chapter 7. 15 U.S.C. 78fff-1(b). Therefore, SIPA clearly envisions a scenario in which there would be a single trustee who would have the same duty to equitably distribute the fund of commodity customer property as a trustee in a chapter 7 liquidation of a commodity broker.4 The Trustee is already fulfilling these duties in parallel with his duties to securities customers. 22. The Movants also base their request for relief on the possibility of delay in

the return of assets to customers of MFGI. See Steering Motion at 10. This concern does not square with the substantial strides that the Trustee has made in returning assets to customers in order to minimize the negative impact of MFGIs liquidation. Within a week of being appointed,

4.

The Trustee has previously performed this duty in other SIPA liquidations in which he has administered both the commodities estate and securities estate of a failed broker dealer. See, e.g., In re Lehman Brothers Inc., No. 08-01420 (Bankr. S.D.N.Y.) (JMP).

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the Trustee facilitated the transfer of over 3 million open customer positions, associated with approximately $1.5 billion in collateral, in order to allow over 14,500 commodity customers access to their accounts. Additionally, the Trustee then moved, and the Court granted, the transfer of $500 million and 23,300 commodities client accounts which held only cash in the accounts on October 31, 2011. The approval of these transfers means that distributions to nearly all of the 38,000 former MFGI commodities clients will have been made within weeks of the Filing Date. The Trustee has announced that he is exploring still further transfers with SIPC, the CFTC and the CME. Throughout the process of transferring customer positions and assets, the Trustee and his professionals have been working closely with the CME, other derivatives clearing organizations, and the CFTC, who have shared their expertise and industry knowledge with the Trustee in order to ensure the prompt and fair transfer of assets to the former customers of MFGI.5 The Trustee has also filed a motion to approve an expedited claims process. These efforts show that the Movants concern that there will be a delay in the distribution of customer property, or that the Trustee lacks the requisite industry knowledge to efficiently transfer assets to customers, is unfounded.6

5.

The Steering Movants, and the customers of MFGI that they represent, are all members of the New York exchanges run by the CME and ICE. The CME has been advising and working closely with the Trustee and his professionals to facilitate the prompt transfer of the customer accounts of these members, as well as the other Members of CME exchanges. In fact, the Trustee and his professionals have substantial experience in the transfer of commodity accounts in the context of a SIPA liquidation. For example in the liquidation of Lehman Brothers Inc. (LBI), the Trustee, with the assistance of SIPC, the SEC, and the CFTC, transferred substantially all of LBIs customer commodity accounts, some 3,000 in number with approximately $3 billion in assets, to a new futures commissions merchant within weeks of LBIs filing in order to promptly allow customers access to their accounts. As here, where there was not even a willing purchaser of the broker-dealers accounts on the commodities side, the Trustee and his professionals effectuated the unprecedented transfer active of securities and commodities accounts and billions of dollars of collateral and equity. There have never before been (Footnote continued on next page)

6.

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23.

The Movants also assert that the Trustee has provided little to no

information to the customers of MFGI. See Steering Motion at 12. Since the commencement of MFGIs liquidation, the Trustee has made, and continues to make, all possible efforts to communicate with potential claimants and respond to the thousands of inquiries that have already been received by the Trustee and his professionals. The Trustee has established a dedicated call center to address inquiries regarding the proceeding. The Trustee has posted, and continues to post, frequent and timely notices of relevant information on the Trustees website (www.mfglobaltrustee.com) and the Court has recognized the utility of the site in answering customer inquiries and conveying information.7 The Trustees website is receiving, on average, approximately 7,000 unique user hits per day and the telephone call center that has received approximately 2,000 calls per week. The Trustee has also sought Court approval to fix a meeting of customers and creditors and to fix a time for interim reports to provide information about the customer claims process and the SIPA liquidation generally. As in the SIPA liquidation of Lehman Brothers Inc., the Trustee is proposing to report to, or consult with, appropriate ad hoc claimant or industry groups. In light of these efforts, the Movants assertion that a customer committee is needed because the Trustee has failed to provide customers with information on the liquidation of MFGI is meritless.

