About $200 million in customer money that vanished from MF Global is believed to have surfaced at JPMorgan Chase in Britain, according to people briefed on the matter. The discovery could be the most significant breakthrough in a monthlong hunt for the missing funds.

During MF Global’s last chaotic days, the brokerage firm overdrew an account at JPMorgan, according to another person who is close to the matter. Some investigators now believe the firm used customer funds to patch at least some of the hole, which would have been a significant breach of federal law.

MF Global transferred the roughly $200 million in the days before the firm filed for bankruptcy, said the people, who requested anonymity because the investigation was incomplete.

Some investigators suspect that the transfer to JPMorgan was the first major misuse of customer money at MF Global, the commodity brokerage powerhouse once run by Jon S. Corzine, the former Democratic governor of New Jersey. Authorities are also looking into whether JPMorgan initially questioned the source of the cash and sought proof from MF Global that it was complying with regulations, one of the people said.

The authorities believe MF Global failed to give JPMorgan full documentation for the cash, the people briefed on the matter said. But the bank’s concerns hardly mattered because the money had already been transferred to the account in Britain. It is unclear whether investigators can recover the $200 million.

Representatives for both MF Global and JPMorgan declined to comment. A spokesman for the MF Global trustee, James W. Giddens, declined to comment.

JPMorgan has long been thought to hold some of the money that disappeared from MF Global. As one of MF Global’s primary banks, JPMorgan has been a persistent presence in the firm’s demise and the messy aftermath. The bank loaned to MF Global until its waning days and has been a vocal and tenacious presence as a creditor during the firm’s bankruptcy hearings.

Rumors circulated briefly this month that the missing money had turned up at the bank. The reports were dispelled later in the same day, however, when investigators disclosed those funds had already been accounted for.

Some of the funds MF Global used to shore up its account with JPMorgan may have been legitimately transferred. Firms often keep a cushion of cash to protect customer accounts, which they are allowed to tap with certain restrictions. While the firm ultimately blew through that buffer, it is unclear when that happened and if MF Global intentionally used customer money.

Some industry lawyers liken JPMorgan’s role in the MF Global bankruptcy to the bank’s position in the messy collapse of Lehman Brothers, albeit on a smaller scale. As the nation’s largest bank, JPMorgan is intimately involved in many large bankruptcies. In 2008, as Lehman Brothers was struggling to survive, JPMorgan officials demanded several billion dollars in collateral to meet margin calls. Lehman acquiesced, severely draining its liquidity.

In the case of MF Global, the process is further complicated since the roughly $200 million is believed to be in Britain, which has its own bankruptcy rules.

The transfer came after a relatively routine overdraw of an account MF Global held at the bank, the person close to the matter said. JPMorgan systems picked up the shortfall and sent an automated message to MF Global, said the person, who requested anonymity because the information was private. The firm complied with JPMorgan’s request and transferred the money, the person said.

After receiving the money, JPMorgan raised questions about its origins but received few answers. Some investigators suspect that MF Global transferred the customer money to another unit of the firm and mixed it with the company’s capital before sending it to JPMorgan.

Such a transaction would have masked that it was customer money. It also would have violated a guiding principle of the futures industry: never mingle customer money with firm money.

The roughly $200 million that is believed to be at JPMorgan is a fraction of the money thought to be missing. The total amount of cash that is unaccounted for is itself the source of much debate.

Shortly after Oct. 31, when the firm filed for Chapter 11, authorities suspected that about $600 million in customer cash was nowhere to be found. Last week, Mr. Giddens’s office put the number at $1.2 billion. Some regulators and the CME Group, the exchange where MF Global did much of its business, have disputed the larger estimate.

The missing money has prompted a wide-ranging federal investigation. The Commodity Futures Trading Commission is leading the search for the cash while the Federal Bureau of Investigation and federal prosecutors in New York and Chicago are examining potential criminal wrongdoing.

Neither the firm nor Mr. Corzine has been accused of wrongdoing. The lengthy search is owed in part to shortcomings in MF Global’s recordkeeping .

Representatives for the F.B.I. and the C.F.T.C. declined to comment.

Next month, a pair of Congressional committees will examine MF Global’s collapse, which came after investors and customers fled the firm amid worries over its risky wagers on European sovereign debt. The Senate Agriculture Committee will hold the first hearing on Dec. 13, followed by the oversight panel of the House Financial Services Committee on Dec. 15.

For the first time, lawmakers are looking to publicly question Mr. Corzine, who spent five years on Capitol Hill as a Democratic senator from New Jersey. He resigned as head of the firm earlier this month. In addition, they hope to call as a witness MF Global’s chief operating officer, Bradley Abelow, who served as Mr. Corzine’s chief of staff when he was governor of New Jersey. Mr. Abelow and Mr. Corzine have not responded to the request from lawmakers on the House committee, according to a person with knowledge of the matter who was not allowed to speak publicly. It is unclear if the two men will agree to attend.

The deadline for a response is approaching. Should Mr. Corzine and Mr. Abelow decline, the committee can subpoena the executives.

Source: http://dealbook.nytimes.com/2011/11/28/money-found-in-britain-may-belong-to-mf-global/