An attorney for the trustee winding down MF Global's brokerage said there may have been more money in the company's customer accounts than initial estimates suggested.
Attorney James Kobak, who leads the legal team for trustee James Giddens, estimated during testimony before the House Agricultural Committee on Thursday that total customer accounts were "between $5.5 billion and $6 billion".
It was the first public estimate from the trustee's camp on the total value of customer accounts, and is an increase from an earlier $5.45 billion estimate from MF's primary clearinghouse, the Chicago Mercantile Exchange.
The statement indicated the fluidity and uncertainty surrounding MF Global's finances and the various amounts the company had, or should have had, on file for its customers.
That is significant in the context of Giddens' separate estimate that about $1.2 billion in customer funds is missing. Giddens has roughly $5 billion of assets under his control, so a $1.2 billion shortfall on top of that would appear to take the total customer funds pool well north of $5.45 billion, a conundrum that had customers scratching their heads.
Thursday's estimate reaffirms the trustee's ongoing mantra that numbers remain foggy and should not be taken as gospel.
Kobak also stressed in his testimony that the $1.2 billion shortfall estimate is fluid, and was made in part to "dampen" public reliance on earlier estimates ballparking the gap at $600 million.
The MF Global brokerage is being liquidated in the wake of the October 31 bankruptcy of its parent company, MF Global Holdings Inc. Its former chief executive, ex-New Jersey Governor Jon Corzine, is testifying before the Agriculture Committee on Thursday afternoon.
Giddens and several federal authorities are investigating the cause of the shortfall. Giddens and his legal team are also working to get customers their money back, and have already transferred parts of customer accounts to other brokers.
Kobak said another planned transfer could boost total recoveries to about 70 percent of accounts. That is an increase from previous estimates that the transfer would bring accounts to about 66 percent recovery.
The trustee is due to seek approval for that transfer at a hearing on Friday in U.S. Bankruptcy Court in Manhattan. He is also expected to update the court on the status of his investigation. It is unclear whether he will also further discuss his estimates on the shortfall and on customer accounts.
The liquidation case is In re MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-2790.
The MF Global bankruptcy is In Re MF Global Holdings Ltd, in the same court, No. 11-15059. (Reporting by Nick Brown)