(Footnote continued from previous page) transfers of the scale and magnitude and complexity of those involved here and in the SIPA liquidation of Lehman Brothers Inc. 7. At the November 16, 2011 hearing the Court stated: I must say, I thought that the information that you have posted on that EPIQ web site is very extensive and ought to answer a lot of questions for anyone affected by this case. You were posting notices, addressing issues about how you were trying to deal with the claim process, resolve claims for cash, et cetera. People may still not be satisfied, but there was a lot of useful information there. See Transcript of November 16 Hearing at 23, In re MF Global Inc., No. 11-2790 (MG) (Bankr. S.D.N.Y. Nov. 16, 2011) (attached as Exhibit A).

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24.

The Steering Movants believe that a customer committee should be

appointed in order to implement the recommendations of the [Trustees] investigative report and to identify the assets of the commodity estates. See Steering Motion at 13. The Steering Movants admit that under the Courts Memorandum Opinion granting the SIPC Trustees Motion for an Order Granting Authority to Issue Subpoenas for the Production of Documents and the Examination of the Debtors Current and Former Officers, Directors, and Employees and other Persons (ECF No. 36), the Trustee must be permitted to conduct his investigation without the participation of, or interference by other parties. See Steering Motion at 13. There is no role for them to play in the investigation and reporting entrusted to the Trustee by statute. See 15 U.S.C. 78fff-1(c)-(d). And this is clearly no ground for the creation of a committee.

III.

There Is No Basis To Authorize The Allowance Of Committee Fees And Expenses. 25. There is no legal basis for the Court to authorize the allowance

professional fees and expenses of a creditors committee as administrative expenses.8 Bankruptcy Code 705 does not provide for the compensation or reimbursement of professional fees and expenses of a creditors committee in chapter 7 cases. See Official Creditors Comm v. Metzger (In re Dominelli), 788 F.2d 584 (9th Cir. 1986) (There is nothing in the express

8.

The Trustee notes that the Coalition Movants have cited no authority supporting their request for the allowance of the professional fees of the proposed committee as administrative expenses of MFGI estate.

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language of the [Bankruptcy Code] that authorizes the bankruptcy court to encumber debtor estates in a Chapter 7 case with the expense of providing counsel to a creditors' committee.)9 26. The Steering Movants reliance on Bankruptcy Code 503(b) to support

their request for administrative expense status for the professional fees and expenses of the proposed committee is also misplaced. Bankruptcy Code 503(b)(3)(D) provides that a court may allow as an administrative expense the actual and necessary expense of a committee representing creditors . . . in making a substantial contribution to a case in chapter 9 or chapter 11 of this title. 11 U.S.C. 503(b)(3)(D). The SIPA liquidation of MFGI is not a case under chapter 9 or chapter 11 of the Bankruptcy Code. Therefore, Bankruptcy Code 503(b)(3)(D) is inapplicable and the Movants are not entitled to administrative status for their professional fees and expenses. See 5 Norton Bankr. L. & Prac. 98:28 (3d. ed.2011). Further, even if Bankruptcy Code 503(b)(3)(D) was applicable to the proposed committee, Bankruptcy Code 503(b)(3) specifically excludes compensation for professionals from administrative expense

9.

Sable, Makoroff & Gusky, P.C. v. White (In re Lyons Transp. Lines, Inc.), 162 B.R. 460 (W.D. Pa. 1994) and In re Wonder Corp. of Am., 72 B.R. 580, (Bankr. D. Conn. 1987), are factually different from the situation presented in the liquidation of MFGI. Both cases originated as chapter 11 proceedings, and consequently neither their committees, nor their committees counsel, joined the proceedings under the procedures of section 705. Id. Accordingly, section 503(b)(3)(D) of the Bankruptcy Code, which authorizes the payment of compensation as an administrative expense to certain entities in chapter 11 and chapter 9 cases, does not apply to a chapter 7 case. See 5 Norton Bankr. L. & Prac. 98:28 (3d. ed.2011); see also In re Energy Co-op., Inc. 95 B.R. 961, 964 (Bankr. N.D.Ill 1988) (holding that section 503(b)(3)(D), by its terms, only authorizes compensation for substantial contributions to a [c]hapter 9 or [c]hapter 11 case, not a [c]hapter 7 case.); In re Kel-Wood Timber Products Co., 88 B.R. 93 (Bankr. E.D. Va. 1988) (holding that due to the diminished role of creditors committees in a chapter 7 case, there is a decreased need for creditors counsel). The limitation on the ability of a creditors committee to seek administrative status for the reimbursement of professional fees is also supported by the legislative history of the statute, which states that [t]here is no provision for compensation or reimbursement of [a chapter 7 creditors' committees] counsel. 5 Norton Bankr. L. & Prac. 98:28 (3d. ed.2011)(citing S. Rep. No. 95-989 at 94 (1978); H.R. Rep. No. 95-595 at 379, 380 (1977)).

