Peregrine Financial trustee seeks to return $41 million to clients
CHICAGO (Reuters) - Peregrine Financial Group's bankruptcy trustee plans to return up to $41 million to former customers of the failed futures brokerage in the second payout since the firm collapsed 17 months ago.
Court-appointed trustee Ira Bodenstein is seeking to return about 7 percent, or $27.5 million, to Peregrine customers who traded on U.S. exchanges, according to court filings. In the first payout last year, the group, which comprised the bulk of the firm's clients, received back about 30 percent of the money they had in accounts when Peregrine failed.
Clients who traded on foreign markets would get back about 45 percent more of their money, or $13.5 million, in the second payout, court documents show. They received back about 40 percent of their missing money in the first payout last year.
A hearing on the trustee's motion is set for December 18.
"Just in time for the holidays, former customers of Peregrine Financial are getting a long awaited stocking stuffer," said Attain Capital Management, a trading firm that lost money when Peregrine failed, in a blog post on its website.
Peregrine filed for bankruptcy protection in July 2012 after founder Russell Wasendorf Sr. attempted suicide and confessed to a long-running fraud. He was later sentenced to 50 years in jail for looting hundreds of millions of dollars from his clients.
Wasendorf said in a suicide note that he had been bilking customers for nearly the entire 20 years of the brokerage's existence, and had spent most of it on keeping the firm afloat and building a state-of-the-art headquarters in Cedar Falls, Iowa.
Bodenstein has about $68.7 million on hand that belongs to customers with different kinds of accounts, documents show. He said he was seeking to hold back nearly $28 million in the second payout because some customer claims still need to be reconciled.
"There's still some futures claims that are subject to resolution," Bodenstein said in an interview. "We believe that this is obviously a safe amount of money to disburse."
The first payout last year returned about $123 million to customers.
Bodenstein proposed to make the second payout by the end of the year. He declined to estimate how much money he will ultimately be able to return to Peregrine customers.
(Reporting by Tom Polansek; Editing by Richard Chang)