When MF Global entered into bankruptcy filing on October 31, 2011, customers were wondering how the bankruptcy would affect them personally. Now, a week after the bankruptcy filing people are finding out what the damages will be to them.
According to the bankruptcy filing, MF Global has more than 150,000 customer accounts that are now frozen because of the company filing bankruptcy. In the bankruptcy court filing, there was a discrepancy that was discovered between the amount of segregated customer funds and the amount they could actually be identified.
Over the weekend, a spokesman for the bankruptcy trustee said that the trustee is still attempting to find that missing $600 million. If need be, this bankruptcy trustee will have to spread the missing funds among all the clients based on the size of their accounts. After this resolution if there is still a shortfall, the SIPC will guarantee $500,000 in missing securities. If the stocks go up or down in value, it won’t matter because the investors will have to lose the gain or loss.
Because of the complexity of this bankruptcy filing, the bankruptcy court is expecting the whole process to take many months. Any account holders will be able to download forms off the bankruptcy trustee’s website to make a claim.
This is another example of mismanagement of funds ending up in the company filing for bankruptcy, with all the damage being spread amongst the account holders. Many Americans are losing faith in Wall Street. After Lehman Brothers filing bankruptcy, it’s a surprise that people continue on trusting these brokerage houses with their life savings.