MF Global Holdings Ltd (MFGLQ).’s proposed rules that guard confidential information are unfair, customers of its failed brokerage said, questioning JPMorgan Chase & Co. (JPM)’s role in deciding whether they can access information about missing customer funds.
Six customers with at least $2.4 million in claims against the brokerage, MF Global Inc., said the proposed rules restrict or delay their access to information about money believed to be missing from customer accounts. The holding company, which is reorganizing in bankruptcy to repay creditors, designed the rules and has interests contrary to the brokerage, now liquidating to repay customers, the group said.
The customers also have sued New York-based JPMorgan over its role in MF Global’s collapse. James Giddens, the brokerage trustee, currently estimates the gap between customer claims and funds available to pay them at $1.6 billion.
“It is patently unfair for JPMC, a member of the creditors’ committee and a defendant in several of the class actions filed on behalf of futures customers, to have a say in whether customers will have access to information,” according to the customers’ filing.
The confidentiality rules proposed by Louis Freeh, the trustee acting for the parent’s estate and its creditors, would give a 30-day time frame for Freeh to respond to information requests. Customers said Freeh should be required to respond within 10 days, and also asked that the rules call for a log of confidential information, stating the date, type and subject of the information.
MF Global Holdings (MFGLQ), run by former Goldman Sachs Group Inc. (GS) co-chairman Jon Corzine until his Nov. 4 resignation, filed the eighth-largest U.S. bankruptcy after a $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations led to margin calls. Its bankruptcy filing listed assets of $41 billion and debt of $39.7 billion.
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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