Following an expedited hearing in Toronto Thursday, the Investment Industry Regulatory Organization of Canada (IIROC) immediately suspended futures broker Peregrine Financial Group Canada, Inc.
IIROC said it has suspended Peregrine, and ordered the firm to immediately cease dealing with the public. The move comes in the wake of the firm’s U.S. parent company entering bankruptcy amid allegations of a US$200 million shortfall from customer segregated accounts. The U.S. firm and its founder, Russell Wasendorf, face regulatory allegations, and Wasendorf has been charged criminally, over the missing funds. The allegations have not been proven.
Last week, IIROC said that the assets of Canadian clients are all accounted for, and it approved the transfer of those accounts to another broker, RJ O’Brien & Associates Canada Inc.
Under the order issued Thursday, IIROC said that Peregrine will work with IIROC staff to carry out an orderly wind-down, through a liquidation, or similar process, by August 20. Once that is complete, it may move to terminate the firm’s membership in the self-regulatory organization.
In the meantime, the firm is ordered to preserve all its books and records, and it must get consent from the regulator to reduce its capital, repay debt, or make any payments to directors, officers, shareholders, or affiliated companies. It can pay reasonable operating expenses including wages, severance payments, and legal costs, among other things, as long as it notifies IIROC first.