Customers are also organizing, and a lawsuit may seek to recover money lost by the members of exchanges who provided liquidity for MF Global trades, said David Rosen, 32, an energy broker who works at the New York Mercantile Exchange. Rosen, who is organizing a meeting at 3 p.m. today, said the meeting is open to members of the NYMEX, COMAX, and Intercontinental Exchange, and the group will seek to hire counsel.
"We didn't think we were just customers," said Rosen, who had more than $100,000 in an MF Global account. "We're the ones in the pits providing liquidity so everyone around the world can trade these products."
Court Permission
James Giddens, the trustee overseeing the liquidation of the company's brokerage, on Nov. 4 won court permission to probe the company's directors and officers, lenders and other investors. That probe will focus on customer recoveries.
Other regulators including the Commodity Futures Trading Commission and the Securities and Exchange Commission are investigating as well. On its first day in court, New York-based MF Global asked for an extension of the usual 14-day window in which to disclose its full lists of assets and debts.
CFTC Chairman Gary Gensler will recuse himself from the agency's investigation amid concern his ties to Corzine may give the appearance of a conflict of interest, two people with direct knowledge of the decision said. Corzine worked with Gensler at New York-based Goldman Sachs and during his term in the U.S. Senate, where Gensler served as an aide.
Subsidiaries
While many of the company's overseas operating units are also unwinding under administrators, including its U.K. unit, other subsidiaries could also end up under Chapter 11 protection within weeks or months, Marinuzzi said.
In forming a committee of unsecured creditors, the U.S. trustee will look for creditors who represent the interests of all parties. Unsecured bondholders make up a large segment of such creditors. MF Global's 6.25 percent notes due 2016 traded at 104 cents on the dollar as of Sept. 7 before dropping to 50 cents on the dollar in the week before its bankruptcy.
"The real question will be who's on what committees and how will they handle things," said Scott Peltz, the national leader of RSM McGladrey's Financial Advisory Services Group in Chicago.
JPMorgan Chase & Co., agent to a $1.2 billion unsecured loan, also provided a $300 million secured loan to MF Global's brokerage and may cause conflicts by seeking a seat on the creditors' committee. The bank would have an interest in keeping money at the broker-dealer unit to satisfy its secured debt, while other creditors would have an interest in bringing the broker-dealer's assets into the holding company's bankrupt estate.