(REUTERS) -- Former customers of MF Global Holdings Ltd's collapsed brokerage were disappointed to hear on Thursday that the trustee hunting for funds missing from their accounts has no immediate plans to transfer more money to them.
More than 250 customers met in New York on Thursday with James Giddens, the trustee in charge of liquidating the brokerage and returning money to customers, for an update on the status of his investigation into what may be $1.2 billion missing from their accounts.
Giddens and his team of lawyers said they may not be able to make another mass transfer of funds above the roughly $3.8 billion they have already paid out. That figure represents about 72 percent of the total money held in customer accounts when the firm went under, leaving many customers still thousands or millions of dollars out of pocket.
At this point we're not in a position to do another bulk transfer, said James Kobak, a attorney for the trustee. That situation might change as we get through the claims process. It would also depend on our ability to recover additional assets.
Customers are being asked to submit claim forms for their missing funds by the end of this month. The trustee said that once he receives all claims, his $1.2 billion estimate may rise or fall. His estimate has been challenged by other agencies involved in the probe, which say the gap may be only half as big.
David Rosen, an energy broker at the New York Mercantile Exchange, said he was leaving the meeting with more questions than answers.
The customers need to be made 100 percent whole - there's a national interest here, said Rosen, who organized fellow MF Global customers on the NYMEX trading floor exchange in the early days of the bankruptcy. I think the trustee has done a good job so far; they've been responsive to us. But we need to make it so this can't ever happen again.
MF Global Inc is the broker-dealer unit of MF Global Holdings, which went bankrupt on October 31 after its bets on European sovereign debt became public knowledge. Chief Executive Jon Corzine, a former New Jersey governor and senator as well as an ex-Goldman Sachs chief, resigned four days after the bankruptcy.
The trustee's team said that while it would try to avoid litigation, it could eventually face a legal battle with the UK subsidiary of MF Global. More than $700 million of customer funds may be held at that subsidiary, the trustee's team said.
We are largest creditor, Giddens said. Their legal position is that certain property and collateral transferred to the UK ... under UK law, those positions become unsecured. We disagree.
Similar disputes in the liquidation of Lehman Brothers Holdings Inc's brokerage -- which Giddens is also handling -- are still winding their way through the court after three years.
Giddens also responded to questions from customers about whether he would try to sue or otherwise recover money from other pools of MF Global money, such as from the parent company, MF Global Holdings.
Giddens said he and his legal team do not want to litigate with the parent, and in fact the parent company may try to assert claims against the brokerage.
They have precious few assets, and few employees, he said. They have said they think they may be able to get a distribution as a stockholder from the brokerage. We think the evidence is certainly to the contrary.
(Reporting by Nick Brown and David Sheppard; Editing by Gerald E. McCormick)