UK Clients Begin to Receive Payments After MF Global Lawsuit

London, EnglandPayments have been made to some clients in the UK after the MF Global lawsuit, as the defunct brokerage firm is being unwound in the face of a legal spat with the US trustee of the company, The Wall Street Journal reported.

According to the news source, KPMG, the UK-based administrator overseeing the unwinding of MF Global's London-based division, noted that it had made some payments to clients with "agreed client money claims."

The first wave of settlements affects up to 600 clients with estimated claims of $12 million, and a second wave of settlements has been announced that would affect another 1,300 clients with estimated claims of $19 million.

"While we await the outcome of the Lehman case in the Supreme Court, and a number of other legal uncertainties to be resolved, the least risky approach would be to hold back the payment process until the full picture of all claims is known," Richard Heis, joint special administrator for MF Global and a restructuring partner at KPMG, told the news source. "However, we want to start returning client money as soon as possible and have therefore constructed an interim distribution model, which has allowed us to start making partial repayments to clients with agreed claims."

KPMG noted that to receive a distribution payment, clients must agree to the number and acknowledge that it represents their entire claim against MF Global UK. They also have to enter into a settlement agreement, which provides an indemnity to repay any amounts received in excess of the client's entitlement, according to the news source.

MarketWatch reported that the trustee from the US who is supervising the liquidation of MF Global Holdings said that more than $1.6 billion in client money remains out of his grasp, more than previously estimated.

According to the news source, the figure was revised upward from the previous $1.2 billion estimate, as the trustee, James Giddens, is allegedly identifying the various chunks of money that were left behind or still missing.