FROM: SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., July 25, 2012 — The Securities and Exchange Commission has charged the close friend of a CEO with insider trading in the stock of a Houston-based employment services company by exploiting confidential information he learned while they were spending time together.
The SEC alleges that Ladislav "Larry" Schvacho, who lived in Georgia at the time of his illegal trading, made approximately $511,000 in illicit profits by using inside information to trade around the acquisition of Comsys IT Partners Inc. by another staffing company. Schvacho gleaned nonpublic information while the Comsys CEO called other Comsys executives to discuss the acquisition and through confidential, merger-related documents to which Schvacho had access.
"As a result of Schvacho’s time with the CEO, he learned nonpublic details and stockpiled Comsys shares until it became by far the largest stock investment that he’d ever made into a single company," said William P. Hicks, Associate Regional Director of the SEC’s Atlanta Regional Office. "The Comsys CEO confided in Schvacho, who exploited that trust and stole information for a half-million-dollar payday."
According to the SEC’s complaint filed late yesterday in U.S. District Court for the Northern District of Georgia, Schvacho first met Larry L. Enterline when they worked for the same company in the 1970s. Enterline went on to become the Comsys CEO in 2006. The two maintained their close friendship even after Enterline moved to Houston to run Comsys, speaking frequently on the phone and maintaining a longstanding tradition of Friday evening dinner and drinks when Enterline visited Atlanta, where he still had a home. The two often shared confidential information with one another.
The SEC alleges that Schvacho purchased approximately 72,000 shares of Comsys stock in the weeks leading up to a public announcement on Feb. 2, 2010, that Comsys was to be acquired by Manpower Inc. Given their close relationship and long history of sharing confidences, Enterline made no significant effort to shield information about the impending acquisition from Schvacho. Rather, Enterline reasonably expected that Schvacho would refrain from disclosing or otherwise misusing the confidential information. For example, during one of their Friday evening dinners at a restaurant in Atlanta on Nov. 6, 2009, Enterline discussed the potential acquisition in Schvacho’s presence during phone conversations with one or more Comsys senior executives. On the very next business day (November 9), Schvacho began purchasing Comsys stock relying on the material, nonpublic information he learned.
The SEC further alleges that Schvacho learned nonpublic information between December 11 and December 14 while he and Enterline vacationed together in Florida. Enterline again discussed the possible acquisition in Schvacho’s presence during a phone conversation with another Comsys senior executive. During that vacation, Schvacho also had access to Enterline’s merger-related documents. Just days later, Schvacho bought additional Comsys stock. On December 19, Enterline again discussed the impending acquisition in Schvacho’s presence during a phone conversation after Schvacho picked him up from the airport. On the next business day, Schvacho purchased additional Comsys shares.
According to the SEC’s complaint, on or about January 20, Schvacho converted his 401(k) account to create a self-directed account so that he could buy even more Comsys shares based on material, nonpublic information about the deal. In order to purchase his large position in Comsys stock, Schvacho undertook other various unusual steps including using all available cash in his brokerage accounts to purchase Comsys shares. The Comsys stock price increased approximately 31 percent following the public announcement on February 2. Schvacho immediately sold half of his Comsys shares after the announcement was made.
The SEC’s investigation was conducted by Debbie T. Hampton and Matthew F. McNamara in the Atlanta Regional Office, and Paul Kim will lead the litigation.
This is a photo of the National Register of Historic Places listing with reference number 7000063
Thursday, July 26, 2012
Wednesday, July 25, 2012
CHICAGO BASED CONSULTING FIRM CHARGED WITH ACCOUNTING VIOLATIONS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., July 19, 2012 – The Securities and Exchange Commission today charged a Chicago-based consulting firm and two of its former executives with accounting violations that overstated the company’s income for multiple years.
