July 10, 2012

NFA Freezes the Assets of PFG Financial

1

The National Futures Association issued a press release yesterday which stated that it:

Has taken an emergency enforcement action against Peregrine Financial Group, Inc. (PFG), an NFA Member futures commission merchant (FCM) and Peregrine Asset Management, Inc. (PAM), an NFA Member commodity trading advisor (CTA) and commodity pool operator (CPO) located in Chicago, Illinois.

Full details of the Member Responsibility Action (MRA) against PFG have also been made available, in which the NFA says:

Is deemed necessary to protect customers because PFG has failed to demonstrate it meets the capital requirements of NFA Financial Requirements section 1 [and 4]. Additionally it appears that PFG does not have sufficient assets to meet its obligations to its customers.

According to the BBC this morning:

Chairman Russell Wasendorf Sr was found in his car near its Iowa headquarters, following attempted suicide. The National Futures Association said it had received information suggesting that Mr Wasendorf may have falsified bank records and that it only had about $5m (£3.2m) of the $225m it had claimed to have in a deposit account.

This all sounds to me horribly like MF Global and WorldSpreads all over again. I guess such things always come in threes?

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Filed under Regulation by Jim #

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July 10, 2012
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Jim @ 3:53 pm #

This morning the CFTC has issued a press release of its own about recent events at PFG. They say that:

It filed a complaint in the United States District Court for the Northern District of Illinois against Peregrine Financial Group Inc. (PFG), a registered futures commission merchant, and its owner, Russell R. Wasendorf, Sr. (Wasendorf). The Complaint alleges that PFG and Wasendorf committed fraud by misappropriating customer funds, violated customer fund segregation laws, and made false statements in financial statements filed with the Commission.

The Commission’s action alleges that from at least February 2010 through the present, PFG and Wasendorf failed to maintain adequate customer funds in segregated accounts as required by the Commodity Exchange Act and CFTC Regulations. The Complaint further alleges that defendants made false statements in filings required by the Commission regarding funds held in segregation for customers trading on U.S. Exchanges.

In the litigation, the CFTC seeks a restraining order to freeze assets, appoint a receiver and preserve records. Further, the litigation seeks restitution, disgorgement, and civil monetary penalties among other appropriate relief.

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