KPMG plans timely return of MF Global assets

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

(Reuters) - MF Global UK administrator KPMG plans to start returning to clients the $1.2 billion of cash and assets frozen at the defunct broker as early as this month in a move that will placate customers ahead of their showdown with KPMG next week.

Richard Heis, joint special administrator of MF Global UK, told Thomson Reuters on Thursday the administrator had recovered the majority of client monies and almost all outstanding client assets, and hoped to start returning these to owners shortly.

"At the end of December we had recovered some 82 percent of client monies and substantially all of the client assets. We hope to commence the return of client assets and an interim distribution of monies as early as this month," Heis said.

The administrator said he is initially talking with clients over the return of 30 million pounds of assets, in what would be the first returns to European customers since the U.S. futures broker collapsed on October31.

The pledge comes as KPMG and MF Global clients prepare for a meeting on Monday which will see the broker's customers taking a vote of confidence on the administrator and appointing a committee to sign off KPMG's fee.

MF Global UK clients have been frustrated by the slow progress recovering the estimated $1.2 billion of client cash and assets frozen at MF Global when it collapsed.

The broker's European clients complained in the immediate aftermath of the firm's default that there was inconsistency in how their live trades were being handled, with some being sold down while others were being transferred to other brokers.

KPMG responded by taking the unusual step of apologizing to MF Global customers and assuring them it was transferring open client positions "wherever possible."

The administrator also moved to reassure MF Global investors when it said in November it would make interim distributions of money to clients before it had finally settled all positions.

"It is hard to tell how the client meeting will go. Inevitably there will be questions about why MF Global collapsed and how soon the clients and creditors will get their money back," said Heis.

European clients may have been highly critical of the administrative process but they appear to have escaped the fate of some of their U.S. peers who are coming to terms with the fact that $1.2 billion of U.S. customer funds are missing.

"We know exactly where all of the client monies are," said Heis.

MF Global had been one of the biggest U.S. futures brokerages but the firm, led by former United States Senator Jon Corzine, failed after a bad $6.3 billion bet on European sovereign debt spooked counterparties and investors.

(Editing by Helen Massy-Beresford)