A Peregrine Financial Group customer from Illinois is taking the embattled company’s executives to court for allegedly mishandling client money.
Michael LaSalvia of Naperville is seeking class-action status in a lawsuit filed in U.S. District Court for the Northern District of Illinois against PFG’s Russell Wasendorf Sr., Russell Wasendorf Jr., Brenda Cuypers and Susan Mary O’Meara.
The suit was filed July 13 in the wake of Wasendorf Sr.’s suicide attempt, which triggered an investigation that discovered some $200 million was missing from an account that held PFG’s segregated client funds.
PFG has since filed for bankruptcy, and FBI agents arrested Wasendorf Sr. for allegedly making false statements to regulators.
Represented by attorney Jeffrey Salas, LaSalvia’s suit accuses company officials of commingling his funds with those of PFG.
The suit lists both Wasendorfs as chief executive officers of the commodity futures brokerage. Cuypers is mentioned as chief financial officer and O’Meara, as compliance director.
The action notes the Commodity Futures Trading Commission, a U.S. regulatory agency, has alleged that Wasendorf and PFG failed to maintain adequate customer funds in segregated accounts, with a shortfall exceeding $200 million.
The suit also accuses PFG and Wasendorf of filing false reports with the CFTC regarding the amount of customer segregated funds held by PFG.
The suit notes the CFTC alleges that the company failed to maintain “adequate customer funds in segregated accounts since at least February 2010” and failed to maintain adequate customer funds in segregated accounts and have misappropriated those customer funds for purposes other than intended by its customers.
The filing lists three separate dates — Feb. 28, 2010; March 30, 2011; and July 9, 2012 — when PFG showed balances exceeding actual balances by hundreds of millions of dollars, in violation of the Commodity Exchange Act.
The suit alleges PFG’s actions adversely affected “at least hundreds of persons.”
“The size of individual damages is small in comparison to the complexity and scope of the Defendants’ alleged unlawful conduct,” the action says.The suit asks for a trial by jury and unspecified damages.