MF Global Customers to Be Paid Back in Full

Ever since the collapse of MF Global, the search for $1 billion of the brokerage firm’s customer money evoked one ominous metaphor after another, including “uphill battle” and “magical mystery tour.”

But on Thursday, the search ended with a different saying: “Checks are going in the mail.”

James W. Giddens, the court-appointed trustee overseeing the return of customer money, announced that he was sending a final round of checks to make MF Global’s customers whole. The payout, which a bankruptcy court judge initially approved late last year, capped a stunning turnaround from MF Global’s  bankruptcy filing in October 2011, when such a recovery seemed a long shot at best.

“When MF Global failed more than two years ago, few thought a way could be found to make customers whole,” Mr. Giddens, a partner at the law firm Hughes Hubbard & Reed, said in a statement. “This is the result of herculean efforts by many professionals.”

The payouts, which will be sent on Friday, provide a happy bookend to a disastrous Wall Street saga.

The problem for MF Global â€" which was run by Jon S. Corzine, formerly New Jersey’s governor â€" became apparent in the firm’s final days. In a fight for survival, MF Global improperly transferred customer money to its banks and clearinghouses, violating a cardinal rule of the financial industry.

The breach upended the lives and fortunes of MF Global’s 30,000 plus customers, a collection of farmers, small investors and hedge funds.

It also set off a flurry of congressional hearings and federal investigations, efforts that culminated last June with the Commodity Futures Trading Commission civilly charging Mr. Corzine for failing to supervise the employee who mishandled the customer money. Mr. Corzine has denied the accusations and is fighting the case.

As the authorities searched for culpability, Mr. Giddens traced the path of the missing money. And in a series of settlements with clearinghouses and banks like JPMorgan Chase - those on the receiving end of MF Global’s improper wire transfers - Mr. Giddens recovered much of the money.

But by late last year, he was still short about $233 million. Customers who traded overseas had received only 74 percent of what once sat in their accounts. MF Global customers who traded in the United States had collected 98 percent.

To recoup the remaining shortfall, Mr. Giddens petitioned Judge Martin Glenn to free up remaining funds from MF Global Inc.’s general estate. In November, Judge Glenn agreed, setting in motion the final disbursements that were announced on Thursday.

Some customers chose not to wait, deciding instead to sell their claims to hedge funds and banks for roughly 90 percent or more of face value. But to those who remained, the full reward will soon arrive in their mailbox.

“It’s been a two-and-a-half-year roller coaster ride for 38,000 customers,” said James L. Koutoulas, a Chicago hedge fund manager and lawyer who became a voice for MF Global customers whose money disappeared. “But it’s a great feeling that they have been made whole - at last.”