MF Global trustee James Giddens is seeking the release of another round of customer funds, especially targeting those clients who have yet to receive any payouts from the failed broker-dealer. This third transfer, of assets potentially worth up to $2.1 billion, is to settle the accounts of all former customers, said a spokesman for the trustee. Previous fund transfers that affected only some accounts provoked grumbling among the unaffected.
Giddens filed a motion to Tuesday to win court approval for the transfer. If successful, all former MF Global customers will receive 66% or more of the funds they had invested with the brokerage. However, it is not yet possible to release all of the money owed because of the mysterious shortfall still plaguing the company. In a statement, Giddens said that the move itself is tentatively scheduled for early December, and would be the “most complex” of the transfers.
The first asset transfer occurred right after the October 31 bankruptcy, and allowed exchange operators to move clients with open positions to other brokerages. The total value of this shift was about 60% of the $2.5 billion in collateral posted against those trades. The second transfer tried to accomplish the same goals, only with cash accounts. Many of these accounts closed out their trades because of bankruptcy rumors, and complained that their money was frozen for longer than those who hadn’t been proactive.
This proposed transfer would raise the total level of assets returned to 66%, and would equalize levels for those who received less than the average 60% in earlier transfers. It will also cover checks written by MF Global in its final days, which have been bouncing when customers try to deposit them. “We’ve been excluded and I don’t think that’s fair,” said one customer stuck with a bad check. In total, about $4.1 billion in customer assets will be released if the motion goes forward.