MF Global trustee: $1.2B missing from accounts

An MF Global sign is seen in the office building where MF Global Holdings Ltd had offices on Nov. 1, 2011 in New York City. Mario Tama/Getty Images

WASHINGTON - The court-appointed trustee overseeing MF Global's bankruptcy says up to $1.2 billion is missing from customer accounts, double what the firm had reported to regulators last month.

The trustee, James Giddens, also said in a statement Monday that his plans to release about $520 million from accounts that have been frozen will mean nearly all the assets under his control will be distributed.

Giddens has been combing through the accounts and finances of MF Global, which filed for bankruptcy protection on Oct. 31.

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Regulators are investigating whether MF Global tapped money from clients' accounts as its own financial condition worsened. That would be a violation of securities rules. The FBI is investigating whether New York-based MF Global violated any criminal laws.

MF Global was led by former New Jersey Gov. Jon Corzine. The firm collapsed after making a disastrous bet on European debt.

Giddens's office said in a statement that "the apparent shortfall" was as much as $1.2 billion or more, but noted that the figure could change.

Last week, the judge overseeing the bankruptcy proceeding approved Giddens's request that 60 percent of the funds in about 23,300 frozen cash-only accounts be returned to customers. The money could start moving to customers before Thanksgiving, a spokesman for Giddens said.

Giddens has previously returned to customers $1.5 billion in collateral for their trading accounts with MF Global. He has a goal of eventually returning 100 percent of all funds to customers, though that could be reduced by the apparent shortfall.

Customers use the accounts for trading derivatives. The value of derivatives is based on the value of an underlying asset, such as interest rates, oil prices or currency rates. MF Global was one of the biggest players in the derivatives market.

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