When MF Global declared bankruptcy in October, 2011, it was the eighth largest bankruptcy by assets in U.S. history. What immediately followed was an epic battle of individuals versus large banks, one that could have been played out on a Hollywood screen. After more than a year, the end may be in sight.

Yesterday, a judge approved a settlement deal that would restore investors' accounts to nearly 93%, an amount that far exceeds expectations, but still falls short of hopes that they would be made whole.

James Koutoulas, head of the Commodity Customer Coalition, and the leading advocate for MF Global customers, says:

The bankruptcy process is getting closer to over and we're looking at a pretty good likelihood of full recovery there.

The missing money
The fact that the money went missing baffled customers and regulators. Mahesh Desai, a former customer told us last year:

In this day and age, when everything is moved electronically, that they can't figure out where the funds are is mind-blowing. It would be one thing if they were moving money in the back of a trunk in suitcases.

JP Morgan (NYSE:JPM) immediately stood out as a culprit; aside from Deutsche Bank (NYSE:DB), the company was MF Global's largest creditor, and involved in ways that weren't immediately clear. JP Morgan returned $600 million in funds in June 2012.

According to Koutoulas, JP Morgan still has several hundred million dollars in customer funds, despite an August deadline imposed by trustee James Giddens upon threat of a lawsuit. Giddens and JP Morgan are in "negotiations" for the return of the remaining funds.

More than the money
An amount of  $1.6 billion doesn't just go missing and, from the beginning, the loudest question asked was who knew what and when. Koutoulas led the call for criminal charges against those involved, most pointedly Jon Corzine, former Goldman Sachs (NYSE:GS) executive turned MF Global CEO, who Koutoulas repeatedly accused of gross criminal misconduct. (Ten months into the investigation of the collapse, officials called criminal charges against MF Global executives "unlikely."  ) That Corzine's risky bet on the European sovereign debt crisis paid off after the firm went bankrupt hasn't muted Koutoulas's call for the former politician's head. He says:

Corzine committed theft and some justice needs to be done to create a deterrent for the next would-be fraudster. We have a plan to get him a lifetime ban from the NFA, bring some civil actions against him, and press for criminal charges through means that avoid the inept or corrupt Department of Justice.

Even if every last customer has every last penny returned, the damage of the collapse to the industry will have long-lasting and far-ranging consequences. Change has come slowly and in pieces. In August, the CME Group (NASDAQ:CME) and other futures markets, approved new regulations for the treatment and management of customer funds.

But it will take more than that. The collapse of MF Global is just one of several man-made financial disasters that has devastated confidence among stakeholders in the past two years, from a flash crash, to the LIBOR manipulation scandal. With the exception of the Commodities Customer Coalition, grassroots reform efforts like Occupy Wall Street or Bank Transfer Day have failed to have a large-scale, meaningful impact.

The return of customer funds is a good start, but restoring year-old accounts doesn't allow for the funds that could have been made or lost during that time. It also doesn't give back the confidence that the industry will operate as it should, or prevent MF Global executives from sinking their next brokerage on a risky bet.

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