WASHINGTON Nov 28 (Reuters) - U.S. regulators are privately questioning a bankruptcy trustee's estimate that puts the shortfall in MF Global Holdings' customer funds at around $1.2 billion, a source familiar with the matter said on Monday.
The source said regulators believe at least $220 million is being double-counted by the trustee, taking the total shortfall at the brokerage to just under $1 billion.
The source also said regulators are "making progress" understanding MF Global's MFGLQ.PK books so there is a chance that figure could change again.
James Giddens, the trustee liquidating MF Global's broker-dealer unit, estimated last week the shortfall in customers' accounts at $1.2 billion, about double initial estimates from regulators.
"There's still a discrepancy on the dollar amount, the trustee coming out with the $1.2 billion and we're not copacetic with that," said an official with knowledge of the MF Global investigation.
"We're not going to refute the numbers publicly because our end goal is the same: get the money back," the source said, adding the trustee gave regulators only a half-hour notice that they were increasing the shortfall estimate to $1.2 billion.
A spokesman for the trustee was not immediately available for comment.
Regulators are trying to determine what happened to the money and whether MF Global may have improperly mixed customer funds with its own -- a violation of industry rules.
Investigators have said they believe it is likely that MF Global transferred customer funds into accounts used by the firm.
"It's like untangling years worth of electrical wires behind a desk, figuring out where they all go and what you have to go through," the source said. "Their books are a mess and there are no straight lines that would make things easy."
MF Global filed for Chapter 11 protection on Oct. 31 after the New York-based company revealed it had made a $6.3 billion bet on European sovereign debt, spooking investors.
(Reporting by Christopher Doering; Editing by Tim Dobbyn)
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