MF Global trustee seeks return of up to $2.1B
Wednesday, November 30, 2011
The court-appointed trustee overseeing MF Global Inc.’s liquidation asked Tuesday that an additional $2.1 billion be released from frozen customer accounts.
It would be trustee James Giddens’s third transfer of funds to MF Global customers since the brokerage filed for bankruptcy protection on Oct. 31. That would bring the total distributed so far to about $4.1 billion, Giddens’s office said in a statement.
The transfer could take two to four weeks and comes atop earlier distributions of $1.5 billion in collateral for customers’ trading accounts and $520 million in cash.
Separately, Giddens has said that $1.2 billion or more may be missing from MF Global customer accounts. Regulators are investigating.
With the proposed $2.1 billion distribution, all MF Global commodities customers would have retrieved two-thirds or more of the money they had in their accounts, Giddens’s office said.
Giddens has a goal of eventually returning 100 percent of all funds to customers — if the missing client funds are recovered.
New York-based MF Global was led by Jon Corzine, a former New Jersey governor, U.S. senator and CEO of Wall Street titan Goldman Sachs. MF Global collapsed after making a disastrous $6.3 billion bet on European debt.
The Commodity Futures Trading Commission and other regulators are investigating whether the firm used money from clients’ accounts for its own purposes as its financial condition worsened. That would violate securities rules.
The FBI is investigating whether MF Global violated any criminal laws.
Customers used the accounts for trading derivatives.
MF Global was one of the biggest players in the derivatives market, where investors trade securities that are based on the value of an underlying asset, such as interest rates, oil prices or currency rates.
Also Tuesday, the chairman of a House panel investigating MF Global’s collapse asked CFTC Chairman Gary Gensler to provide documents related to the agency’s oversight of the firm.
Rep. Randy Neugebauer, R-Texas, who heads the House Financial Services oversight subcommittee, also asked Gensler in a letter to explain his personal involvement in supervising MF Global. Gensler stepped aside from the CFTC’s investigation in early November because of his longstanding ties to Corzine. Gensler worked for Corzine when both were at Goldman Sachs.
Neugebauer noted that Corzine reportedly personally lobbied Gensler and his staff this year in opposition to a possible CFTC rule that would have affected MF Global. Neugebauer asked Gensler why he didn’t remove himself earlier from MF Global matters, so Corzine wouldn’t have been able to lobby him.
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