Business

‘No MF cash’ at JPMorgan

A probe of a JPMorgan Chase & Co. account that received almost $1.8 billion in inflows of cash in the month before MF Global Holdings Ltd.’s bankruptcy showed no evidence that brokerage customers’ money was being siphoned off, a trustee said.

Louis Freeh, who is handling the parent company’s bankruptcy, said all transactions between the MF Global Inc. brokerage customer account and the JPMorgan account, held by the parent company’s finance affiliate, related to margin loans. The affiliate lent money to brokerage customers to cover margin requirements and was later repaid, he said in a report.

Freeh said he started the probe, which included “review of volumes of bank statements and an extensive population of cash-transaction activity during October 2011,” after US Bankruptcy Judge Martin Glenn in Manhattan asked if any cash in the account belonged to brokerage customers, as some customers had alleged. His findings indicate that at the JPMorgan account money flowed from the parent’s affiliate to the brokerage, and not the reverse.

After an investigation, “the trustee does not believe that any of the cash in the JPM account as of the petition date represents misdirected customer property,” Freeh said yesterday.