Updated to include additional Dodd-Frank information, comments from Securities Investor Protection Corporation CEO Stephen Harbeck, and investor comments. NEW YORK ( TheStreet) -- Large creditors like JPMorgan Chase ( JPM) may not be alone in facing losses from failure of MF Global ( MF), if speculation of missing client funds turns out to be correct. MF Global filed for Chapter 11 bankruptcy on Monday, after negotiations of a rescue deal with Interactive Brokers Group ( IBKR) were terminated, with various media reports that Interactive Brokers got cold feet because client funds were missing. JPMorgan is MF Global's largest creditor with $1.2 billion in exposure according to the bankruptcy petition. The Wall Street Journal on Wednesday reported that MF Global admitted to federal regulators that customer money was missing, citing an unnamed federal official, and also said that the Commodity Futures Trading Commission (CFTC) would issues subpoenas to MF Global and that the FBI was planning to investigate as well. The Securities Investor Protection Corp. (SIPC) on Monday quickly initiated the liquidation of brokerage customer accounts at MF Global, with a federal judge appointing James W. Giddens as trustee for the liquidation. SIPC CEO Stephen Harbeck said that the liquidation proceeding was started because "customer accounts were at risk
since counterparties were refusing to do business with MF Global," and because the company was "incapable of making the calculations required of them under the financial responsibility rules."