Canada's financial industry regulator has suspended the membership of Peregrine Financial Group Canada and ordered a wind-down of the company, whose parent firm is at the centre of fraud allegations in the U.S.
The Investment Industry Regulatory Organization of Canada said after an expedited hearing Thursday that it decided to immediately suspend Peregrine's membership and bar it from dealing with the public.
The financial services firm has also been ordered to remove its website from public access.
It also cannot engage in certain activities without the written consent of IIROC. Those activities include: reducing its capital or indebtedness, making payments to executives and increasing the non-allowable assets of the firm.
Peregrine will work with IIROC staff to develop a plan to wind down operations, through liquidation or a similar process, no later than Aug. 20.
The company is also ordered to keep all books and records in tact and at its head office in Mississauga, Ont.
Earlier this month, the firm's parent company, an Iowa-based brokerage, became the focus of a complaint from the Commodity Futures Trading Commission that accused owner Russell Wasendorf of falsifying bank statements and being unable to account for about $220-million of customer funds.
Mr. Wasendorf's business empire collapsed last week after he was found unresponsive in his car outside Peregrine's headquarters in Cedar Falls following a suicide attempt. He left a note in which investigators say he detailed how he embezzled customer funds for nearly 20 years and falsified bank records to fool regulators.
Federal regulators shut down his firm, which was missing more than $200-million in customer accounts that it claimed to have, and it filed for bankruptcy.
Last week, IIROC said that clients at the Canadian subsidiary of Peregrine shouldn't lose any money because those funds were located, and will be transferred to RJ O'Brien & Associates Canada.