• Court Rejects Safe Harbor Defenses for Futures Customers
  • February 4, 2013
  • Law Firm: Sutherland Asbill Brennan LLP - Washington Office
  • On January 4, 2013, the U.S. District Court for the Northern District of Illinois issued an opinion that strikes a significant blow against the rights of futures customers that might otherwise enjoy the Bankruptcy Code’s safe harbor protections. The opinion, arising out of the Chapter 11 bankruptcy case of Sentinel Management Group, Inc. (Sentinel), fashions a new exception to the safe harbor protections in the event of distributions or redemptions to customers of a failed futures commission merchant (FCM). The defendant on the losing end of the opinion, FCStone, LLC, has indicated that it will appeal the ruling, which sets the stage for a compelling battle in front of the U.S. Court of Appeals for the Seventh Circuit in the coming months.