The bankruptcy trustee for John Muir & Co., the brokerage that collapsed last month, said Monday that nearly 60 percent of the Muir customers that lost money had already recovered their losses.
Harvey R. Miller said these investor losses were covered by the Securities Investor Protection Corp., the industry-financed organization created by Congress in 1970. SIPC insures losses when a brokerage firm collapses to a limit of $500,000 for each investor.
Miller took over as trustee of Muir on Aug. 17. He said he expects that most of the other investors will be covered by SIPC because very few accounts at Muir were more than $500,000.
The trustee held the first meeting of customers and creditors today at U.S. District Court here.
Muir owes money to 1,700 creditors, including 600 former employes, Miller said. The biggest Muir creditors are four New York banks, which are owed $31.5 million. That loan package, backed by $44 million in securities, comes due on Nov. 30, and Miller said he will borrow from SIPC to pay off the loans.
Before the collapse last month, Muir had 15 branches, including a major office in Washington. That office was taken over by Ferris & Co.
At the hearing, John Saffer, who said he had been manager of Muir's Washington office, claimed that he and others had negotiated a deal to have Muir's operations in the capital transferred to the Washington office of Moseley Hallgarten Estabrook and Weeden Inc.
Saffer said this transfer would have "avoided freezing 890 customer accounts," which is what he said happened under the arrangement with Ferris. Saffer asked why the deal with Moseley was scuttled by the trustee.
Miller replied that "Moseley was bidding up to the last minute, then decided to withdraw. I decided that the Ferris offer was in the best interest of the estate."
On hand for today's hearing were Muir's three general partners, including Raymond L. Dirks, who held a 54 percent interest in the firm and who made himself the centerpiece of Muir's lavish advertising campaign.