Peregrine files for bankruptcy and faces fraud charges
Source: Agencies |
July 12, 2012, Thursday
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EMPLOYEES of an Iowa-based brokerage firm that has been unable to account for US$220 million in customer money found their boss in his car at company headquarters, with a tube connecting the vehicle's tailpipe to the interior, authorities said.
Peregrine Financial Group, based in Iowa, filed for bankruptcy protection on Tuesday, a day after founder and chairman Russell Wasendorf Sr was discovered with a suicide note that prompted investigators to notify the FBI, which is conducting a preliminary inquiry.
Black Hawk County Sheriff Tony Thompson declined to discuss the contents of the note, except to say it was "a form of documentation that caused alarm, at least concern for us to get federal authorities involved."
Emergency crews were not sure how long Wasendorf had been in the running car. A police report said he was breathing but incoherent when rescuers took him to an Iowa City hospital, where he was reportedly in a coma.
The day after Wasendorf's suicide attempt, the Commodity Futures Trading Commission, the top federal regulator, filed fraud charges that accused him and his firm of misusing customer funds and failing to keep them separate from company money. Later Tuesday, the company filed for Chapter 7 bankruptcy protection in federal court in Chicago. The bankruptcy filing was signed by Wasendorf's son, Russell Wasendorf Jr The younger Wasendorf was the company's president and chief operating officer.
The events are sure to bring more scrutiny to an industry still smarting from the implosion of MF Global, former New Jersey Governor Jon Corzine's futures firm, which was missing billions in customer cash when it collapsed in October.
Peregrine customer Kevin Davey said the allegations, if true, violate a bedrock principle of futures trading. Traders are confident in their brokerages because they believe that nobody will touch the money in customer accounts.
"The whole industry is based on that," Davey said.
Peregrine helped customers buy, sell and trade foreign currency and futures and options - investments whose value changes based on the expected future price of food and energy commodities and other investments.
The commission said Peregrine falsely reported to the agency that it held US$220 million in customer funds when it actually had only US$5.1 million. The agency is asking the court to freeze the firm's assets and appoint a receiver to take over Peregrine. Regulators forced Peregrine to freeze customer accounts on Monday.
In a statement to clients, the firm acknowledged Wasendorf's suicide attempt but provided no information on his condition, saying only that his actions provoked investigation of "some accounting irregularities."
Peregrine Financial Group, based in Iowa, filed for bankruptcy protection on Tuesday, a day after founder and chairman Russell Wasendorf Sr was discovered with a suicide note that prompted investigators to notify the FBI, which is conducting a preliminary inquiry.
Black Hawk County Sheriff Tony Thompson declined to discuss the contents of the note, except to say it was "a form of documentation that caused alarm, at least concern for us to get federal authorities involved."
Emergency crews were not sure how long Wasendorf had been in the running car. A police report said he was breathing but incoherent when rescuers took him to an Iowa City hospital, where he was reportedly in a coma.
The day after Wasendorf's suicide attempt, the Commodity Futures Trading Commission, the top federal regulator, filed fraud charges that accused him and his firm of misusing customer funds and failing to keep them separate from company money. Later Tuesday, the company filed for Chapter 7 bankruptcy protection in federal court in Chicago. The bankruptcy filing was signed by Wasendorf's son, Russell Wasendorf Jr The younger Wasendorf was the company's president and chief operating officer.
The events are sure to bring more scrutiny to an industry still smarting from the implosion of MF Global, former New Jersey Governor Jon Corzine's futures firm, which was missing billions in customer cash when it collapsed in October.
Peregrine customer Kevin Davey said the allegations, if true, violate a bedrock principle of futures trading. Traders are confident in their brokerages because they believe that nobody will touch the money in customer accounts.
"The whole industry is based on that," Davey said.
Peregrine helped customers buy, sell and trade foreign currency and futures and options - investments whose value changes based on the expected future price of food and energy commodities and other investments.
The commission said Peregrine falsely reported to the agency that it held US$220 million in customer funds when it actually had only US$5.1 million. The agency is asking the court to freeze the firm's assets and appoint a receiver to take over Peregrine. Regulators forced Peregrine to freeze customer accounts on Monday.
In a statement to clients, the firm acknowledged Wasendorf's suicide attempt but provided no information on his condition, saying only that his actions provoked investigation of "some accounting irregularities."
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