JPMorgan Returned $168M to MF Global, Trustee Says

A trustee for brokerage MF Global Inc. said JPMorgan Chase & Co. (JPM) returned $168 million in cash and that he’s still discussing his other claims with the bank.

The $168 million is the proceeds of excess collateral that JPMorgan held at the beginning of the brokerage’s liquidation, said the trustee, James Giddens, in a statement today. The bank has kept an interest in the sum, so that if any of its allegedly secured claims against MF Global become unsecured, it can make a claim to recover the $168 million, Giddens said.

“The Trustee believes that this recovery will assist him in his primary duty of recovering property for the benefit of MFGI customers,” Giddens said in the statement.

Giddens, appointed under the Securities Investor Protection Act to return funds to former customers of the failed brokerage, has estimated a $1.6 billion shortfall to what they are owed.

While Giddens is overseeing distributions to customers at MF Global Inc., its parent, MF Global Holdings Inc., once run by former New Jersey Governor and Goldman Sachs Group Inc. co- chairman Jon Corzine, filed for bankruptcy separately to apportion returns to creditors, including bondholders and lenders such as JPMorgan.

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. (MFGLQ), 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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MF Global Trustee

Andrew Harrer/Bloomberg

James Giddens, trustee of MF Global Holdings Ltd.

James Giddens, trustee of MF Global Holdings Ltd. Photographer: Andrew Harrer/Bloomberg