MF Global trustee raises tally of missing funds to $1.6B

The trustee supervising the liquidation of MF Global Holdings’ brokerage said Friday that more than $1.6 billion in customer cash remains out of his grasp, more than previously estimated.

The figure was revised upward from the previous $1.2-billion estimate largely because of the way the trustee, James Giddens, is defining various chunks of money left behind — or still missing — after the broker-dealer’s late-October collapse.

Included in Giddens’ estimate for the first time is approximately $700 million in client money seen residing in the UK that is likely to be the center of a legal fight with KPMG, the UK-based administrator overseeing the unwind of MF Global’s London-based division.

“We now know we’re in for a long haul with the UK administrator,” said a spokesman for James Giddens, the court-appointed trustee for MF Global’s brokerage in New York.

Giddens this week was cleared by US bankruptcy court to hire Slaughter & May, a London law firm, as the process of securing funds from MF Global’s foreign-based operations plays out.

The $1.6-billion deficiency outlined by the trustee Friday comes after more than three months of investigation by federal authorities and the filing of claims by former customers of MF Global, which entered bankruptcy Oct. 31.

Those efforts, as well as investigators’ progress in tracing “a majority” of the cash transactions made during MF Global’s final week, have helped sharpen Giddens’ view on commodity account funds that are yet to be reclaimed, according to his spokesman.

About $900 million in funds linked to US commodity trading accounts remains unaccounted for, as well as $700 million tied to foreign-based accounts, believed to be in the UK. Giddens included the latter figure in the total deficiency as it became apparent that this money will not be repatriated anytime soon, his spokesman said.