Bloomberg News

CFTC Files MF Global Creditor Claim to Pursue Customer Funds

June 01, 2012

One of MF Global Inc. (MFGLQ:US)’s investigators, the U.S. Commodity Futures Trading Commission, filed a claim to pursue restitution for customers, the agency said today.

The CFTC, a panel established to regulate commodities exchanges and futures trading, took the measure to “preserve all possible options for recovering funds for the benefit of commodity customers,” according to a statement today. It said the claim won’t give it priority over MF Global customers who have filed their own claims.

The agency, which has a rule that customer funds are required to be segregated, has been investigating the brokerage’s failure, along with the Federal Bureau of Investigation and other parties.

MF Global Holdings, run by former Goldman Sachs Group Inc. (GS:US) co-chairman Jon Corzine until his Nov. 4 resignation, filed the eighth-largest U.S. bankruptcy in October 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 Chapter 11 filing listed assets of $41 billion and debt of $39.7 billion.

Its operating unit, MF Global Inc., is liquidating under the Securities Investor Protection Act to repay customers, while the holding company is unwinding in bankruptcy to repay creditors. Both proceedings operate under their own trustees.

In prior progress reports on their own investigations, the two trustees have disputed whether certain assets belong to customers or creditors, and customers were estimated to be out $1.6 billion as of the last report by James Giddens, the trustee for the operating unit.

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).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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