MF Global trustee declared “disinterested”

A bankruptcy judge in Manhattan has declared MF Global trustee James Giddens sufficiently disinterested to continue managing the dissolution of the failed commodities brokerage. Giddens’ qualifications came under scrutiny from MF Global customers concerned that his past work for JP Morgan (a major lender to MF Global) compromised his neutrality.

In order to calm investors, Judge Martin Glenn ordered Giddens to reveal more details about his working relationship with JP Morgan, as his initial disclosures “lacked sufficient information to resolve the important issues.” In response, Giddens and his firm Hughes Hubbard & Reed have ended their relationship with JP Morgan, including their ongoing patent work for the bank.

Meanwhile, regulators announced that they suspect the misappropriation of client funds may have begun on October 27th, earlier than previously thought. As they began winding down trades before the imminent bankruptcy, employees at MF Global may have moved client money into the Depository Trust & Clearing Corporation. Previously, investigators found evidence that MF Global used $200 million to repay an overdrawn account at JP Morgan in London.

The CFTC is also reviewing the source of money used to pay a margin call to a clearinghouse in the UK. In  its last week, a clearinghouse forced the brokerage to pay $300 million on some of its bond holding. A portion of this payment may have been made with customer funds.

Read more about the MF Global bankruptcy.
Creative Commons License photo credit: fdecomite

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