What have you always wondered about the economy? Tell Us

Peregrine Financial Group to liquidate under Chapter 7

David Gura Jul 11, 2012

Jeremy Hobson: We’ll start in Cedar Falls, Iowa — that’s the home of a brokerage firm called Peregrine Financial, which has collapsed amid accusations from federal regulators that Peregrine defrauded customers and hid losses.

More than $200 million of its customers’ money has allegedly gone missing and the firm has been engulfed in scandal.

Marketplace’s David Gura reports.


David Gura: The story begins on Monday, when the CEO of the Peregrine Financial Group attempts suicide. Jason Karaian is with the Economist Intelligence Unit.

Jason Karaian: That really adds a lot of intrigue to this story. So some people are watching it quite closely to see what news will come out next.

While the CEO is hospitalized, the National Futures Association goes through Peregrine’s books, and the regulator realizes the money is missing. That brings to mind another shortfall, with another futures broker: MF Global.

Lincoln Ellis is with the firm Poplar Jackson.

Lincoln Ellis: When money like that tends to disappear it has been willfully moved from one place in the segregated financial accounts of customer funds to somewhere else.

Brokerages like Peregrine are supposed to keep their clients’ money separate, tempting as it may be to use those funds to speculate on their own behalf.

Angus Campbell is with Capital Spreads, in London.

Angus Campbell: That’s all very well if you make money, but if you start using client funds to speculate in financial markets and lose all that money, then obviously the clients are not going to get that money back.

Now, federal regulators are involved. And so is the FBI.

I’m David Gura, for Marketplace.

 

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.