MF U.K. Clients to Get 26 Cents on Dollar
By Kit Chellel – Feb 2, 2012 10:50 AM ET
MF Global Holding Ltd.’s (MF) U.K. administrators plan to make the first payment to British clients of the failed brokerage, returning 26 cents on the dollar.
KPMG LLP, the administrators of MF Global’s U.K. unit, said the figure was the most it could return at this stage because of “continued uncertainty” as to who can claim a share of the so- called client money pool. The money will be returned to customers who had allowed claims for money in segregated, protected accounts, the firm said in a statement on its website.
The administrators are to give a report to a London court tomorrow on their progress.
KPMG has been under pressure to start returning money frozen in U.K. customer accounts since MF Global collapsed into bankruptcy on Oct. 31 after making a $6.3 billion bet on European sovereign debt. The trustee liquidating New York-based brokerage MF Global Inc. in the U.S. has so far distributed about $1.5 billion to customers, he said in January.
While KPMG has recovered about $912 million, or 90 percent, of money held in protected customer accounts at banks, exchanges and clearinghouses, it hasn’t yet returned anything to clients, the firm said in a report.
Administrators in New York and London are involved in a dispute over about $742 million of customer funds used as margin collateral for American clients trading in Europe. The U.S. trustee of MF Global Inc. wants the money to come from the client money pool, which would hamper the return of funds to U.K. clients.
KPMG said if it weren’t for the MF Global Inc. claim it would have been able to return 42 cents rather than 26 cents on the dollar to U.K. customers.
“Subsequent distributions will be made in due course as and when the resolution of issues and claims permits,” the firm said.
The U.S. 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).
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