Friday, September 21, 2012
Peregrine Financial customers to get back some frozen funds
CHICAGO, Sept 20 |
(Reuters) - A federal bankruptcy judge on Thursday approved the first payout to former customers of failed futures brokerage Peregrine Financial Group, according to the lawyer for the firm's bankruptcy trustee.
Judge Carol Doyle in Chicago approved the trustee's plan to return approximately $123 million to futures customers, which amounts to 30 percent to 40 percent of customers' claims.
"This is the first big step," said Robert Fishman, the lawyer for the trustee.
Peregrine Financial Group filed for bankruptcy on July 10, a day after then-Chief Executive Russell Wasendorf Sr. attempted suicide and confessed to stealing more than $100 million from customers over nearly 20 years.
Wasendorf, 64, was arrested on July 13. On Monday, he pleaded guilty to mail fraud, lying to regulators and embezzling customer funds, crimes that could send him to prison for as many as 50 years.
Peregrine's customers have had no access to their money since Wasendorf's failed attempt on his own life, outside of the company's headquarters near Cedar Falls, Iowa.
The first wave of payouts will happen by Oct. 8 and a second wave will occur before Oct. 29, Fishman said.
The Commodity Futures Trading Commission initially raised concerns about the trustee's plan because of uncertainty about the integrity of Peregrine's books. The commission warned that some people could get money they were not entitled to without proper vetting of records.
However, the trustee "satisfied them that we had done a really thorough job," Fishman said of the CFTC. (Editing by Steve Orlofsky)