Trustee: MF Global coming up $1.6B short

Trustee: MF Global coming up $1.6B short
Giddens sees large gap between what is owed to customers and what's in the till
APR 25, 2012
The trustee liquidating MF Global Inc. (MFGLQ) brokerage said the firm has a shortfall of at least $1.6 billion to pay commodity customers' claims. James Giddens, the trustee, gave the estimate yesterday after counting allowable customer claims and the assets under his control. Giddens previously estimated the shortfall at about $1.2 billion and has now folded in $700 million that he is disputing with the administrators of MF Global's U.K. affiliate. The gap, which applies to commodities customers who traded on U.S. and foreign exchanges, will change over time as claims are processed and assets recovered, he said. “The estimated deficiency may rise or fall in significant amounts,” Giddens said in a statement. The trustee has said customers of the bankrupt futures brokerage, formerly run by Jon Corzine, may not recover all their money. Giddens has traced most of the more than $327 billion in transactions completed during the brokerage's last days. The banks, clearing houses and customers that received the funds may be subject to lawsuits seeking the money for customers missing funds from their accounts, Giddens has said. Gap Figures The gap was calculated after counting about $6.9 billion in claims by commodity customers, Giddens spokesman Kent Jarrell said. The trustee has returned about $3.9 billion that was frozen in customer accounts, and has $1.4 billion left as a reserve, Giddens said yesterday. That means there's a shortfall of “at least $1.6 billion” to pay the remaining $3 billion owed to those customers, Jarrell said in an e-mail. It's a different calculation from the previous one involving missing funds of $1.2 billion, Jarrell said. The gap between MF Global's securities customers' claims and assets available for them hasn't been calculated yet, and all claims will have to be checked for accuracy, Giddens said. MF Global Holdings Ltd., the brokerage's parent, filed the eighth-largest U.S. bankruptcy on Oct. 31 after making bets on sovereign debt and getting margin calls. Corzine, a former governor of New Jersey and former co-chairman of Goldman Sachs Group Inc., has said he didn't authorize any misuse of customer money that may have occurred. --Bloomberg News--

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