Investigators searching for $1.2 billion in missing client funds at MF Global now believe a “significant amount” of the money may have “vaporized” during the brokerage’s final chaotic days, according to The Wall Street Journal.

The report represents a further setback for the investors, hedge funds and farmers who held funds at New York-based MF Global, which filed for Chapter 11 on October 31 in one of the largest bankruptcies in U.S. history.

The regulators, investigators and court-appointed trustees overseeing the search for the estimated $1.2 billion in missing client funds increasingly believe much of the money may never be recovered, the Journal reported.

Officials believe certain MF Global employees used money from “customer segregated accounts” at the company to meet demands for collateral or to unfreeze assets at banks and counterparties, the paper said.

However, investigators are also weighing other theories, such as whether MF Global posted steep losses on investments that were made using client cash, the Journal reported.

Led by Jon Corzine, the former New Jersey governor and Goldman Sachs (GS) CEO, MF Global collapsed due to a run by customers and counterparties worried about the bank’s heavy bullish exposure to the near-toxic debt of eurozone nations like Italy and Spain.

During the chaotic trading before the Chapter 11 filing, much of the money that came out of MF Global went to middlemen and banks.

Specifically, the Journal pointed to JPMorgan Chase (JPM) and trade-clearing partners like Depository Trust & Clearing Corp. and LCH.Clearnet Group. The paper said those companies have denied they knowingly accepted any of the missing MF Global money.

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