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MF Global trustee: Some clients may be made whole
Friday - 12/28/2012, 3:55pm EST
NEW YORK (AP) - Some customers of the failed brokerage MF Global could get back all the money they lost, according to the trustee working to recover those funds.
In a statement Friday the Securities Investor Protection Corp. said there would "likely" be full restoration for securities customers who made "accepted" claims to get their money back. There should also be "significant additional distributions" to return some money to commodities customers.
The outlook for repayments follows an agreement reached late last week. James Giddens, the bankruptcy trustee overseeing the liquidation of MF Global's main brokerage unit, and Richard Heis, who is overseeing the liquidation of the company's United Kingdom operations, agreed to resolve all claims between the two corporate entities.
That agreement could result in an extra $500 million to $600 million eventually being freed up for the main brokerage unit to return to customers. The agreement still has to be approved by U.S. bankruptcy court.
The Securities Investor Protection Corp. was created by Congress and acts as trustee when a brokerage fails, meaning it helps customers try to get their money back. Giddens, working on behalf of the organization, has been combing through the accounts of MF Global to try to find funds to return to customers.
MF Global was headed by former New Jersey Governor and U.S. Senator Jon Corzine. It collapsed in Oct. 2011 after making a disastrous bet on European debt.
Regulators have been investigating whether MF Global tapped money from clients' accounts as its financial condition worsened. That would violate securities laws because brokerages are required to keep customer money separate from the firm's money.
Much of the money that went missing belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from fluctuating prices of commodities like corn and wheat.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)