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Battle Royale: MF Global, J.P. Morgan

J.P. Morgan Chase & Co. and MF Global Holdings once were tight knit business associates; now the two entities are butting heads as regulators search for answers in the case of the $600 million missing from MF Global client accounts.

The discovery of the missing client funds effectively put an end to a potential deal to sell MF Global to Interactive Brokers Group. Instead, MF Global filed for bankruptcy protection last week.

As a result, MF customers are now finding themselves in an unforeseen situation. As reported Nov. 8 by the Wall Street Journal, Ken Morrison is one of many MF Global customers unable to withdraw any cash from his account. Morrison doesn’t know how much he will eventually get back, or when, according to the WSJ article.

But it isn’t just Morrison’s cash at stake, it’s also his trading. Morrison’s account was one of 17,000 accounts that were moved to rivals of MF Global, but the trustee liquidating the MF Global has retained $1 billion in those accounts for the time being to pay any potential claims. On Nov. 7, Morrison had to sell corn and wheat trades in order to come up with the cash necessary to back up his remaining trades, the Wall Street Journal says.

Meanwhile, MF Global says J.P. Morgan dragged its feet when it came to settling trades made by MF Global during the time it tried sell various assets. Execs at MF Global believe the supposed slow-down complicated the company’s efforts to find a buyer and may have even caused the $600 million gap in customer accounts.

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