Accounts were frozen at Peregrine late Monday by an industry group that believes it may have falsified bank statements and hasn't been able to account for customer funds. The action follows a reported suicide attempt by its founder and chairman. Federal regulators followed with civil fraud charges against Peregrine Tuesday, accusing the firm and its owner of misusing customer funds and failing to keep them separate from the firm's money as required by law. The Commodity Futures Trading Commission is also asking a court to freeze the firm's assets and appoint a receiver to take over the firm.
The National Futures Association said late Monday that it received information that Peregrine may have falsified bank records, and that the company only had about $5 million of $225 million it had claimed to have in a deposit account. The association, an industry group that serves as a self-regulatory role, said the brokerage firm could not demonstrate that it met capital requirements and rules requiring it to segregate customer funds.
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Jefferies Group Inc. clears transactions for Peregrine. It said Tuesday that when the firm was unable to meet a margin call, Jefferies began to liquidate its positions.
Jefferies, based in New York, says it's already liquidated a substantial portion of those positions and expects to liquidate the remainder soon. All the proceeds of the liquidation will be maintained in segregated accounts.
Shares of investment bank Jefferies fell 13 cents to $12.50 in midday trading.
[Associated
Press]
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