MF Global trustee sees $3 billion in potential claims

Tue Jun 5, 2012 5:10am EDT

Former MF Global CEO Jon Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington, December 15, 2011. REUTERS/Jonathan Ernst

Former MF Global CEO Jon Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington, December 15, 2011.

Credit: Reuters/Jonathan Ernst

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(Reuters) - MF Global Holdings Ltd could have more than $3 billion in claims against its former affiliates, Louis Freeh, the trustee overseeing the wind-down of the parent company of the collapsed broker-dealer, said in his first status report.

The potential recoveries for the parent company's creditors will come primarily from such claims, Freeh said in his 119-page report that was submitted to the bankruptcy court.

Freeh said his investigation into potential claims and causes of action is in its early stages, and details will be provided to the court as it progresses.

"This report gets to the heart of the complex intercompany relationships inherent in a global firm that provided financing for its affiliates and subsidiaries all over the world," Freeh said.

MF Global collapsed after investors abandoned it following revelations of heavy bets it made on European debt.

Separately, James Giddens, the trustee liquidating the company's broker-dealer unit, said in a 275-page report he might bring civil claims against former Chief Executive Jon Corzine and other top MF Global executives for negligence and breach of duties to customers.

Giddens has estimated that $1.6 billion disappeared from customer accounts when the company, which filed for bankruptcy on October 31, 2011, improperly mixed client funds with its own money.

Both trustees had agreed to issue periodic status reports as part of their work on the case.

The case is In re: MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059

(Reporting by Sakthi Prasad; Editing by Hans-Juergen Peters)

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Comments (9)
iowafarm wrote:
mismanaged growth or stole farmer funds? The Trustee should have to return some of the $17 million in fees, also. Two wrongs don’t make it right.

Jun 04, 2012 8:26pm EDT  --  Report as abuse
Dragos111 wrote:
It has been over a year and nothing has come of this investigation. Where are the forensic accountants following the money path? There is actually documentation for every transaction out there. If nothing else, you start at the bottom of the food chain, threaten those small fish with lifetime jail unless they flip on the person above them. A motivated investigator should be able to unravel this fairly quickly.

Someone is protecting these people and letting them get away with stealing money that was supposed to be in segragated accounts. These people broke the law. The entire industry has been greatly damaged. They really need to get to the bottom of this problem.

Perhaps when November rolls around and the current administration is replaced, new people will come in and might actually get this investigation going. Sure, wishful thinking, but you have to have hope.

Jun 04, 2012 8:49pm EDT  --  Report as abuse
thinker001 wrote:
They deleted comments posted earlier. Reuters is funny. all of them are doing samething you scratch my back and scratch yours. we cover up your faults and you inject money. please do real journalism.

Jun 04, 2012 9:01pm EDT  --  Report as abuse
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