Peregrine trustee to serve banks with subpoenas in coming days
08/07/2012| 01:28pm US/Eastern
The bankruptcy trustee for failed brokerage Peregrine Financial Group plans to serve subpoenas for financial information to major banks in the next few days.
A federal bankruptcy judge in Chicago on Tuesday gave Trustee Ira Bodenstein the authority to issue subpoenas to 10 banks that did business with Peregrine, including JPMorgan Chase & Co. (>> JPMorgan Chase & Co.), U.S. Bank <USBUB.UL>, Goldman Sachs & Co. <GSGSC.UL> and Morgan Stanley (>> Morgan Stanley).
Peregrine, commonly known as PFGBest, filed for bankruptcy protection on July 10, one day after CEO Russell Wasendorf Sr attempted suicide and left a note describing how he had bilked customers of more than $100 million over nearly 20 years.
Wasendorf said he had forged and intercepted financial statements that were mailed between U.S. Bank, where some Peregrine customer money was held, and the firm's auditors at the National Futures Association.
The trustee, whose job is to oversee the liquidation of Peregrine and return money to customers and creditors, will issue subpoenas to banks in the coming days, said his lawyer, Robert Fishman.
The trustee wants to obtain records directly from financial institutions to identify any inconsistencies in Peregrine's records and examine transfers of money out of its accounts.
The subpoenas will have "the broadest possible description" for information the trustee is seeking about open and closed accounts maintained by Peregrine, its affiliates and wholly owned subsidies, Fishman said, adding that the trustee did not know what records the banks might have.
Subpoenaed documents could include account applications, authorization forms, wire transfer details, canceled checks, deposit slips and correspondence.
"We're in dire need of getting this financial information," Fishman said.
JPMorgan objected to the trustee's request that a bankruptcy court prohibit financial institutions from recouping any costs incurred as a result of the subpoenas. A judge said she would deal with the issue of costs after subpoenas are served.
The trustee has not yet returned money to Peregrine customers four weeks after the brokerage filed for bankruptcy and froze their accounts.
(Editing by Bob Burgdorfer)
By Tom Polansek