Good news of the week: MF Global trustee James Giddens got permission to release some $520 million in funds back to anxious clients who had been fighting to get into their frozen accounts.The bad news? The funds that have been freed were only related to cash-only commodity accounts — about 23,000 of them.
When MF Global first went bankrupt, about 17,000 accounts that held open positions were transferred to new brokers.
The downside then was that only about 60% of the collateral to back up those trades were moved.
Now, those customers who had open positions moved still can’t get to the money left in their old MF Global accounts.
Business Insider was in contact with three MF Global clients, who confirmed they were in this predicament and are still working to get their money back. The bankruptcy judge overseeing the case has also asked Giddens to find a way to return money to those type of clients.
One independent investor, who wanted to go only by his last name, Patel, said he still has $1.3 million in his MF Global accounts frozen that he will not be able to access despite the judge order earlier this week. Only about $240,000 was moved to over to his new broker, RJ O’Brien, which he is able to access some of.
Another client, Jason Skole is an equity trader and had accounts at MF Global through a personal investment. He had $185,000 in his MF Global account, but now only has $7,500 through a new broker that his open positions were transferred to.
This type of situation is especially hurtful to conservative investors who may have deposited excess cash in their accounts as a safety measure, and now have a majority of that cash stuck at MF Global.
The $520 million released also does not apply to clients who liquidated their positions early and tried to withdraw their money, but had the checks MF Global sent them bounce.
Giddens has said his goal is for all MF Global clients to get 100 cents on the dollar, but looks like there’s a long road ahead.