Braley Calls for House Hearing into CFTC Oversight of Peregrine Financial Group
Jul 16, 2012 Issues: Financial Services, Government Reform
Alleged misappropriation of investor funds for twenty years calls into question CFTC’s oversight
Washington, D.C. – Rep. Bruce Braley (IA-01) today called on the US House Oversight and Government Reform Committee to investigate the Commodities Futures Trading Commission’s role in allowing Peregrine Financial Group of Cedar Falls to apparent misappropriate $200 million of investor funds over 20 years in what could be the largest financial fraud in Iowa history.
In a letter to committee Chairman Darrell Issa and Ranking Member Elijah Cummings, Braley requested a hearing into Peregrine Financial Group and the CFTC’s oversight of commodities trading. Braley is a member of the House Oversight Committee.
“It’s shocking to think that Peregrine was defrauding its customers for more than 20 years,” Braley said. “My question is, where were the regulators who should have stopped this long ago and how did Peregrine so easily fool them?
“It’s the job of regulators to protect farmers, families, and businesses who have invested in futures. I’m greatly concerned that this misappropriation of funds was allowed to continue for so long before it was discovered. Iowans deserve answers – especially those who were victims of Peregrine’s fraud.”
In court filings, federal prosecutors allege that Russell Wassendorf, Sr., CEO of Peregrine Financial Group, admitted to falsifying bank statements and defrauding customers for 20 years.
The U.S. Commodity Futures Trading Commission (CFTC) has said that Peregrine has “used customer funds for purposes other than those intended by its customers.” According to CFTC, the money has been misused for years and as many as 1,845 investors are missing their money.
The full text of Braley’s letter to Issa and Cummings follows.
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July 16, 2012
The Honorable Darrel Issa
Chairman
Committee on Oversight and Government Reform
B3540-A, Rayburn HOB
Washington, DC 20515
The Honorable Elijah Cummings
Ranking Member
Committee on Oversight and Government Reform
2471 Rayburn HOB
Washington, DC 20515
Dear Chairman Issa and Ranking Member Cummings:
I am writing to bring to your attention the apparent misappropriation of more than $200 million in client funds by Peregrine Financial Group, an Iowa-based futures trading company. According to the U.S. Commodity Futures Trading Commission (CFTC), Peregrine has “used customer funds for purposes other than those intended by its customers.”
According to a criminal complaint filed by the U.S. Attorney on Friday, Russell Wassendorf, Sr., Founder and CEO of Peregrine Financial Group, admitted that he was defrauding his customers for as long as 20 years. According to court documents, Peregrine had as many as 1,845 investors – and it is unclear whether their money will ever be recovered.
It is the job of regulators to protect farmers, families, and businesses who have invested in futures. I’m greatly concerned that this misappropriation of funds was allowed to continue so long before being discovered.
In the wake of the MF Global debacle and these new allegations at Peregrine Financial Group, I ask that you immediately hold a hearing to look at unanswered questions related to the role of the CFTC in allowing this situation to continue and investigate whether this agency had the proper procedures in place to prevent this type of abuse from happening again. It is absolutely essential that there is investor confidence in our commodity trading system.
It is also important that any hearing focus on whether there is a process in place to expedite the recovery of the assets of these investors.
Thanks again for your consideration of this request. We owe it to American taxpayers and investors to ensure a secure marketplace where they can trust that their money is protected from fraud.
Sincerely,
Bruce L. Braley
Member of Congress
