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MF Global Customer Says $50 Million Commodity Account Gone

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MF Global Trustee to Return Up to $2.1 Billion to Customers
MF Global Inc. signage is displayed at 60 East 53rd Street in New York. Photographer: Stephen Yang/Bloomberg

Dec. 2 (Bloomberg) -- Highridge Futures Fund LP, a customer of the MF Global Inc. brokerage, said its $50 million account with the defunct company is “missing.”

James Giddens, the trustee liquidating the brokerage, has “failed and refused” to provide any information about the whereabouts of the account, Highridge said in a filing today in U.S. Bankruptcy Court in Manhattan. Highridge asked the judge handling the case to order Giddens to locate and transfer the account, containing mostly cash and also unsettled commodity positions.

Highridge described itself in the filing as a registered commodity pool incorporated in Delaware, with a general partner that is an Illinois company.

Giddens has transferred about 38,000 commodity accounts to other firms, and said he plans to sell 330 securities accounts. Three transfers of collateral made and pending will give commodity customers about $4 billion of their assets, according to court filings.

“Highridge’s account was not among the accounts transferred,” the fund said. “This account is nowhere to be found.”

Kent Jarrell, a Giddens spokesman, said, “The trustee’s office has been in contact with Highridge and will continue to try to resolve the issue without the need for a judicial decision.”

Transfer Lists

Highridge said its account showed up twice on lists of accounts to be transferred to other future firms, first to Vision Financial Markets LLC, then to R.J. O’Brien.

CME Clearing, part of CME Group Inc., told Highridge on Nov. 29 that there was no information on the account because its unsettled positions were on the London Metal Exchange, which also had no information to give at the time.

“Twice Highridge was told the account was being transferred and twice the account was not transferred,” it said.

Separately, Queen’s Quay Avante Ltd., which opened a Canadian dollar account of $7 million at MF Global on Sept. 21, said it hadn’t received any money from the all-cash account, possibly because of the Canadian currency, or a failed wire transfer from Harris Trust & Savings Bank in Chicago, which was maintaining the account, to “a different bank.”

Account Shortfall

The shortfall in the MF Global brokerage’s U.S. segregated customer accounts may exceed $1.2 billion, more than double what was previously expected, Giddens has said. That would mean customer accounts are missing about 22 percent of their total of $5.4 billion.

The parent company’s Oct. 31 bankruptcy filing, the eighth-largest in U.S. history, listed assets of $41 billion. The firm said it has about $26 million in cash. Jon Corzine, the former co-chief executive officer of Goldman Sachs Group Inc., quit as MF Global’s CEO on Nov. 4.

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).

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Thom Weidlich in New York at tweidlich@bloomberg.net

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

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