MF Global commodity trader customers to get all their money back

Tue Nov 5, 2013 6:43pm EST
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By Nick Brown

NEW YORK (Reuters) - The trustee of MF Global's defunct brokerage received approval from a bankruptcy judge on Tuesday for a plan that will repay its former commodity trader customers in full.

The move, approved by Judge Martin Glenn at a hearing in U.S. Bankruptcy Court in Manhattan, will repay customers by reallocating to them some funds initially earmarked for non-customer unsecured creditors, Kent Jarrell, the trustee's spokesman, said on Tuesday.

The ruling comes just after the two-year anniversary of the $40 billion collapse of MF's parent company, which was run by former New Jersey Governor and ex-Goldman Sachs (GS.N: Quote) chairman Jon Corzine. It was the eighth-largest Chapter 11 bankruptcy.

The case became a political firestorm after regulators found that the company had misused customer money, leading to panic in the trading world and discussions on Capitol Hill over whether brokerages need better regulation.

The trustee, lawyer James Giddens, made a rare public appearance at Tuesday's hearing, saying he was "delighted" at the prospect of paying customers in full, according to a copy of his written statement.

"In the opening moments of the liquidation proceeding, it seemed inconceivable that we would even consider the possibility of 100 percent return of property owed to former customers of MF Global," Giddens said.

Glenn's approval cements a result that has been widely expected for months. Giddens has estimated that about 98 percent of money has already been returned to customers who traded on U.S. exchanges, and 74 percent to customers who traded on foreign exchanges.

He has estimated that a total of about $1.6 billion went missing from customer accounts due to MF Global's misuse of customer funds, which was an effort by the company to stave off its collapse as it teetered on the brink in 2011.   Continued...

The sign marking the MF Global Holdings Ltd. offices at 52nd Street in midtown Manhattan is seen in New York November 2, 2011. REUTERS/Shannon Stapleton