April 19 (Bloomberg) -- A trustee for failed brokerage MF Global Inc. plans to pursue a lawsuit in the U.K. to recover $700 million in customer funds, according to a statement.
The trustee, James Giddens, has been working since November to return the $700 million in funds and has already filed a claim with the administrators overseeing the company’s MF Global UK Ltd. unit, according to the e-mailed statement. Giddens cited a current dispute over whether the money should have been segregated under English law, and seeks to have a British court decide the issue.
“We believe that the U.K. courts should act on this issue and that this process is the most efficient way to return customer assets to the former customers of MF Global,” said Kent Jarrell, a spokesman for Giddens. He said the lawsuit will need to be brought by MF Global’s U.K. administrator, not the U.S. Trustee.
Giddens, appointed under the Securities Investor Protection Act to return funds to former customers of the failed brokerage, has estimated a $1.6 billion shortfall to what they are owed.
“The trustee will press to have this litigation concluded as expeditiously as possible,” Giddens said in the statement yesterday. He said it would take “robust” disclosure of evidence and hearings under the procedures of English law.
Giddens has also said he may sue individuals over breach of fiduciary duty and other issues related to the loss of customer funds in an effort to recoup the money. Giddens is in discussions with JPMorgan Chase & Co. about the bank’s activities in connection with MF Global, and sees claims against it and other parties to recover funds for customers.
MF Global was the operating unit of MF Global Holdings Ltd., which filed for bankruptcy in October.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).