Earlier, investigators probing the records of MF Global expressed some optimism that they could locate some of the $600 million that appeared lost from customer accounts.  Their job just got twice as difficult, the New York Times reports, as the amount missing may have doubled to $1.2 billion:

The amount of customer money missing from the collapsed trading firm MF Global may be more than $1.2 billion — double previous estimates — the trustee dismantling the firm’s brokerage unit said on Monday.

But the surprise finding, which caught regulators off guard, may be overstated, according to a person briefed on the investigation. Some regulators say they believe that the trustee double-counted $220 million that had been transferred between units of MF Global, this person said.

Still, the much higher number highlights the disarray of MF Global’s records and raises significantly the hurdle for tens of thousands of customers seeking to get their money back. The trustee’s estimate represents a significant portion of customer funds held by MF Global.

Whatever the final number, investigators now know it will be much higher than the first estimate, which came from MF Global itself:

But after weeks of reconstructing MF Global’s books, forensic accountants from Deloitte and Ernst & Young working for the trustee concluded that the account shortfall was much greater than originally estimated. Regulators have yet to verify the new numbers. While they are expected to raise their estimate above $600 million, it is unlikely to reach the trustee’s $1.2 billion figure.

So far, it looks like the trustee of the brokerage unit’s bankruptcy says he can only reimburse 60 cents on the dollar on the customer losses:

MF Global Inc.’s shortfall in U.S. segregated customer accounts may be as much as $1.2 billion or more, said the trustee overseeing a liquidation of the failed brokerage.

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.

“He is very close to exhausting the funds under his control,” according to the statement, which noted that the amount of assets the trustee can access are different than the amount of the shortfall. Recovering funds from foreign depositories may take more time, Giddens said.

MF Global Holdings, the parent company, has asked for an outside trustee for its bankruptcy proceedings apart from Giddens’ work on the brokerage unit — under pressure from major creditor JP Morgan Chase.  As the Chicago Tribune notes, JPMC has agreed to fund the outside trustee, which is an unusual step, and one that suggests that the creditor smells a rat:

JPMorgan Chase & Co , a member of the creditors’ committee, said it would provide $26 million to keep MF Global afloat in bankruptcy if the company agrees to appoint a trustee, according to the filing.

Such an outside administrator is rare, and is reserved for cases in which a bankrupt entity’s executives are accused of wrongdoing, or when it is in the estate’s best interest.

JPMC is also bidding for a significant piece of MF Global’s assets, so its interest in the bankruptcy exists on more than one level.  The question will be how much MF Global will actually have worth buying, and whether customers will ever see the rest of their money that should never have disappeared in the first place.