491 B.R. 355
Bankr. S.D.N.Y.2013Background
- Trustee seeks to uphold eight commodity-related claim determinations and expunge attendant objections.
- Eight objections remain after prior consensual resolutions of ~430 objections.
- Hamann and Surana contest whether their claims are securities, not commodities, to obtain SIPC advances.
- Non-MFGI claims involve Lenmore, Southwest Georgia Oil, DiLella, and MSS seeking commodity customer protection.
- Prepetition damages include Gorman and Azaryan claims for losses allegedly caused by MF Global employees.
- Court analyzes SIPA advances, Subchapter III protections, and Part 190 regulations to resolve classifications.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hamann and Surana are securities customers eligible for SIPC advances | Hamann and Surana lack securities accounts; seek SIPC protections. | No securities accounts exist; protections governed by commodity subchapter. | They are not SIPA securities customers; expunged SIPC advances. |
| Whether Lenmore, Southwest Georgia Oil, DiLella, and MSS are entitled to commodity customer priority | Records show no funded commodity accounts; priority not warranted. | Some claims may represent valid commodity customer property; objections sustain denial. | Denials upheld; lack of funded accounts; no priority. |
| Whether Gorman and Azaryan claims are barred from SIPA protections due to misconduct exclusions | Claims depend on misconduct by MF Global employees; excluded from protection. | Misconduct claims fall within protected scope when arising from securities disputes. | Claims fall outside SIPA protection due to misconduct exclusion; upheld. |
| Whether the Trustee correctly applied the Commodity Broker Liquidation Subchapter and Part 190 regulations | Trustee properly classified as commodities claims with no SIPC advance. | Need for SIPC protection where appropriate; accounts and transfers considered. | Trustee's classifications upheld under Subchapter and Part 190. |
Key Cases Cited
- Securities Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 454 B.R. 285 (Bankr.S.D.N.Y.2011) (defines customer for SIPA purposes; burden on proving customer status)
- In re MF Global Inc., 467 B.R. 726 (Bankr.S.D.N.Y.2012) (distinguishes SIPA protections from commodity property)
- In re MV Secs., Inc., 48 B.R. 156 (Bankr.S.D.N.Y.1985) (customer definition and securities claims framework)
- Mishkin v. Siclari (In re Adler, Coleman Clearing Corp.), 277 B.R. 520 (Bankr.S.D.N.Y.2002) (SIPA customer status and transaction-by-transaction burden)
- In re Bernard L. Madoff Inv. Sec. LLC, 708 F.3d 422 (2d Cir.2013) (critical width of customer protections under SIPA)