MF Global Trustee to Return $685 Million to Customers
The MF Global Inc. (MFGLQ) brokerage trustee is engaged in discussions with JPMorgan Chase & Co. about the bank’s activities in connection with MF Global, the trustee, James Giddens, said yesterday in a statement.
In a status update on his investigation of JPMorgan, the trustee said the bank has been cooperating in a probe that’s included witness interviews, and a review of documents by attorneys and accountants from Ernst & Young.
“The Trustee and JPMorgan are presently engaged in substantive discussions regarding the resolution of claims,” Giddens said in the statement.
During a U.S. House investigations subcommittee hearing on the collapse of the former broker last week, questions focused on a $200 million transfer from a segregated account at MF Global to a “house” account, followed by the move of $175 million from the house account to a London subsidiary’s account at JPMorgan Chase & Co.
MF Global Holdings Ltd., the broker’s parent company, filed the eighth-largest U.S. bankruptcy on Oct. 31 with debt of almost $40 billion after making $6.3 billion in bets on sovereign debt and getting margin calls.
Giddens has estimated a $1.6 billion shortfall to what customers are owed from their segregated accounts.
Jon Corzine, chairman of MF Global Holdings until his resignation on Nov. 4, has said he didn’t authorize any misuse of customer money that may have occurred. Corzine is a former governor of New Jersey and former co-chairman of Goldman Sachs Group Inc.
Corzine gave “direct instructions” to move money from a U.S. account to meet an overdraft with JPMorgan, according to a memo by congressional investigators. He may face potential legal liability if investigators show he knew customer money might be used when he ordered the transfer.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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