By Michael Foster, Big4.com Blogger

KPMG is expected to announce that it will begin returning funds to former MF Global clients, as worries mount that the money may have disappeared.

On Friday, administrators of the now-defunct derivatives brokerage are expected to testify before the British High Court on the issue. Joint administrator at KPMG Richard Heis told British daily newspaper The Telegraph that he and KPMG administrators “can now progress returning client assets in accordance with our distribution plan,” thanks to the bar date, which the UK’s Financial Services Authority’s Special Administration Regime set up so that creditors could receive their assets more quickly.

The news comes amidst heightened fears that a majority of the firm’s funds may have disappeared. A probe into the brokerage has led some officials to believe that some employees at MF Global were using funds in customer-segregated accounts to keep the company running, although it was heading for collapse. Investigations are also underway to determine if investments using client money declined sharply in the brokerage’s last days, and whether those investments were legal and appropriate.

In total, $1.2 billion is missing, which bankruptcy trustee James Giddens says is still unaccounted for. This is much larger than the $200 million that the company said it had in customer accounts in a statement to CME Group sent four days before the company filed for bankruptcy.

Jon S. Corzine, former New Jersey governor, Goldman Sachs alum, and MF Global CEO, has testified that he did not direct anyone to misuse customer funds and that he did not believe that anyone working under him moved money improperly.

The investigation continues.

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