James L. Koutoulas, CEO of Typhon Capital Management, is upset at the handling of the MF Global bankruptcy and wants to give a voice to the thousands of customers who don’t have a seat at the table. Koutoulas, who is also an attorney, is informally representing approximately 200 clients and brokers affected by the bankruptcy on a pro-bono basis in conjunction with the Northwestern Law Investor Protection Clinic.
He wants to be appointed to the MF Global Bankruptcy Creditors’ Committee “to make sure individual clients and brokers are represented and have a voice on how the funds are distributed.”
Like other industry insiders he was bewildered that the Securities Investor Protection Corp. (SIPC) was put in charge of the bankruptcy when MF Global was a much bigger player in futures than in securities. He would like the futures regulators to step up. “[CME Group] and the CFTC (Commodity Futures Trading Commission) have handled this abominably,” he says.
He also believes that the trustee should have already distributed the seg funds that they oversee. “These guys should have had 80¢ (on the dollar) paid out right away,” he says regarding the bulk of the segregated assets that are accounted for.
He is more upset that the trustee allowed JP Morgan and Bank of America on the trustee committee. “You’ve got the foxes guarding the hen house. You have nobody there that cares about the clients,” Koutoulas says, pointing out the JP Morgan has a huge conflict because it has acted as a custodian of some of the MF Global segregated accounts and is also a creditor of MF Global. “They have a lot at stake and it is adverse to client interests,” he says.
Koutoulas says the trustee is putting the interests of highly resourced creditors ahead of segregated account holders, even though the segregated account holders have the superior claim to be paid out first.
That dual JP Morgan role has led speculation that the missing seg funds were being held by JP Morgan. Koutoulas is not satisfied that JP Morgan answered this question.
“Is this the money or isn’t it?” he asks.