By George Miller of Shustak Reynolds & Partners, P.C. posted on Friday, December 9, 2011.

A U.S. Bankruptcy Court judge in Manhattan, New York ruled today that James Giddens, the trustee appointed to liquidate MF Global Inc. following the firm’s October 2011 bankruptcy, may distribute an additional $2.2 billion to the firm’s former customers. While a small victory for customers, who will receive these funds over the firm’s other creditors, nearly $1.2 billion of investor funds still remains totally unaccounted for. While an SEC investigation is ongoing, it has been reported these funds may have been totally lost as a result of commingling of assets or other misconduct on the part of the firm.

Jon Corzine, former MF Global CEO and U.S. senator for the State of New Jersey, testified earlier this week that he “did not know” what happened to the missing $1.2 billion. Corzine, who appeared stumped when asked details about the firm’s transactions, was the first former U.S. senator to be subpoenaed to testify before Congress in the past 100 years.

MF Global traded heavily in European government bonds, a bet largely blamed for the firm’s demise, and reported a nearly $192 million quarterly loss in October 2011. After credit rating agencies downgraded the firm’s credit ratings to “junk,” Corzine began trying to find a buyer for the defunct firm. But the fact the firm was missing nearly $1.2 billion in customer funds quickly halted Corzine’s attempts to sell. Though just one of many firms that have failed as a result of the global financial crisis, MF Global is the largest securities firm to fail since Lehman Brothers collapsed in September 2008.

If you have lost investments as a result of broker misconduct or commingling of funds, contact our firm’s managing partner, Erwin Shustak, at (619) 696-9500 or [email protected]. Our firm routinely handles investment fraud cases involving commingling of funds and broker misconduct.

Share This Article