The trustee liquidating failed brokerage MF Global has announced plans to pursue a lawsuit over a dispute with the firm's UK division over the rights to $700mn of customer funds.
James Giddens, who has been acting as trustee since November 2011, said on 18 April that he had already filed a claim with KPMG, the administrator managing MF Global's UK affiliate, to bring the case to court in the UK.
The funds he is trying to retrieve are linked to accounts held by US customers who traded on UK exchanges. However, the dispute has arisen out of an inconsistency between US and UK law over who has a right to the money.
The trustee wants a British court to decide whether the roughly $700mn of funds which is now with the UK subsidiary should have been segregated under English law.
KPMG has agreed to the court settlement. Giddens said he would press to have the litigation "concluded as expeditiously as possible" but that it would require "robust evidentiary disclosures and hearings".
The trustee estimated that MF Global customers are missing $1.6bn in funds that were supposed to be segregated from MF Global's corporate coffers but had been commingled as the broker-dealer collapsed in October.
Earlier this month, Giddens said he may also file a lawsuit against certain MF Global executives responsible at the time of its fall for breaching fiduciary duties to the firm and clients and for violating segregation rules for customer funds.
The trustee is also in discussions with JP Morgan Chase regarding the resolution of claims, suggesting that a substantial sum of client funds is still sitting with the bank.