Newspaper article International Herald Tribune

Happy Ending in Sight for MF Global

Newspaper article International Herald Tribune

Happy Ending in Sight for MF Global

Article excerpt

On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to the firm's U.S, customers.

When Mahesh Desai checked his MF Global account 15 months ago, his $580,000 nest egg was gone.

Like thousands of investors and farmers who had their savings with MF Global, Mr. Desai lost his money in the brokerage firm's chaotic final days. Regulators discovered that $1.6 billion was trapped in a web of improper wire transfers, a stunning breach that sent U.S. investigators scrambling to build a case.

On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way, if approved by the judge, that could plug the remaining shortfall for customers in the United States, according to people involved in the case.

The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm's bankruptcy filing in Oct. 31, 2011, when such a recovery seemed impossible.

"I'm surprised that, magically, the money has shown up," said Mr. Desai, a software account executive who, like most customers in the United States who traded futures contracts, so far has only 80 percent of his money. "I feel very relieved."

Customers are not the only ones exhaling. The hearing Thursday presents a turning point for several major players in the MF Global case, including the firm's trustees, creditors and former executives.

For one, Mr. Giddens late last year made peace with an overseas administrator tending to the firm's British unit and with Louis J. Freeh, the MF Global trustee recovering money for creditors. The pact ended a bitter fight over access to limited resources.

And Jon S. Corzine, the former New Jersey governor who was head of MF Global when it collapsed, can now claim some small degree of vindication. The European bonds at the center of a $6.3 billion bet by Mr. Corzine paid out fully when they matured in recent months.

The large position in European sovereign debt in 2011 unnerved MF Global's investors and ratings agencies. Yet it is now clear that the bonds, which were sold to George Soros and other investors, were not by themselves to blame for felling MF Global. The firm also struggled after a one-time charge depressed its earnings.

Mr. Corzine, a former chief executive of Goldman Sachs, has started to regain his footing. He spent the summer on Long Island, New York, traveled to France around the holidays and visited Central America for a humanitarian project involving children, setting up what he hopes will become a broader charitable effort. Mr. Corzine, 66, also spends time with his grandchildren and has office space in New York, where he writes and trades with his own money.

In the most telling indication that Mr. Corzine is taking steps to put MF Global behind him, he was close to cooperating with Richard Ben Cramer, an author and a Pulitzer Prize-winning reporter, on a biography. Mr. Corzine's lawyers were in the final stages of negotiating with Mr. Cramer this month when the author died from complications of lung cancer.

Despite Mr. Corzine's progress, he still must shake a nagging U.S. government investigation. While investigators have long doubted their ability to file criminal charges against him, suspecting that chaos and lax controls were at play, rather than outright fraud, they continue stitching together evidence on the firm's demise.

The authorities interviewed the former chief over two days in September, according to people close to the case, a sign that the government saw him more as a witness than a suspect. When prosecutors have damning evidence, they often file charges rather than propose a voluntary interview.

But Mr. Corzine, unsurprisingly, has yet to receive assurances that he is in the clear. …

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