Many MF Global customers may not recover all their money, even though they were first in line to be paid back under broker liquidation rules. Key Reason: Thanks to the Securities Investor Protection Act, or SIPA, which was enacted in 1970, brokerage customers at are put at the front of the payback line in the event their broker-dealer goes bankrupt.  By contrast, commodities customers must wait in the unsecured creditors' line. Rule Application to MF Global. In MF Global's case, this is particularly troublesome for investors.  Of the roughly 50,000 MF Global accounts with holdings totaling in excess of $5.5 billion, only a fraction - some 400 - are securities accounts;  the rest are commodities accounts.  That's according to a spokesman for the trustee now in control of MF Global. This means that brokerage customers generally, can remain secure knowing that they will be the first ones paid - in full, no less - for any holdings they may have had on deposit with a now-bankrupt broker-dealer.  However, non-customer creditors - including firm lenders and bondholders - may not even get a dime.  And, where there are shortfalls in customer funds, the next level of creditors may not get paid at all. MF Global's brokerage could be one of those cases.  The company last month reported a "significant shortfall" in customer money, fueling questions about whether the firm improperly commingled client funds with the the firm's own money.  The shortfall currently is estimated at $593 million. Trustee James Giddens. MF Global was put under the control of the trustee, James Giddens, after its parent, MF Global Holdings, declared bankruptcy on 10/31/11 following huge losses on leveraged euro zone debt bets. Giddens' job is to pool the broker-dealer's customer assets or property, and pay it out to customers.  He also was given subpoena power to facilitate his investigation into the cause or source of the shortfall in customer assets - i.e., the power to collect documents and interview MF Global employees.  And that power is critical.   As Stephen Lubben, a professor at Seton Hall Law, notes:  customer recovery "will really rise and fall with the success of the trustee." SHORTFALL = LOSSES. The still unresolved large shortfall at MF Global increases the risk to firm customers and can readily translate into losses. Again, as we noted above, the MF Global case differs markedly from other high-profile brokerage blowups in that the vast majority of clients hold commodities accounts. So, even though SIPC has the authority to use its own funds to pay back securities customers, for up to $500,000 per account, such 'insurance' benefits do not extend to commodities accounts.  "Commodities people really do not have the protection securities customers have," said SIPC CEO Harbeck. One explanation for the disparate protection afforded brokerage and commodity customers, is that commodities trading was much less common in the late 1960s and early 1970s when SIPA was created.  Forty years later, commodity accounts still remain unprotected, even though they play a larger role in today's markets. For additional information, go to:     [Reuters, 11/8/11]