Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich November 18, 2011

MF Global Holding trustee James Giddens has won the permission of a U.S. Bankruptcy Judge in Manhattan to distribute $520 million in cash to customers. This sum covers about 6o% of the total $869 million frozen in consumer accounts on October 31st that contained only cash.

Judge Martin Glenn handed down this ruling over objections from some customers seeking full distribution, and others upset that they did not qualify for this payout. He flatly told disgruntled customers that nothing in the law “requires that all customers receive similar rates of distributions at the same time…Do you want everybody held hostage until the trustee can come up with a more global solution? That could take months.”

A spokesman for Giddens said that about 23,300 accounts will be entitled to a share of the unfrozen funds. Cash will be distributed beginning November 21st. A few hundred accounts will remain entirely frozen.

Read more about this MF Global court approval.

CFTC Investigation Update

Meanwhile, the investigation underway at the CFTC has unearthed new evidence showing that MF Global transferred hundreds of thousands from customer accounts into its own brokerage accounts just days before it filed for bankruptcy. This transfer likely violates CFTC regulations governing the segregation of client and company assets, and could lead to charges.

According to the Wall Street Journal, MF Global employees believed their use of customer funds in time of crisis was acceptable. It appears that, as the broker-dealer ran out of capital in the weeks leading up to the bankruptcy, it began moving hundreds of thousands at a time into its brokerage accounts. It is unclear if these actions were intentional, instead of the result of confusion. The current location of the money is also still a mystery.

The transfers appear to have begun as temporary injections injections of capital, moved out of customer accounts at the beginning of the day and returned by closing. However, on October 27, customer accounts were short $200 million. The next day, that figure leaped to $800 million. At the time of bankruptcy, $600 million was unaccounted for.

Read more about the ongoing CFTC investigation.
Creative Commons License photo credit: photosteve101