Nov 4 (Reuters) - The trustee liquidating MF Global's
brokerage will have the authority to subpoena documents and
examine personnel and the company's affiliates, creditors and
counterparties, a bankruptcy judge ruled on Friday.
In a hearing held by telephone, Judge Martin Glenn said the
request from trustee James Giddens was appropriate, given
questions about whether the broker-dealer improperly mixed
customer funds with its own capital.
Glenn denied a request from MF Global Holdings Ltd, the
brokerage's parent company, which is under Chapter 11
bankruptcy, to sit in on examinations and receive copies of all
"An investigation ... cannot be completed effectively if
the trustee is required to reveal his investigatory
methodology" before the probe is complete, Glenn said.
The brokerage late last month reported a "significant
shortfall" in customer accounts. The latest figures peg the
missing money at more than $600 million. The trustee and
multiple regulatory authorities are looking into how the money
An attorney for MF has said the company believes that,
while some money has been slow to clear, there is no
MF's CEO, former New Jersey Governor and former Goldman
Sachs chief Jon Corzine, resigned on Friday, the day after news
emerged that he had hired a white-collar defense attorney.
Eric Ivester, a lawyer for the bankrupt parent company,
said his client lost access to key information since Giddens
was appointed to liquidate the brokerage, and would be better
able to maximize creditor recovery if it had access to the
"We have very limited resources, both in human capital and
finances," Ivester said at Friday's hearing.
But James Kobak, counsel for Giddens, said it was
inappropriate for the parent to "be looking over our shoulder
as we do this work."
Glenn agreed, but also told the trustee's legal team to be
as cooperative as possible on information sharing as the parent
works to find value in its estate.
Giddens, who is also liquidating Lehman Brothers'
brokerage, received similar subpoena power in that case, and
other parties in the Lehman case were similarly barred from
shadowing the investigation.
The brokerage liquidation is In re MF Global Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 11-2790.
The parent's bankruptcy case is In re MF Global Holdings
Ltd, in the same court, No. 11-15059.
(Reporting by Nick Brown)
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