The Investment Industry Regulatory Organization of Canada (IIROC) will hold an expedited hearing to consider suspending Peregrine Financial Group Canada, Inc. after the company’s U.S. parent fell into bankruptcy amid allegations of fraud last week.
IIROC said Wednesday that it will hold a hearing Thursday morning, where IIROC staff will be seeking an order for, among other things, the immediate suspension of Peregrine’s membership in the self-regulatory organization.
Last week, U.S. regulators brought charges against the firm’s parent, Peregrine Financial Group Inc. and its founder, Russell Wasendorf, alleging that they misappropriated customer funds, violated customer fund segregation laws, and made false statements in financial filings.
The allegations came after a regulatory audit uncovered a large shortfall in customer funds (about US$200 million), and Wasendorf attempted suicide. He was later charged by the US Federal Bureau of Investigation (FBI) with making false statements to the US Commodity Futures Trading Commission (CFTC) regarding the value of customer segregated funds held by his company. The regulatory allegations and criminal charges have not yet been proven.
IIROC has said that Peregrine Canada is not affected by the US regulatory actions, or bankruptcy action, and that all client assets are accounted for at the Canadian subsidiary. Last week, the firm’s Canadian accounts were transferred in bulk to RJ O’Brien & Associates Canada Inc.