The MF Global Saga Pieced Together part 3 of 3
Last week, KPMG, the administrator for the liquidation of MF Global’s British arm announced it had recovered £795 million ($1.25 billion) from both customers’ accounts and corporate funds held by MF Global in that country. That amount is slightly more than the £724 million U.K. customers had in segregated accounts with MF at the time of the firm’s fall, meaning it is likely customers there will be paid out in full, with some money left over to pay creditors. In the announcement, KPMG said £594 million of the funds it had been able to recover had been in “client monies held by clearing houses, exchanges and Brokers.” While that is still accurate, what KPMG did not mention at the time was more than half of those funds apparently used to belong to American clients
The U.S. bankruptcy court trustee says that the $700 million in MF Global client funds is all from U.S. customers and should be returned to them by the British authorities. But the Joint Special Administrator of MF Global UK said only that the $700 million has been discovered in client funds and that it is not prepared to distribute the money yet.
“We are pleased with progress in the collection of both client and company monies, and are working hard to prepare to make an interim distribution of client money as soon as reasonably practicable,” said the British authority.
James Giddens, the U.S. trustee appointed to try to recover assets in the MF Global (MFGLQ) bankruptcy case, said in a statement Friday that he’s disappointed with the British response. He has retained UK lawyers to try to get the money returned immediately. (MF Global: Sorting through the debacle)
“While we have made significant progress in identifying and distributing customer property held by U.S. depositories, the UK administrators’ position will significantly affect, in the near term, my ability to return a substantial amount to US customers dealing in foreign futures,” he said.
The $700 million is not included in Giddens’ estimate of $1.2 billion in missing customer’s funds in the MF Global bankruptcy. Many of the clients who lost funds were small investors, including farmers who trade commodities as part of their regular business.
Executives of MF Global, including its former CEO Jon Corzine, have denied knowing what happened to the missing customer funds.
Authorities including the Justice Department are investigating the collapse of MF Global, which filed for bankruptcy Oct. 31 after the discovery of missing client funds killed the chance for a last-minute sale of the firm that would have kept it alive.
Friday 17 senators from various farming states in the Midwest and Great Plains wrote to Attorney General Eric Holder asking that Justice use all possible resources to investigate and prosecute any executives who misused client funds.
“We understand that criminal cases involving complex financial transactions are sometimes difficult to prove beyond a reasonable doubt,” said the letter. “However, tens of thousands of American farmers have seen their customer accounts raided by MF Global to the tune of hundreds of millions of dollars. The need for extraordinary effort should not discourage the Department of Justice from pursuing this case to the full extent of the law.”
Various news sources were used to compile the pieces of this article