MF Global trustee will meet with customers

[January 12, 2012]  WASHINGTON (AP) -- Customers of MF Global, the brokerage firm that imploded into bankruptcy last year, will meet publicly Thursday with a court-appointed official overseeing the dismantling of the company.

The question still lurking behind the eighth-largest U.S. bankruptcy is what happened to the $1.2 billion that was discovered missing from customer accounts when MF Global failed Oct. 31.

It is not expected to be answered Thursday in New York, when customers and other creditors can meet with James Giddens, the court-appointed trustee. But Giddens will answer questions about the claims process.

The industry-funded Securities Investor Protection Corp., charged with protecting customers when a brokerage fails, can provide up to $500,000 for each customer with securities in their accounts.

That applies to only a small portion of MF Global customers, however. Most customers used accounts for commodities trading. There were about 330 securities accounts when the firm failed, compared with about 38,000 commodities accounts.

Jon Corzine, the former CEO and a former senator and governor of New Jersey, told Congress last month that he did not know where the money was.

Much of the missing money belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from the fluctuating prices of commodities such as corn and wheat.

The federal judge overseeing the bankruptcy last month approved Giddens' request to return $2.2 billion in frozen money to MF Global customers. The total approved for distribution to customers is $4.1 billion.

Brokerages such as MF Global are required to keep customer money in separate accounts in case the firm fails. This was the first time customer funds disappeared in the failure of a commodities brokerage, lawmakers say.

Congress and regulators are investigating whether MF Global used money from customer accounts for its own purposes as its financial condition worsened. That would violate securities laws. The FBI is also investigating.

MF Global collapsed following a disastrous bet on European government debt. Corzine stepped down Nov. 4.

[Associated Press; By MARCY GORDON]

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