Judge OKs Release of $2.2B to MF Global Customers
The judge overseeing the bankruptcy of MF Global has approved releasing $2.2 billion more in frozen funds to customers of the firm.
U.S. Bankruptcy Judge Martin Glenn issued an order Friday that clears the way for customers to regain some of their money.
It’s the third transfer of funds to MF Global customers since the firm filed for bankruptcy protection on Oct. 31. The transfer will bring the total distributed to customers so far to about $4.1 billion.
The transfer, which a bankruptcy trustee requested Nov. 29, is expected to take two to four weeks. Once completed, MF Global commodities customers will have recovered about 72 percent of their money, according to the trustee for the liquidation of the brokerage firm.
The frozen funds are separate from the $1.2 billion or more that is estimated to be missing from MF Global customer accounts.
The transfer approved Friday comes atop earlier distributions of $1.5 billion in collateral for customers’ trading accounts and $520 million in cash.
MF Global collapsed after making a disastrous $6.3 billion bet on European debt. Regulators are investigating whether MF Global used money from clients’ accounts for its own purposes as its financial condition worsened. That would violate securities rules. The FBI is investigating whether the firm violated any criminal laws.
A lawyer for the trustee told Glenn in court Friday that the trustee’s staff has discovered some “suspicious” trades in MF Global customer accounts that were made in the last days before the firm failed. He didn’t provide any details.
MF Global was led by Jon Corzine, a former New Jersey governor and U.S. senator and former CEO of Goldman Sachs. Corzine was subpoenaed by three congressional committees to testify at hearings on the firm’s collapse.
In his first appearance, he told the House Agriculture Committee at a hearing Thursday that he doesn’t know what happened to the missing money.
(Copyright 2011 by The Associated Press. All Rights Reserved.)