Following last week’s emergency enforcement action against Peregrine Financial Group, National Futures Association has requested an internal review of its audit practices and procedures.

NFA took action against PFG after it determined that PFG had failed to maintain adequate funds in segregated accounts, and that PFG's chairman may have falsified bank records and filed false reports with NFA. 

PFG subsequently filed for bankruptcy protection and PFG's chairman was arrested, dealing a severe blow to the public's confidence in the financial integrity of the futures markets. 

NFA was PFG's designated self-regulatory organisation and conducted regulatory examinations of PFG's activities. 

NFA's chairman has requested that the Special Committee for the Protection of Customer Funds, consisting of the public representatives on NFA's board of directors, retain the services of Jenner and Block, a national law firm, to conduct  a careful internal review of NFA's audit practices and procedures, and the execution of those procedures in the specific instance of PFG, to assure that the right procedures are in place and that they are being properly followed. 

NFA intends to identify and implement any regulatory oversight changes that may be necessary to improve the detection of fraud and protection of segregated customer funds. 

The Special Committee is authorised to retain outside professionals to assist in that review, and will review any recommendations made regarding NFA's audit practices and procedures and make a report to NFA's board of directors.