Customers of MF Global could have reason to believe they’ll get more of their money back from the collapsed broker/dealer. James Giddens, the trustee in charge of the firm’s liquidation, is asking a bankruptcy court to distribute another $685 million to MF Global customers.
As reported March 15 by Bloomberg, Giddens wants commodity customers who traded futures on foreign exchanges to receive payments about $50 million, while some $600 million is slated for customers who traded on U.S. exchanges. Holders of physical assets like precious metals are in line to get about $35 million.
Each of the distributions requires a judge’s approval.
MF Global Holdings Ltd., the broker’s parent company, filed for bankruptcy protection on Oct. 31. At the time, it had debt totaling nearly $41 billion after making $6.3 billion in risky trades on European sovereign debt and other assets and getting margin calls. Reports later came to light that as much as $1.2 billion was in missing in client money and that the company’s leverage ratio was an astonishing 38-to-1.
So far MF Global clients have received about 72% of their money following the company’s derailment on Oct. 31. The new distributions, however, would increase that percentage, giving customers who traded on U.S.exchanges about 80% of their claims paid. For customers who traded on foreign exchanges, the amount is less than 10%.
MF Global’s former CEO Jon Corzine has come under fire following his firm’s implosion. Corzine came to MF Global in March 2010 shortly after the firm faced a scandal involving a trader making unauthorized bets. Earlier this month, Corzine testified at a congressional hearing on his firm’s collapse but offered little insight into the millions of dollars in missing customer funds.