MF Global customer funds stuck in US/UK trustee battle

Statement from the Office of the Trustee for the Liquidation of MF Global Inc.

December 23, 2011 – New York, New York – James W. Giddens, trustee for the liquidation of MF Global Inc., reported today the Joint Special Administrators (“administrators”) of MF Global UK Limited, the UK broker-dealer affiliate of MF Global, dispute the classification under UK law of approximately $600 to $700 million in U.S. commodities claimant funds that were purportedly held as segregated assets for U.S. customers dealing in foreign futures. In the Trustee’s view, these funds were segregated for U.S. customers who traded on foreign exchanges and, thus, should be returned to those customers.

“I am disappointed in the UK administrators’ position,” Giddens said. “While we have made significant progress in identifying and distributing customer property held by U.S. depositories, the UK administrators’ position will significantly affect, in the near term, my ability to return a substantial amount to U.S. customers dealing in foreign futures. We will actively and expeditiously pursue the resolution of this issue.”

At this time, the Trustee does not have control of most of the assets associated with foreign positions, known as Rule 30.7 secured funds. In the Trustee’s view, these funds belong to U.S. customers of MF Global Inc. who traded on foreign exchanges; the ultimate recovery of these foreign assets is not certain and may take more time. The Trustee noted that the investigation into the apparent shortfall of segregated customer property continues and the customer property held by MF Global UK Limited does not change his estimate that the shortfall is not less than $1.2 billion. The disputed assets currently held by the MF Global UK administrators are separate from the previously reported shortfall.

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