Peregrine Financial lawyer's planned pay rise draws objection
SAN FRANCISCO (Reuters) - Former customers of collapsed Peregrine Financial Group objected on Tuesday to a proposed raise for Peregrine's general counsel, saying the firm's bankruptcy trustee should focus on returning money to clients, not boosting the pay of its in-house lawyer.
Ira Bodenstein, the trustee, last week asked a Chicago judge to approve a $20,000 raise, to $400,000, for Rebecca Wing, calling her services "invaluable" and citing her "wealth of knowledge" about Peregrine's business. Wing is the most senior executive left at the firm after its July 10 bankruptcy filing.
Vitaloon Inc., a Peregrine Financial customer with $180,000 frozen at the firm, and the Commodity Customer Coalition, which represents commodity customers of bankrupt futures brokerage, wrote in their objection that payment for customers should have a higher priority than a raise for Wing.
"Seven weeks have passed without customers receiving any indication when and how their funds will be returned to them," Vitaloon and the coalition said. "Customers of the Debtor are understandably concerned about the lack of information from the Trustee regarding the return of their funds and suggest that this issue should be the highest priority for the trustee, rather than proposing a raise for the Debtor's general counsel."
Peregrine collapsed last month after its CEO hooked a hose to his car's exhaust pipe in an apparent suicide attempt, even as regulators closed in on a massive fraud.
Wasendorf left a note saying he had bilked clients of his Cedar Falls, Iowa-based futures brokerage of more than $100 million by forging the firm's bank account statements. He was indicted this month for lying to regulators.
So far customers have received no money back from the firm, which told regulators in July it had more than $400 million in customer funds.
The Commodity Futures Trading Commission, which regulates the futures industry, now says that figure was probably double the real amount.
The trustee plans to file a motion to get court approval to distribute some money back to customers "as soon as we are able," Bodenstein's lawyer told Reuters last week.
But the fact that Wasendorf fabricated the firm's financials casts doubt on the accuracy of the firm's accounting for its 24,000 clients, he said, forcing the trustee to take extra care that he does not send out any cash until he's certain who is entitled to what.
"It is my business judgment that I need her help," Bodenstein said in a phone interview on Tuesday, referring to Wing. "I'd like her to stay. She's very helpful in all aspects of the case, including the work we are doing to get a customer distribution."
(Reporting by Ann Saphir; Editing by David Gregorio)