The SEC found that Huron Consulting Group Inc., a provider of financial and operational consulting services to clients in various industries, failed to properly record redistributions of sales proceeds by the selling shareholders of four firms acquired by Huron. The selling shareholders redistributed the money to employees at those firms who stayed on to work at Huron as well as other Huron employees and themselves. Because the redistributions were contingent on the employees’ continued employment with Huron, based on the achievement of personal performance measures, or not clearly for a purpose other than compensation, Huron should have recorded the redistributions as compensation expense in its financial statements. By failing to do so, Huron overstated its pre-tax income to the public. Former chief financial officer Gary Burge and former controller and chief accounting officer Wayne Lipski oversaw these accounting decisions at Huron.
Huron agreed to settle the SEC’s charges by paying a $1 million penalty, and Burge and Lipski agreed to pay a total of nearly $300,000 in disgorgement and penalties to settle the charges against them.
“Huron’s income overstatements obscured the fact that a substantial portion of the money it paid to acquire other consulting firms was being used to retain professional talent at the firm,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “Huron, Burge, and Lipski should have known that their flawed accounting gave investors a misleading impression of the profitability of Huron’s acquisitions.”
According to the SEC’s order instituting settled cease-and-desist proceedings, Huron’s financial statements for 2006, 2007, 2008, and the first quarter of 2009 were materially misstated as a result of these accounting failures. In August 2009, Huron restated those financial statements, thus reducing its net income by approximately $56 million.
The SEC’s order finds that in January 2008, Huron, Burge and Lipski considered an SEC Staff Accounting Bulletin, which referenced accounting principles applicable to the redistributions, but that they subsequently did not determine the full impact of the accounting principles on the company’s financial statements. As a result, Huron publicly overstated its pre-tax income by 3.7 percent for 2005, 6.09 percent for 2006, 30.45 percent for 2007, 68.59 percent for 2008, and 25.29 percent for the first quarter of 2009.
The SEC’s order finds that Huron violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. The order finds that Burge and Lipski caused Huron’s violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13, and that they violated Rule 13b2-1.
In agreeing to settle the charges without admitting or denying the SEC’s findings, Huron consented to the SEC’s order imposing a $1 million penalty and requiring the company to cease and desist from committing or causing any violations or any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Burge and Lipski, without admitting or denying the SEC’s findings, also consented to the order, which requires Burge to pay disgorgement of $147,763.12, prejudgment interest of $30,338.46, and a penalty of $50,000, and requires Lipski to pay disgorgement of $12,750, prejudgment interest of $3,584.94, and a penalty of $50,000. The order also requires Burge and Lipski to cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 13b2-1.
The SEC’s investigation was conducted in the Chicago Regional Office by Ruta Dudenas, Rebecca Bernard, Thomas Meier, and Paul Montoya with litigation counsel assistance from Robert Moye.
Washington, D.C., July 19, 2012 – The Securities and Exchange Commission today charged a Chicago-based consulting firm and two of its former executives with accounting violations that overstated the company’s income for multiple years.
The SEC found that Huron Consulting Group Inc., a provider of financial and operational consulting services to clients in various industries, failed to properly record redistributions of sales proceeds by the selling shareholders of four firms acquired by Huron. The selling shareholders redistributed the money to employees at those firms who stayed on to work at Huron as well as other Huron employees and themselves. Because the redistributions were contingent on the employees’ continued employment with Huron, based on the achievement of personal performance measures, or not clearly for a purpose other than compensation, Huron should have recorded the redistributions as compensation expense in its financial statements. By failing to do so, Huron overstated its pre-tax income to the public. Former chief financial officer Gary Burge and former controller and chief accounting officer Wayne Lipski oversaw these accounting decisions at Huron.
Huron agreed to settle the SEC’s charges by paying a $1 million penalty, and Burge and Lipski agreed to pay a total of nearly $300,000 in disgorgement and penalties to settle the charges against them.
“Huron’s income overstatements obscured the fact that a substantial portion of the money it paid to acquire other consulting firms was being used to retain professional talent at the firm,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “Huron, Burge, and Lipski should have known that their flawed accounting gave investors a misleading impression of the profitability of Huron’s acquisitions.”
According to the SEC’s order instituting settled cease-and-desist proceedings, Huron’s financial statements for 2006, 2007, 2008, and the first quarter of 2009 were materially misstated as a result of these accounting failures. In August 2009, Huron restated those financial statements, thus reducing its net income by approximately $56 million.
