The Real Bombshell in the MF Global Post Mortem

John Giddens, the bankruptcy trustee in MF Global, garnered headlines Monday by saying that he will decide in the next 60 days whether to filing suits against Jon Corzine and other officers for breach of fiduciary duty and negligence and against JP Morgan if he is unable to come to a settlement. JP Morgan so far has returned roughly $518 million in MF Global assets and $89 million in customer monies, a meager recovery relative to $1.6 billion in missing customer funds.

The report Giddens released Monday is thorough and confirms many of the observations made in journalistic accounts of the firm’s collapse, particularly regarding inadequate risk and accounting controls, JP Morgan’s aggressive posture greatly increasing the liquidity squeeze. It also makes clear that this is an interim report, and unlike the trustee’s report on Lehman, says that reaches no conclusion regarding legal strategies, including whether prosecutions are warranted.