Peregrine Financial Group to liquidate under Chapter 7
Traders work on the floor of the New York Stock Exchange on June 22, 2012 in New York City.
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.