In a report issued on Thursday in U.S. Bankruptcy Court in Manhattan, trustee Louis Freeh said the money, which was in one of MF Global's account at JPMorgan Chase & Co, does not contain money that should have been segregated for customers.

The scope of the report does not extend to whether customer money could have ended up with JPMorgan through other transactions, or transfers, or in other accounts with the bank.

JPMorgan is a key player in MF Global's bankruptcy because it served as the agent for a $1.3 billion loan as well as the clearing bank for some of its transactions. Some customers have speculated that a significant chunk of their missing money could be with JPMorgan.

The most vocal of those customers, James Koutoulas, said Freeh's report applies only to one account, something he says many customers may not understand.

"Everyone's freaking out today," Koutoulas told Reuters. "Customers, people calling me, or going on Twitter. I just want to make it very clear that it's just one account. This has nothing to do with the far greater picture of the shortfall."

James Giddens, the trustee in charge of liquidating MF Global's broker-dealer unit, has estimated that about $1.6 billion is missing from customer accounts. He issued a report earlier this month chronicling the massive deficit, which he said was caused by the firm's use of customer funds to cover corporate transactions as liquidity demands tightened.

A portion of the shortfall is at the center of a dispute with the company's UK unit, while the rest could be with banks, clearinghouses, affiliates, and other parties who did business with MF Global in the days leading up to its October 31 collapse, Giddens said in the report.

Bankruptcy Judge Martin Glenn in December ordered Freeh to investigate whether about $26 million in the JPMorgan account, which is being used to fund the company in bankruptcy, may have contained customer money. The account was comprised of cash MF Global had pledged to JPMorgan as collateral.

Glenn ordered the investigation at the urging of customers of the broker-dealer, who were concerned that some of their money could be with the MF Global parent's estate.

Thursday's report said that is not the case.

"After an exhaustive investigation - which included the review of volumes of bank statements and an extensive population of cash transaction activity during October 2011 - the trustee does not believe that any of the cash in the JPM account ... represents misdirected customer property," Freeh said.

MF Global, once headed by former New Jersey Governor Jon Corzine, collapsed amid fears about its exposure to risky European debt. Corzine stepped down on November 4.

Giddens is conducting a broader investigation into where customer money ended up. His spokesman on Friday said that investigation is ongoing.

"We don't disagree with the report about what is the MF Global Holdings Trustee's limited inquiry into an account," spokesman Kent Jarrell said. "In our effort to identify and return property to former customers, our investigation continues into accounts at relevant banks and depositories."

The case is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.

(Reporting By Nick Brown in New York; Editing by Tim Dobbyn)

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