Peregrine Trustee Seeks to Subpoena Banks on Transfers
The trustee liquidating Peregrine Financial Group Inc. asked a judge for authority to subpoena the defunct futures brokerage’s banks including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) for information about transfers from segregated accounts and proprietary accounts.
Citing a lawsuit by the U.S. Commodity Futures Trading Commission against the company and founder Russell Wasendorf Sr. over misappropriation of customer funds, the trustee said he needs records from “various financial institutions” to identify “abnormalities” in the company’s records.
Ten financial institutions maintained account applications, authorization forms, agreements, statements, wire transfers, canceled checks, deposit slips and correspondence, he said.
“Official financial institution records will also enable the trustee to examine transfers from the debtor’s proprietary accounts and segregated accounts,” Ira Bodenstein, the trustee, said in a filing today in federal court in Chicago.
The other financial institutions that will be asked for information are U.S. Bank, Bank of New York Mellon Corp., First Premier Bank, Commerzbank AG, Royal Bank of Scotland Plc, Jefferies Bache LLC, Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS), he said.
Peregrine’s July 10 bankruptcy, cutting off customers’ access to their accounts, came less than a year after the failure of MF Global Holdings Ltd. (MFGLQ), whose clients are still missing $1.6 billion. In district court in Chicago, a receiver is finding and securing Wasendorf’s assets on request of the CFTC, which is probing more than $200 million of missing customer money, as is the Justice Department.
Wasendorf may have funded his personal investments with Peregrine brokerage money, the receiver has said.
In its bankruptcy petition, Cedar Falls, Iowa-based Peregrine listed more than $500 million in assets and more than $100 million in liabilities. The brokerage estimates it has more than 10,000 creditors, according to the filing. Peregrine had 241 employees, of which 56 were retained to help liquidate the company.
Separately, Bodenstein asked the judge to set up procedures for paying his fees and expenses, and said he is seeking to hire as bankruptcy adviser Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, the law firm where works, at rates of as much as $650 an hour.
The criminal case is U.S. v. Wasendorf, 12-mj-131, U.S. District Court, Northern District of Iowa (Cedar Rapids). The bankruptcy case is Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The regulatory case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-05383, U.S. District Court, Northern District of Illinois (Chicago).
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