Jon Corzine, who has been publicly silent since resigning as MF Global Holdings Ltd's chief executive on November 4, was asked to appear before Congress next month to explain how his futures brokerage collapsed into bankruptcy so fast.

The request was made as U.S. Bankruptcy Judge Martin Glenn at a hearing in Manhattan approved the appointment of a bankruptcy trustee to oversee what remains of MF Global, wresting control from the remnants of its management team.

Bradley Abelow, MF Global's chief operating officer, was also asked to testify on December 15 before the House Financial Services Subcommittee for Oversight and Investigations, along with Corzine and several top U.S. regulators.

Both developments came one day after James Giddens, a trustee liquidating MF Global's broker-dealer unit, startled customers by revealing a possible $1.2 billion shortfall of commodity customer funds, twice what regulators had estimated.

It is a preliminary number, James Kobak, a lawyer for Giddens, told Glenn at the hearing. The apparent shortfall could go up. We hope it could go down as well. But that was the best information at the time.

Lawyers for Corzine and Abelow were not immediately available for comment.

Late on Tuesday, a spokesman for Giddens said the trustee expects soon to recover $1.3 billion of customer assets from Bank of Montreal's Harris Bank unit.

That sum would be pooled with $3.7 billion of other assets under Giddens' control, for eventual distribution to customers, the spokesman Kent Jarrell said. The recovery of the $1.3 billion would not affect the current estimate of the size of the shortfall, Jarrell said.

Giddens was expected this week to begin distributing $520 million to customers who had only cash in their MF Global accounts. That distribution would mean nearly all of MF Global's roughly 38,000 customer account holders would have received at least some of their money and collateral back.

MF Global filed for Chapter 11 protection on October 31 after the New York-based company revealed it had made a $6.3 billion bet on European sovereign debt.

The revelation worried investors, credit rating agencies and trading partners, and resulted in a liquidity crunch.


MF Global and JPMorgan Chase & Co, one of the company's main lenders, had asked Glenn to authorize the appointment of a trustee for the parent company. No one has yet been named to the role.

In approving the request, Glenn also authorized JPMorgan to pledge $26 million of collateral, up from $8 million, to keep MF Global operating in bankruptcy.

A trustee is often named to serve the bankruptcy estate's best interest, or when company executives are suspected of wrongdoing. Corzine, a former New Jersey governor and chief of Goldman Sachs & Co, has not been accused of wrongdoing.

Others invited to testify before House panel were Robert Cook, director of the U.S. Securities and Exchange Commission's division of trading and markets; Gary Gensler, who heads the Commodity Futures Trading Commission; and William Dudley, president of the Federal Reserve Bank of New York.

Gensler and SEC Chairman Mary Schapiro are also expected to appear at a December 1 hearing before the Senate Agriculture Committee.

Regulators are trying to determine what happened to the missing money, and whether MF Global may have mixed customer funds with its own, a major violation of industry rules. Federal prosecutors are also looking into the matter.


At Tuesday's hearing, Glenn approved the adoption of a parallel claims process for securities customers and commodities customers of MF Global Inc.

He declined to approve the creation of an official committee of commodities customers, saying he lacked authority under bankruptcy law, but urged Giddens to keep those customers in the loop.

If there's 38,000 separate voices, they're going to drown each other out, Glenn said.

The judge also advised Giddens to make it a priority to focus on small claims from people who are really suffering.

Nonetheless, some customers complained to Glenn about the process, fearing it will take too long to get all, or even most, of their money back.

It's going to be a very slow and winding process, said John Roe, a spokesman for the Commodity Customer Coalition, which represents more than 7,000 former MF Global customers. Ultimately it will come down to what actually happened to the money.

JPMorgan is also expected to soon announce it will pay 25 million pounds (US$39.1 million) for MF Global's 4.7 percent stake in the London Metal Exchange, making it that exchange's largest shareholder, two people familiar with the matter said.

An announcement could come this week. JPMorgan already has a 6.2 percent stake in the exchange. A sale could leave more money for MF Global creditors.

(1 British pound = US$1.563)

(Reporting by Nick Brown, Matthew Goldstein, Lauren Tara LaCapra, David Sheppard and Jonathan Stempel in New York; Christopher Doering in Washington, D.C.; and Melanie Burton and Douwe Miedema in London; editing by Carol Bishopric)