 "MF global trustee says $1.2 billion missing from customer accounts")
New York: The court-appointed trustee overseeing MF Global’s bankruptcy says up to $1.2 billion is missing from customer accounts, double what the firm had reported to regulators last month.
The trustee, James Giddens, has been combing through the accounts and finances of MF Global, which filed for bankruptcy protection on 31 October. He also says his plan to release about $520 million from accounts that have been frozen will mean nearly all the assets under his control will be distributed.
Regulators are investigating whether MF Global tapped money from clients’ accounts as its own financial condition worsened. That would be a violation of securities rules.
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The trustee liquidating MF Global Holdings Ltd’s broker-dealer unit said on Monday that the apparent “shortfall” of customer funds may be larger than the futures brokerage had reported prior to its bankruptcy.
“The trustee believes that even if he recovers everything that is at US depositories, the apparent shortfall in what MF Global management should have segregated at US depositories may be as much as $1.2 billion or more,” the trustee, James Giddens, said in a statement. He added that the amount could change.
Giddens also said he expects in early December to transfer 60 percent of what is in segregated customer accounts for US futures positions, pending court approval. He said the transfer would require $1.3 billion to $1.6 billion to implement, exhausting much of the assets under the trustee’s control.
MF Global was run by former Goldman Sachs & Co chief and New Jersey governor Jon Corzine before its Chapter 11 filing on 31 October. The filing came after the New York-based company revealed that it made a $6.3 billion bet on European sovereign debt. Corzine resigned on 4 November.
Agencies