One of the most frustrating aspects of the MF Global debacle for the former customers of the bankrupt futures broker is the process where their advocate — the SIPA appointed trustee — has insisted from the beginning the need for customers to file claims to get their own money. Customers objected to the notion that they should have to file a claim to access their money and they pointed out in quite strong terms that they were customers not claimants.

This was an important distinction to most customers and the SIPA trustee James Giddens did not seem to understand as he was working to set-up a lengthy claims process as soon as the initial customer positions and margin was transferred out of MF Global to other brokers in the first weeks of the crisis. This was their money that was illegally moved out of segregation and they did not like the fact that the trustee was referring to them as claimants as if they were some utility collecting a bill. Eventually Trustee Giddens got the message—with the help of the Commodity Customer Coalition and others—and several bulk distribution were made truing up most customers to 72¢ on the dollar sometime after the first of the year before a longer claims process began. (A fourth bulk distribution has been proposed that would true up 4d customer accounts to more than 80%).

So it is somewhat odd that insurance money that — perhaps could be used to make up part of the shortfall in customer money — may be being left on the table by the MFGI trustee because he has failed to claim it.

But that is what is happening if you believe attorneys for Sapere Wealth Management and related firms who have demanded SIPA Trustee Giddens file a claim for a $120 million group of insurance policies that the MF Global holdings estate and the insurer, MFG Assurance (a subsidiary of MFGH) would like to tap to pay for the defense of Jon Corzine and other officers of MFGH.

Trustee Giddens has intimated in filings that the MFGI estate may have claims to this insurance money but he hasn’t filed a specific claim to it and in the meantime he says that he is ok with the MFGH estate tapping into it to pay for some defense costs. What is odd and perhaps upsetting to customers is that Louis Freeh, the trustee for MFGH, is challenging every aspect of the case. He even attempted to hold-up the third distribution of customer funds held at MFGI, an act that caused one industry insider to ask if “he was nuts” during a panel at the recent Futures Industry Association conference in Boca Raton. The customers deserve an advocate just as committed and yes ruthless in defense of their legitimate claims as Freeh is for the Creditors Committee.