Failed broker-dealer MF Global dipped into customer funds for weeks before its collapse and it is unlikely all this money will be recovered, according to authorities investigating the case.
James Giddens, the trustee overseeing the company’s bankruptcy, estimates that there could be up to $1.2 billion (£760m) in missing funds when the case is wrapped up.
A briefing document Giddens sent to congressional officials this week reads: “The trustee has determined that even if he could recover everything that is at US depositories, there will be a shortfall in what MF Global management should have segregated at US depositories.”
New York-based MF Global Holdings, which owns the broker-dealer, collapsed on October 31 after $6.3 billion exposure to eurozone debt failed to pay off. Jon Corzine, its chief executive, resigned on November 4.
It was later reported that MF Global had been accessing customer funds for its own purposes, which is an illegal act. It was thought this only took place in the days immediately before the collapse, but Giddens suggests it had been occurring for a number of weeks.
Kent Jarrell, a spokesman for Giddens, told Bloomberg: “There is no big pile of money we’re going to find in the US depositories now that we don’t know about.”
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