Russell Wasendorf Sr

CFTC files complaint against Peregrine Financial Group

Wed, 11/07/2012 - 09:38

The US Commodity Futures Trading Commission (CFTC) has filed a complaint against Peregrine Financial Group Inc (PFG), a registered futures commission merchant, and its owner, Russell R Wasendorf, Sr (pictured). 

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 National Futures Association (NFA) is PFG’s Designated Self-Regulatory Organization and is responsible for monitoring and auditing PFG for compliance with the minimum financial and related reporting requirements. According to the Complaint, in July 2012 during an NFA audit, PFG falsely represented that it held in excess of USD220 million of customer funds when in fact it held approximately USD5.1 million.

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 US Exchanges.

According to the Complaint, Wasendorf attempted to commit suicide on 9 July, 2012. In the aftermath of that incident, the staff of the NFA received information that Wasendorf may have falsified certain bank records.

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.

In a realted devlopment, Jefferies has confirmed that it has a clearing relationship with PFG with trading positions held on behalf of PFG’s clients fully secured by cash held in margin accounts. After PFG was unable to meet a margin call that Jefferies made in response to yesterday’s National Future Association’s Member Responsibility Action, Jefferies began an orderly liquidation of PFG’s positions.

Jefferies has already liquidated a substantial portion of those positions and expects to be able to expeditiously liquidate the remainder in a fair and reasonable manner, after which all proceeds of the liquidation will be maintained in segregated accounts. Jefferies does not expect to incur any loss in respect of PFG.


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