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(Reuters) - The sudden collapse of MF Global Holdings Ltd is leaving some small and independent futures traders angry and frustrated.
Customers of the bankrupt firm are starting to complain about getting checks that bounced, having requests to transfer funds denied and receiving inaccurate account statements.
The growing litany of woes is adding to the tasks for the receiver assigned to liquidate MF Global and causing some investors to voice concern about the basic plumbing of the financial services system.
Steve Meyers, an independent futures trader in Florida, said he asked for $500,000 from his MF Global account to be wired back to him on October 28 because he was concerned about the firm filing for bankruptcy.
The money never was wired.
Instead, on November 2, Meyers received several checks from MF Global that were dated October 28. By the time he went to deposit the checks, MF Global had filed for bankruptcy on October 31 and the checks were not honored for payment.
Between himself and several clients he manages money for, Meyers said he has several millions of dollars still tied up with MF Global.
"I am sitting with hundreds of thousands of dollars in returned checks," said Meyers. "I just think the industry has suffered irreparable damage from this."
Other clients of the firm led by former New Jersey Governor Jon Corzine are telling similar stories.
Chris Ries, who co-manages a commodities brokerage and grain dealer in Iowa that cleared trades through MF Global, said several clients had checks bounce even though they deposited them before MF Global's bankruptcy on October 31.
The situation has been made worse, he said, because customers' account balances appear as though they received the cash even though the checks did not clear.
"Eventually it may all get cleared up," said Ries, "but for now, accounts with bounced checks don't reflect the balance that they should."
Some clients' checks were drawn on an MF Global account held at a Harris Bank branch in Illinois. Harris bank is a subsidiary of Bank of Montreal.
Jim Kappel, a spokesman for Harris, said the bank began denying payment and returning checks on November 1, at the direction of the bankruptcy trustee. While some checks might have been dated before October 31, he said, they were likely debited at a later date.
Clients' issues with bounced checks come as MF Global and its regulators continue to hunt for $600 million in client money that has gone missing. It is not clear if some of the bounced checks are part of the unaccounted money.
It appears MF Global began issuing checks to customers seeking funds -- instead of wiring the money -- as a way to buy some time for the firm, which was hoping to arrange a last-minute sale to Interactive Brokers, some of the customers say. The deal fell apart last Monday when the issue of the missing customer money arose.
A week later, regulators have yet to provide an answer on what became of the missing $600 million, although some money has been located in an account with JPMorgan Chase.
Brokers who cleared through MF Global say they have been allowed to move some of their money to new firms, but not all of it. They have been waiting for guidance from the trustee or regulators on when they will get access to all of their funds.
MF Global's trustee, James Giddens, had frozen 150,000 accounts when the firm filed for bankruptcy protection.
On Monday, Giddens said $1.5 billion worth of client money had been transferred to other firms. But the trustee and CME Group Inc, which regulates futures exchanges, have held back some $1 billion in customer funds as they search for the missing money, angering clients who can trade again but are still frozen out of their excess collateral and cash.
"We can understand the frustration of customers," Kent Jarrell, a spokesman for the trustee, told Reuters. "That is why we are working around the clock to facilitate the transfer and return of customer assets. Unfortunately, this will take time as we conduct our independent and thorough investigation and maximize the estate for all stakeholders in a fair process."
Some traders who tried to move their money from MF Global to other clearing firms or banks even before the company went belly-up have also been left in the lurch.
One independent options trader in Chicago said he placed a wire request on the morning of October 28 to transfer $1.25 million from MF Global to JPMorgan Chase.
The transfer never occurred.
An MF Global representative said JPMorgan rejected the transfer because of errors in the account number, the trader said, but upon double-checking the wire request form he found no mistakes. The funds have remained frozen at MF Global since its bankruptcy, he said.
"We pretty much have zero clarity," said the trader, who did not want to be identified. "I have a feeling the wire instructions probably just got lost in the turmoil."
Reporting by Lauren Tara LaCapra in New York; editing by Matthew Goldstein and Matthew Lewis