However, in exchange for using the cash, firms are required to back it up with high-quality collateral such as U.S. government securities.
CME Group, MF Global's front-line regulator, has stated plainly that the firm misused customer funds as it faced a liquidity crisis.
At a Senate Agriculture Committee hearing on Tuesday, CME Executive Chairman Terrence Duffy escalated the allegations, saying a CME auditor participated in a phone call during which an MF Global employee indicated that Corzine knew the firm used customer money to lend $175 million to its European affiliate.
Duffy said the matter had been turned over to the Justice Department, but he did not provide more details about the loan.
'DOWN TO THE PENNY'
Sommers said investigators are now trying to back up thousands of transactions with underlying documentation such as a signature or email to determine whether the customer approved the transfer into a broker-dealer account, a complicated process.
Until regulators can determine which transactions were illegitimate, they will not be able to determine the shortfall in customer funds, and how much money will ultimately be distributed back to customers, Sommers said.
A judge on Dec. 9 approved an additional $2.2 billion transfer to MF Global's U.S. commodities customers, bringing the recovery to 72 percent of accounts.
"Until you actually know down to the penny which ones of those transactions were not legitimate transfers, you're not going to know whether or not you can claw back some of that money from other accounts," Sommers said.
"Until you know the exact shortfall, you're not going to know how much can then be distributed to customers above the 72 percent."
Pat Roberts, the ranking Republican on the Senate Agriculture Committee, said Sommers' revelation sets off the next chapter in the MF Global saga.
"Now the next step is to find out were (the transfers) legitimate or were they illegitimate, and then the big question is: who on Earth was responsible," he told Reuters Insider. (Additional reporting by Nick Brown in New York; Editing by Karey Wutkowski and Tim Dobbyn)