Trustee Tussles With Regulators

January 6th, 2012

Wall Street Journal
By Scott Patterson and Aaron Luchetti
Jan. 6, 2012

Louis Freeh, the former Federal Bureau of Investigation director who was appointed bankruptcy trustee of MF Global Holdings Ltd., has declined to turn over some documents to investigators trying to determine what happened to an estimated $1.2 billion in missing customer funds.

Mr. Freeh, who is representing the parent company, has asserted attorney-client privilege in deciding not to release certain documents to the Commodity Futures Trading Commission, according to his office and other people familiar with the matter. The CFTC, one of the failed firm’s regulators, is aiding the investigation into what became of the missing MF Global customer funds.

The conflict is among several that have erupted among various investigators looking into the collapse of MF Global. The disputes are complicating efforts to learn how the firm lost the customer funds and to return the money to its owners, say people familiar with the investigation, which has entered its third month.

Regulators worry the dispute with Mr. Freeh’s office could slow their investigation, according to a person familiar with the probe.

A spokesman for Mr. Freeh’s office responded in an email to The Wall Street Journal that the trustee’s team isn’t aware that “our initial desire to preserve the attorney-client privilege has hampered” the investigation.

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