Former employees of a subsidiary of global financial derivatives broker MF Global Holdings Ltd have sued the company, claiming they were not given proper notice before they were fired on November 11. According to sources, 1,066 employees were fired from the company's broker-dealer unit.
The lawsuit was reportedly filed on Monday in U.S. bankruptcy court in Manhattan. According to papers filed by employees, New York labor law required the company to provide 60 days written notice of the firings. In addition to seeking class-action for all employees affected by the firing, they suit also seeks unpaid wages and bonuses, commissions and other benefits.
According to the employees, they were terminated without cause. They are seeking to recover 60 days worth of wages and benefits.
MF Global filed for bankruptcy protection on October 31, 2011. Its brokerage unit is set to be liquidated in the process. Sources said the unity encountered liquidity problems stemming from investment in European sovereign bonds. Four days after the liquidity problems arose, the company's chief executive resigned. Employers of the brokerage unit were told it was the company's duty to close the unit down.
Those named as plaintiffs in court documents are a former vice president in credit risk management at MF Global's New York office, as well as a floor broker that worked at the company's Chicago office.
According to the attorney representing the trustee appointed to liquidate the brokerage unit, the trustee acted appropriately in terminated the employees, who were fired as part of a court-mandated liquidation and wind-down of MF Global Inc.
Source: Businessweek, "MF Global Parent Sued by Former Employees Over Firings," Linda Sandler, November 14, 2011.