INTL FCStone 2011 Annual Report Download - page 36

INTL FCSTONE INC.Form10K22
PARTI
ITEM 3 Legal Proceedings
Porto Alegre, Brazil; Asuncion, Paraguay; Montevideo, Uruguay;
London, UnitedKingdom; Dublin, Ireland; Dubai, United Arab
Emirates; Singapore, Singapore; Beijing and Shanghai, China;
and Sydney, Australia.
All of our o ces and other principal business properties are
leased, except for the space in Buenos Aires, which we own.
We believe that our leased and owned facilities are adequate to
meet anticipated requirements for our current lines of business.
ITEM 3 Legal Proceedings
Certain conditions may exist as of the date the  nancial statements
are issued, which may result in a loss to the Company but
which will only be resolved when one or more future events
occur or fail to occur. We assess such contingent liabilities, and
such assessment inherently involves an exercise of judgment.
In assessing loss contingencies related to legal proceedings that
are pending against the Company or unasserted claims that
may result in such proceedings, our legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims
as well as the perceived merits of the amount of relief sought or
expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss had been incurred at the date of the  nancial
statements and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company’s  nancial
statements. If the assessment indicates that a potentially material
loss contingency is not probable, but is reasonably possible, or
is probable but cannot be estimated, then the nature of the
contingent liability, together with an estimate of the range of
possible loss if determinable and material, would be disclosed.
Neither accrual nor disclosure is required for loss contingencies
that are deemed remote. We accrue legal fees related to contingent
liabilities as they are incurred.
In addition to the matters discussed below, from time to time
and in the ordinary course of business, we are involved in various
legal actions and proceedings, including tort claims, contractual
disputes, employment matters, workers’ compensation claims
and collections. We carry insurance that provides protection
against certain types of claims, up to the policy limits of our
insurance. During the year ended September30,2011, loss
contingency accruals, not having a material impact on the
consolidated  nancial statements, have been recorded. In the
opinion of management, possible exposure in these matters in
excess of the amounts accrued, is not material to the Company’s
earnings,  nancial position, or liquidity.
 e following is a summary of signifi cant legal matters involving
the Company.
Securities Litigation
FCStone and certain officers of FCStone were named as
defendants in an action fi led in the UnitedStates District
Court for the Western District of Missouri on July15,2008.
A consolidated amended complaint (“CAC”) was subsequently
fi led on September25,2009. As alleged in the CAC, the action
purports to be brought as a class action on behalf of purchasers
of FCStone common stock between November15,2007 and
February24,2009.  e CAC seeks to hold defendants liable
under Section10(b) and Section20(a) of the Securities Exchange
Act of 1934 and concerns disclosures included in FCStone’s
fi scal year 2008 public fi lings. Specifi cally, the CAC relates to
FCStone’s public disclosures regarding an interest rate hedge,
a bad debt expense arising from unprecedented events in the
cotton trading market, and certain disclosures beginning on
November3,2008 related to losses it expected to incur arising
primarily from a customer energy trading account. FCStone and
the named offi cers moved to dismiss the action. Although the
Court denied that motion on November16,2010, it limited
the action to the public disclosures made on November3,2008
and November4,2008 related to the energy trading account.
As a result of the Court’s order and lead plaintiff s’ decision not
to amend their complaint, the lead plaintiff s lost standing to
prosecute the action because they were not shareholders at the
relevant time. Counsel for lead plaintiff s have since added named
plaintiff s who purport to possess standing. Motion practice with
respect to class certifi cation is currently pending before the Court
pursuant to which plaintiff s seek to certify a class on behalf
of purchasers of FCStone stock between April14,2008 and
February24,2009.  e Company and the FCStone defendants
continue to believe the action is meritless, and intend to defend
the action vigorously.
In August,2008, a shareholder derivative action was fi led against
FCStone and certain directors of FCStone in the Circuit Court
of Platte County, Missouri, alleging breaches of fi duciary duties,
waste of corporate assets and unjust enrichment. An amended
complaint was subsequently fi led in May,2009 to add claims