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MF Global Trustee to Return $685 Million to Customers

James Giddens, trustee of the liquidation of MF Global Holdings Ltd., at a Senate Agriculture Committee hearing on the collapse of MF Global holdings Ltd. in Washington on Dec. 13, 2011. Photographer: Andrew Harrer/Bloomberg

The MF Global Inc. brokerage trustee is seeking to distribute another $685 million to customers, giving some of them a return of about 80 percent.

Commodity customers who traded futures on foreign exchanges will get their first payments of about $50 million, while about $600 million will go to customers who traded on U.S. exchanges, trustee James Giddens said today in a statement. Holders of physical assets such as precious metals are in line to get about $35 million.

“We believe that requesting an additional distribution is prudent and appropriate at this time and is consistent with our goal of returning as much customer property as possible,” Giddens said.

The distributions require a judge’s approval. No date has been set for the payments.

So far, distributions to commodities customers have repaid about $3.9 billion, or 72 percent of their funds, and Giddens has estimated a shortfall of $1.6 billion to what customers are owed. Giddens said today that his staff continues its “efforts to recover additional assets” and resolve disputed claims.

The new distributions would mean that customers who traded on U.S. exchanges will have 80 percent of their claims paid. For customers who traded on foreign exchanges, the amount will be less than 10 percent, Giddens said.

U.K. Dispute

Disputes with MF Global U.K. Ltd. and other units may make it impossible to determine the exact amounts to be distributed, Giddens said.

Separately, customers who want to trade their right to a future recovery for money now will soon be able to do so through twice weekly auctions, CRT Capital Group LLC said in a statement. A unit of the Stamford, Connecticut-based broker-dealer will hold the auctions.

“There are a number of firms offering to buy claims, but none have so far provided a transparent, fair mechanism to offer customers both attractive liquidity and the highest possible return,” Joe Sarachek, managing director of CRT Special Investments, said in the statement.

According to court papers, claims have recently been bought by the CRT unit, VonWin Capital Management LP and Contrarian Funds LLC.

Parent Company

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.

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.

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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