There’s bad news and more bad news when it comes to that infamous MF Global missing money. Not only have the $1.2 billion shortfall in funds not yet been fully recovered, but the figure has now been increased to $1.6 billion.
The New York Times reports that James W. Giddens, the federal trustee in the MF Global case, has raised the figure due to an estimated $700 million being held overseas with MF Global’s subsidiary in the United Kingdom. The Times says that Giddens admitted that he has been unable to get at that money, which KPMG is the administrator for. The money was meant to be used for American MF Global customers who made trades overseas, especially in Europe. The Times says that Giddens might need to sue KPMG to get at that money.
“The $1.2 billion number is history,” says Kent Jarrell, who serves as a spokesman for Giddens. Reuters says that $900 million of the figure is from American customers who traded on American exchanges. Giddens figures that there have been $6.9 billion worth of claims, and $3.9 billion of those claims have been paid. That leaves $3 billion, and Giddens is holding on to “$1.4 billion in reserve for now,” Reuters reports, which accounts for the $1.6 billion figure.
Here’s where it all gets weird. According to Reuters, “whether that gap represents a decrease or an increase from the trustee’s previous $1.2 billion shortfall estimate proved a surprisingly complex topic.” Wait, what? Isn’t it adding onto the missing money? But Jarrell argues that “it’s apples and oranges” and that “we’re changing the definition a little bit.” Really? How about a clear answer?
Then there’s this. According to Giddens and his staff, much of the missing money had actually been tracked down. The problem is that he can’t get at it and “claw” it back. In a statement, the trustee’s staff said that they would “attempt to resolve these claims as quickly as possible, but it is uncertain how long resolution will take,” and that “it is not known at this time when the trustee will be legally able to make additional distributions.” Oh, great.
Perhaps American traders can be thankful for something — they have gotten around 70 percent of their MF Global investments back, according to the Times. but those overseas have not yet gotten a dime.
The thing is, that $1.6 billion can still change. John Roe, who heads the Commodity Customer Coalition, notes that while it is true that duplicate claims and claims that are not accepted could bring that figure down, “we still don’t really know what the hole is.” Lovely.
Lisa Swan is a Feature Writer for the Compliance Exchange. She is also a columnist for The Faster Times and a blogger for Subway Squawkers. Her work has also appeared in the New York Daily News, Yahoo Sports, Huffington Post and the books Graphical Player 2011 and Graphical Player 2010.