WHEN Mahesh Desai checked his MF Global account 15 months ago, his $US580,000 ($554,000) nest egg was gone. Like thousands of investors and farmers who had their savings with MF Global, Desai lost his money in the brokerage firm's chaotic final days. Regulators discovered $US1.6 billion was trapped in a web of improper wire transfers, a stunning breach that sent US federal investigators scrambling to build a case.
On Thursday, a bankruptcy court will review a proposal that would return 93 per cent of the missing money to customers like Desai. And the trustee who has submitted the proposal, James Giddens, has quietly identified a way that, if approved by the judge, could plug the remaining shortfall for US customers.
The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm's Halloween 2011 bankruptcy filing when such a recovery seemed impossible.
"I'm surprised that, magically, the money has shown up," said Desai, a software account executive who, like most US customers who traded futures contracts, has only 80 per cent of his money. "I feel very relieved."
Customers are not the only ones exhaling. The hearing on Thursday presents a turning point for several major players in the MF Global case, including the firm's trustees, creditors and former executives.
For one, Giddens last year made peace with an overseas administrator tending to the firm's British unit and Louis Freeh, the MF Global trustee recovering money for creditors. The pact ended a fight over access to limited resources.
And Jon Corzine, the former New Jersey governor who headed MF Global when it collapsed, can now claim some small degree of vindication. The European bonds at the centre of a $US6.3 billion bet by Corzine fully paid out when they matured in recent months.
The large position in European sovereign debt in 2011 unnerved MF Global's investors and ratings agencies. Yet it is now clear that the bonds, which were sold to George Soros and other investors were not by themselves to blame for felling MF Global. The firm also struggled after a one-time charge depressed its earnings.
Corzine, a former chief of Goldman Sachs, has started to regain his footing.
In the most telling indication that Corzine is taking steps to put MF Global behind him, he was close to co-operating with Richard Ben Cramer, an author and a Pulitzer Prize-winning reporter, on a biography. His lawyers were in the final stages of negotiating with Cramer this month when the author died from complications of lung cancer.
Despite Corzine's progress, he still must shake a nagging federal investigation. While investigators have long doubted their ability to file criminal charges against him, suspecting chaos and lax controls were at play, rather than outright fraud, they continue seeking evidence on the firm's demise.
Federal authorities interviewed the former chief over two days in September, according to people close to the case, a sign that the government saw him more as a witness than a suspect. When prosecutors have damning evidence, they often file charges rather than offer a voluntary interview.
But Corzine, unsurprisingly, has yet to receive assurances he is in the clear. Investigators continue to examine one of his statements from the September session. The statement involved Corzine's recollection about a phone call he had with JPMorgan Chase, which received a suspicious $US175 million transfer from MF Global on its last day of business.
JPMorgan sought written promises that the money did not belong to customers but never received such assurances. An email shows that Edith O'Brien, a MF Global employee who oversaw the transfer, told Corzine that the money belonged to the firm, not clients.
O'Brien declined to co-operate with investigators without receiving immunity from criminal prosecution. But the government is hesitating to grant her request, fearing that doing so would set a bad example for future investigations.
For Freeh, the most significant breakthrough came in late December when he joined a deal with Giddens and the British administrator.
Under the terms of the broad settlement, the administrator will pay $US500 million to $US600 million to Giddens, ending a dispute over customer money trapped overseas. The deal also prompted Freeh to drop more than $US2 billion in claims against Giddens, who hailed the pact as a "critical milestone".