JPMorgan Chase has returned roughly $600 million that was ensnared at the bank when MF Global Holdings Ltd. collapsed in October, people familiar with the matter said late Friday.
Most of the payments haven’t been disclosed publicly, and a bankruptcy trustee representing customers of the failed securities firm might pursue JPMorgan for as much as several hundred million dollars in additional claims, according to a person familiar with the investigation.
Still, the New York bank’s payments are a sign of progress in efforts to fill the estimated $1.6 billion hole left in customer accounts at MF Global. Money recovered by the bankruptcy trustee, James Giddens, eventually will be passed along to customers, though the amount depends on the outcome of continuing legal squabbles and negotiations.
A spokesman for Giddens said in a statement that “substantive discussions” are underway with the nation’s largest bank in assets for “the resolution of other claims” made on behalf of the former customers. JPMorgan continues to cooperate with the investigation, the spokesman added.
JPMorgan was one of MF Global’s biggest creditors and handled many of its trades as the New York securities firm scrambled to save itself in late October. MF Global also transferred $175 million to fix an overdraft in one of the firm’s accounts at the bank, according to congressional testimony.
Bank officials have said JPMorgan never intentionally accepted or held on to money that belonged in segregated customer accounts at MF Global. In May, the trustee announced that JPMorgan agreed to hand over $168 million that came from collateral held at the bank when MF Global filed for bankruptcy.
Bank officials contend that JPMorgan isn’t holding more MF Global money, according to people familiar with the matter. Giddens hasn’t reached the same conclusion and could demand additional payments, claiming that money passed through JPMorgan on its way elsewhere, according to a person familiar with his thinking.
Giddens is expected to disclose in a report Monday details about where the money in customer accounts went, including the portions that are believed to have gone to JPMorgan.
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