MF Global Inc.'s shortfall in U.S. segregated customer accounts may exceed $1.2 billion, said the trustee overseeing a liquidation of the failed brokerage run by former New Jersey Governor Jon Corzine.

James Giddens, the trustee, said today that distributing 60 percent of what should have been in customers' accounts will take $1.3 billion to $1.6 billion, or almost all of the assets he has within his control. While he expects the transfer will occur in early December, he doesn't have access to funds beyond $1.6 billion, Giddens said in a statement.

A shortfall of $593 million, or 11 percent of customer funds, had been previously estimated by a person with knowledge of probes of the firm's collapse. Giddens said today that forensic accountants and investigators are working "around the clock," and the shortfall estimate may change.

"The apparent shortfall in what MF Global management should have segregated at US depositories may be as much as $1.2 billion or more," Giddens said in the statement. "The trustee wants to stress that these are preliminary numbers that may well change, and the trustee will update in due course."

Kent Jarrell, a Giddens spokesman, didn't immediately respond to an e-mail asking what this meant for customer demanding 100 percent of their collateral.

David Fuller's view The trustees "stress that these are preliminary numbers that may well change…" Let us hope so because otherwise this has the makings of a major scandal involving the unlawful use of MF Global's client's funds which are required by law to be segregated.

Meanwhile, as last mentioned on Thursday, I maintain that this story has had some affect on last week's surge in European debt yields and the simultaneous slide in the prices for many commodities, which has continued today.