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status. See 11 U.S.C. 503(b)(3).10 In addition, the CFTC is also actively participating here with respects to commodity issues and its rules for broker-dealer liquidations. IV. The Trustee Is Willing to Meet and Confer as Appropriate with Ad Hoc and Industry Groups. 27. While the Trustee opposes the Movants request for a customer committee

whose expenses would be paid from the commodity customer fund, the Trustee would be willing to consult and meet periodically with appropriate ad hoc and industry groups; as he has with other such groups in prior SIPA liquidations. 28. Movants note the helpful role of an unsecured creditors committee in the

Lehman case, but fail to recognize that the unsecured creditors committee there was appointed in the Chapter 11 proceeding of LBIs parent, Lehman Brothers Holdings Inc., not the SIPA liquidation of LBI. See Steering Motion at 12; Coalition Motion at 9. No creditors committee of any kind has been appointed in the SIPA liquidation of LBI, which was the securities-broker dealer and future commissions merchant in the Lehman corporate structure. Rather, the Trustee and his professionals meet from time to time with the chapter 11 creditors committee, as well as ad hoc groups of largely hedge fund customers, who are the principal remaining public customers in that proceeding. The Trustee also appears periodically to report and answer questions at industry groups such as the Managed Funds Association. The Trustee

10. Bankruptcy Code 503(b) states: After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502(f) of this title, including(3) the actual, necessary expenses, other than compensation and reimbursement specified in paragraph (4) of this subsection. The compensation and reimbursement specified in paragraph (4) is the payment of fees for the attorneys and accountants of an entity under section 503(b)(3)(D), which includes a committee representing creditors that was not appointed under section 1102. See 11 U.S.C. 503(b)(4). Because the Movants seek to be appointed under Bankruptcy Code 705, the fees of their professionals cannot qualify for administrative expense status.

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and his professionals is fully prepared to do so here as well and has expressed this willingness to counsel to the Steering Movants. CONCLUSION For the foregoing reasons, the Court should deny the Motions in all respects. HUGHES HUBBARD & REED LLP Dated: New York, New York November 20, 2011

By: /s/ James B. Kobak, Jr. James B. Kobak, Jr. Christopher K. Kiplok Jeffrey S. Margolin Dustin P. Smith 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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Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Case No. 11-02790-mg - - - - - - - - - - - - - - - - - - - - -x In the Matter of:

MF GLOBAL INC.,

Debtor.

- - - - - - - - - - - - - - - - - - - - -x United States Bankruptcy Court One Bowling Green New York, New York

November 16, 2011 4:27 PM

B E F O R E: HON. MARTIN GLENN U.S. BANKRUPTCY JUDGE

212-267-6868

516-608-2400

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Page 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Trustee's Expedited Application for Entry of an Order Establishing Parallel Claims Processes for Commodity Futures Customer and Securities Customer Claims; Approving Form and Manner of Publication and Mailing of Notice of Commencement; Specifying Procedures and Forms for Filing, Informal and Formal Determination, and Adjudication of Claims; Fixing a Meeting of Customers and Other Creditors; and Fixing Interim Reporting Pursuant to SIPA (CC: doc no. 144)

Status Conference

Transcribed by:

Dena Page

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

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been satisfied in part; I realize that.

