NFA publishes MRA action against PFG - over $200 million may be missing

Monday, 09/07/2012 | 22:24 GMT by Michael Greenberg

Following up on the earlier story of NFA putting PFG in liquidation mode only NFA just released a little bit more information in its MRA action again Peregrine Asset Management Inc and Peregrine Financial Group Inc:

NOTICE OF MEMBER RESPONSIBILITY ACTION:

On July 9, 2012, NFA's Executive Committee issued a Member Responsibility Action (MRA) against Peregrine Financial Group, Inc. (PFG) and Peregrine Asset Management, Inc. (PAM), whereby:

Effective immediately, PFG and PAM are prohibited from soliciting or accepting any additional customer accounts or customer funds, except as margin for existing positions.
Effective immediately, PFG and PAM are prohibited from accepting or placing trades for any customer accounts except for the liquidation of existing customer positions.
Effective immediately, PFG and PAM are prohibited from distributing, disbursing or transferring any funds, including to existing customers, without the prior approval of NFA.
In taking any action under this MRA, PFG and PAM must act in the best interests of their customers.

This action is effective immediately and is deemed necessary to protect customers because PFG has failed to demonstrate that it meets the capital requirements of NFA Financial Requirements Sections 1 and segregated funds requirements of NFA Financial Requirements Section 4. Additionally, it appears that PFG does not have sufficient assets to meet its Obligations to its customers.

Here's more information:

"In support of these actions, NFA attaches the affidavit of Lauren Brinati, a Director in NFA's Compliance Oepartment, and based thereon alleges as follows:

PFG is an FCM/FOM Member of NFA located in Chicago, Illinois.
PFG and PAM share several directors in common and PFG and its chief executive officer each own more than 10% of PAM.
Pursuant to NFA Financial Requirements Section 1, PFG was required to maintain Adjusted Net Capital of approximately $31 million as of May 31, 2012.
Pursuant to NFA Financial Requirements Section 4, PFG was required to maintain segregated funds of approximately $400 million as of July 5, 2012.
On or about June 29, 2012, PFG reported to NFA that it had approximately $400 million in segregated funds, of which more than $225 million were purportedly on deposit at U.S Bank.
On or about July 9, 2012, NFA received information indicating that PFG's Chairman may have falsified bank records.
On July 9, 2012, NFA made inquiry with U.S. Bank and learned that rather than the $225 million that PFG had reported as being on deposit at U.S. Bank just days earlier, PFG had only approximately $5 million on deposit at U.S. Bank.
Further, NFA learned that, in contrast to purported bank confirmations submitted to NFA that sought to confirm U.S. Bank account balances as of February 2010 and March 2011, that reported balances of approximately $207 million and $218 million, respectively, PFG's actual balances at U.S. Bank at those times was less than $10 million for each one of these months.
As of the date of this MRA, PFG has been unable to demonstrate to NFA that it has sufficient capital to meet its minimum adjusted net capital requirement or segregated funds to meet its obligations to customers.

[scribd id=99636938 key=key-1lr8t2t3pkrx2c9pfb6u mode=list]

NOTICE OF MEMBER RESPONSIBILITY ACTION:

On July 9, 2012, NFA's Executive Committee issued a Member Responsibility Action (MRA) against Peregrine Financial Group, Inc. (PFG) and Peregrine Asset Management, Inc. (PAM), whereby:

Effective immediately, PFG and PAM are prohibited from soliciting or accepting any additional customer accounts or customer funds, except as margin for existing positions.
Effective immediately, PFG and PAM are prohibited from accepting or placing trades for any customer accounts except for the liquidation of existing customer positions.
Effective immediately, PFG and PAM are prohibited from distributing, disbursing or transferring any funds, including to existing customers, without the prior approval of NFA.
In taking any action under this MRA, PFG and PAM must act in the best interests of their customers.

Here's more information:

"In support of these actions, NFA attaches the affidavit of Lauren Brinati, a Director in NFA's Compliance Oepartment, and based thereon alleges as follows:

PFG is an FCM/FOM Member of NFA located in Chicago, Illinois.
PFG and PAM share several directors in common and PFG and its chief executive officer each own more than 10% of PAM.
Pursuant to NFA Financial Requirements Section 1, PFG was required to maintain Adjusted Net Capital of approximately $31 million as of May 31, 2012.
Pursuant to NFA Financial Requirements Section 4, PFG was required to maintain segregated funds of approximately $400 million as of July 5, 2012.
On or about June 29, 2012, PFG reported to NFA that it had approximately $400 million in segregated funds, of which more than $225 million were purportedly on deposit at U.S Bank.
On or about July 9, 2012, NFA received information indicating that PFG's Chairman may have falsified bank records.
On July 9, 2012, NFA made inquiry with U.S. Bank and learned that rather than the $225 million that PFG had reported as being on deposit at U.S. Bank just days earlier, PFG had only approximately $5 million on deposit at U.S. Bank.
Further, NFA learned that, in contrast to purported bank confirmations submitted to NFA that sought to confirm U.S. Bank account balances as of February 2010 and March 2011, that reported balances of approximately $207 million and $218 million, respectively, PFG's actual balances at U.S. Bank at those times was less than $10 million for each one of these months.
As of the date of this MRA, PFG has been unable to demonstrate to NFA that it has sufficient capital to meet its minimum adjusted net capital requirement or segregated funds to meet its obligations to customers.

[scribd id=99636938 key=key-1lr8t2t3pkrx2c9pfb6u mode=list]

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