NEW YORK (Bloomberg) — Bermuda-based MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts, will pay $75 million to settle claims it helped a Philadelphia hedge fund hide trading losses from investors.

The case stems from MF Global's role as broker for Philadelphia Alternative Asset Management, which collapsed amid fraud claims in 2005. MF Global was sued in May 2006 by a court- appointed receiver, who accused the broker and seven employees of fraud and racketeering. MF Global denies the allegations.

The settlement includes $69 million that will go to a restitution fund for investors and $6 million in legal fees, MF Global said in a statement yesterday. The company was the brokerage arm of Man Group Plc, the world's biggest publicly traded hedge fund firm, until it became a separate company with its initial public offering this year.

The US Commodity Futures Trading Commission sued the Philadelphia hedge fund in June 2005, claiming it hid more than $140 million in trading losses from investors. MF Global was accused of participating in the fraud by letting the fund conceal losses in a brokerage account.

The fund's manager, Paul Eustace, filed for bankruptcy the next month and the judge overseeing the CFTC case appointed Clark Hodgson as receiver to round up any remaining assets and pursue legal claims on behalf of investors.

In its October earnings release, MF Global said it expected to pay $69 million to settle the allegations and that the costs were insured. The company said at the time that it would settle the charges without admitting wrongdoing. MF Global spokeswoman Diana DeSocio declined to comment yesterday.

The settlement is conditional on US District Court approval, MF Global said. Such approval for the definitive settlement agreement will be sought within the next 10 days, the company said.