There probably, our

best estimate, is less than 1,000, probably 4 to 500, that may not fall into either of these tranches. We're trying to look

now to see what the amount of property is and whether we feel comfortable making yet a third tranche that might benefit some of those people. THE COURT: motion. I know you're coming in tomorrow on this

One of the letter objections that I read today -- you

can answer it tomorrow, if you want -- raised the issue, they said they had mostly cash in their account and a small amount of collateral. get transferred. MR. KOBAK: That's correct. We dont really feel And they read your motion saying that wouldn't

comfortable -- what Im saying is that we are exploring that, and we may well file yet another motion in the near future seeking to transfer that in bulk. When the claims process

starts, we tried to do this on an as expedited a basis as possible. We plan, once the order is approved, starting the

process to get the claim forms up on our web site so that people can copy them, send them back. We've got over a hundred

people from Deloitte; we've hired, so far, 180 with a few offers outstanding of the former MFGI employees, many of whom we're retaining because of -- they'll have a role because of their knowledge of the accounts and the systems and so forth. So from the trustee's standpoint, as soon as people can get us

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claims, we're going to start looking at them on a rolling basis. If it's possible for us to make distributions on a

partial basis as they come in so that other people can get up to the sixty percent or some true-up number, we will do that. If we can do it on a group basis through another bulk transfer or plan of distribution of the kind that we've done and proposed so far, we'll endeavor to do that, too. We don't feel comfortable, at this point, with what we know and what we know that we don't know about the records and the amount of the accounts, going above this sixty percent figure. THE COURT: If -- this file are the letters that have

been faxed to the Court, to the consternation, to some extent, of our clerk's office. But -- because ordinarily, we don't

accept any fax filings, and the case management procedures need to reflect that anybody represented by a lawyer, the lawyer must do all filings on ECF. MR. KOBAK: THE COURT: Um-hum, yeah, sure. We will continue -- and this should be

reflected in the case management order -- we will continue to accept faxed filings from individuals who were customers, many of whom -- I mean, in the stack -- and every one has been reviewed by the Court -- many of them are -- there are many in New York, there are many in other parts of the country. appear to be individuals who don't have lawyers. These

The Court

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wants to be and will be accessible for all parties-in-interest, and so will continue to accept fax, filings by individuals who are customers. Many of the letters, however, appear to be written on behalf of -- signed by individuals, but on behalf of corporations, LLCs. This is not this Court's rule, but a And so

corporation or an LLC must be represented by counsel.

any corporation or LLC that's seeking relief, any request for relief from the Court has to be filed by an attorney. In your -- again, your case management procedures aren't on for today, but one of the things I observed, and I talked to our clerk of court and some of my colleagues about it, I want to see a simplified procedure for requests for notice on the Court. In reviewing the proposed procedures, it

may be appropriate for a case that's all lawyer-driven, but this is not. This case is different in this respect. So what

I would like to see is a form created by you and your colleagues posted on the web site, downloadable, that would permit any individual to request notice -- electronic notice, not mail notice; I think e-mail and the Internet is sufficiently ubiquitous that e-mail of pleadings is sufficient. But the procedures you proposed required -- they had to serve that request on a very long list of parties. impose that burden on your office. I'm going to

If you get a request for

notice from individuals, they fill out your form, whatever

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distribution of that has to be made can be made in bulk groups by your office. But I want all individuals, wherever they're

located, to be able to have easy access to this Court and the filings. I reviewed the Epiq web site, which I guess is the web site you have reference to? MR. KOBAK: THE COURT: Yes, Your Honor. Okay, because I was receiving all these

letters complaining about lack of information, and I must say, I thought that the information that you have posted on that Epiq web site is very extensive and ought to answer a lot of questions for anyone effected by this case. You were posting

notices, addressing issues about how you were trying to deal with the claim process, resolve claims for cash, et cetera. People may still not be satisfied, but there was a lot of useful information there. If you or your colleagues will talk with Una O'Boyle, the chief deputy clerk, we are going to post on the court web site a link to the Epiq web site so that anybody going to the court web site will have -- just click on the link and they can immediately go to the Epiq web site. It will be indicated -I spoke with her They both

so one of you should confer with Una O'Boyle. and Vito Genna, the clerk of court, last night. agreed that that was appropriate. MR. KOBAK:

If I may, just to get back to the claims

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