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Financial reporting requirements lead to Peregrine's downfall

Peregrine Financial Group's CEO is alleged to have hidden roughly $220 million

In the wake of the MF Global meltdown, new financial reporting regulations may have unveiled another case of customer money mismanagement, according to Bloomberg News.

Futures brokerage Peregrine

In the wake of the MF Global meltdown, new financial reporting regulations may have unveiled another case of customer money mismanagement, according to Bloomberg News.

Futures brokerage Peregrine Financial Group had been reporting customer assets of $225 million to the National Futures Association, Bloomberg reported. The company's founder and CEO, Russell Wasendorf Sr., is alleged to have doctored the paper records before forwarding them to the regulatory agency. According to the report, Peregrine never held more than $5 million in customer assets in the bank account in question.

Following the failure of MF Global, which lost hundreds of millions of dollars of customer money, regulatory agencies began requesting electronic regulatory filings, which could not be tampered with. Peregrine was up against a July 19 deadline for filing updated financial statements. Wasendorf, who would have been held responsible for the losses, attempted suicide on July 7, Bloomberg reported.

A U.S. District Court judge has frozen Peregrine's assets, which are reported to be in excess of $500 million, with debts of roughly $100 million. Peregrine has filed Chapter 7 bankruptcy, and authorities said it is likely the firm violated the federal Commodity Exchange Act.