Russ Wasendorf, chairman and chief executive officer of PFGBest, attends a function in Cedar Falls, Iowa, in this 2007 photo courtesy of the Waterloo Courier.Waterloo Courier/Reuters
Peregrine Financial Group's bankruptcy trustee is seeking court approval to distribute $123-million to former customers of the futures brokerage, the first they would see of their funds since Peregrine's collapse in mid-July.
The earliest the distribution could take place is Sept. 28, according to a court filing late Wednesday.
The trustee, Ira Bodenstein, has about $181-million on hand, the filing shows, about $195-million short of what the company told regulators it had in customer funds when it last filed an official report. Federal prosecutors and regulators now say that report was false.
Peregrine filed for bankruptcy protection on July 10, a day after its chief executive officer, Russell Wasendorf Sr., attempted suicide and confessed to a long-running fraud. He was arrested on July 13 and indicted last month on charges of lying to regulators and stealing from customers over a period of at least three years.
James Koutoulas, lead attorney for customer advocacy group the Commodity Customer Coalition, said he was happy with the amount to be distributed but said the trustee has taken too long to make the payout and had failed to be clear on exactly how the distribution will be made.
"The distribution 'plan' has yet to make the simple determination of whether to issue the distribution via check, wire transfer, or bulk transfer to another futures commission merchant" Mr. Koutoulas said, using industry language for futures brokerage.
The Wednesday filing asks that futures brokerages be permitted to take over the customer accounts through a bid process run by the trustee.
In the failure of the much larger MF Global last October, CME Group Inc and the trustee managed a transfer of accounts to new futures brokerages within days.
Having another broker take over Peregrine's accounts would speed the process of getting customer funds in customer hands, Mr. Koutoulas said. Cutting checks to customers could delay the process, he said.
The trustee was not immediately available to comment on Thursday morning.