The SEC’s order finds that in January 2008, Huron, Burge and Lipski considered an SEC Staff Accounting Bulletin, which referenced accounting principles applicable to the redistributions, but that they subsequently did not determine the full impact of the accounting principles on the company’s financial statements. As a result, Huron publicly overstated its pre-tax income by 3.7 percent for 2005, 6.09 percent for 2006, 30.45 percent for 2007, 68.59 percent for 2008, and 25.29 percent for the first quarter of 2009.
The SEC’s order finds that Huron violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. The order finds that Burge and Lipski caused Huron’s violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13, and that they violated Rule 13b2-1.
In agreeing to settle the charges without admitting or denying the SEC’s findings, Huron consented to the SEC’s order imposing a $1 million penalty and requiring the company to cease and desist from committing or causing any violations or any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Burge and Lipski, without admitting or denying the SEC’s findings, also consented to the order, which requires Burge to pay disgorgement of $147,763.12, prejudgment interest of $30,338.46, and a penalty of $50,000, and requires Lipski to pay disgorgement of $12,750, prejudgment interest of $3,584.94, and a penalty of $50,000. The order also requires Burge and Lipski to cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 13b2-1.
The SEC’s investigation was conducted in the Chicago Regional Office by Ruta Dudenas, Rebecca Bernard, Thomas Meier, and Paul Montoya with litigation counsel assistance from Robert Moye.
Tuesday, July 24, 2012
FDIC WARNS BANKERS OF FRAUDSTERS PREYING ON WEAK BANKS
FROM: FDIC
The FDIC has become aware of multiple instances in which individuals or purported investment advisors have approached financially weak institutions in apparent attempts to defraud the institutions by claiming to have access to funds for recapitalization. These parties also may claim that the investors, or individuals associated with the investors, include prominent public figures and that the investors have been approved by one or more of the federal banking agencies to invest substantial capital in the targeted institutions. Ultimately, these parties have required the targeted institutions to pay, in advance, retention and due diligence fees, as well as other costs. Once paid, the parties have failed to conduct substantive due diligence or to actively pursue the proposed investment.
Institutions should be extremely cautious if approached by any party in a similar manner. Before entering into any agreements or paying any funds, targeted institutions should verify the credibility of such solicitations, including the credibility of the investor group, their principals, and their representatives. Further, institutions deemed to be Critically Undercapitalized for purposes of Prompt Corrective Action are cautioned that prior approval may be required for the payment of retention or due diligence fees, or other costs. If, following assessment of the parties and proposal, it appears likely that a proposal is fraudulent, institutions should submit a Suspicious Activity Report in compliance with Part 353 of the FDIC's Rules and Regulations and ensure that the designated FDIC Case Manager is informed of the solicitation and the institution's actions.
The FDIC has become aware of multiple instances in which individuals or purported investment advisors have approached financially weak institutions in apparent attempts to defraud the institutions by claiming to have access to funds for recapitalization. These parties also may claim that the investors, or individuals associated with the investors, include prominent public figures and that the investors have been approved by one or more of the federal banking agencies to invest substantial capital in the targeted institutions. Ultimately, these parties have required the targeted institutions to pay, in advance, retention and due diligence fees, as well as other costs. Once paid, the parties have failed to conduct substantive due diligence or to actively pursue the proposed investment.
Institutions should be extremely cautious if approached by any party in a similar manner. Before entering into any agreements or paying any funds, targeted institutions should verify the credibility of such solicitations, including the credibility of the investor group, their principals, and their representatives. Further, institutions deemed to be Critically Undercapitalized for purposes of Prompt Corrective Action are cautioned that prior approval may be required for the payment of retention or due diligence fees, or other costs. If, following assessment of the parties and proposal, it appears likely that a proposal is fraudulent, institutions should submit a Suspicious Activity Report in compliance with Part 353 of the FDIC's Rules and Regulations and ensure that the designated FDIC Case Manager is informed of the solicitation and the institution's actions.
Monday, July 23, 2012
SEC CHARGES ORTHOFIX INTERNATIONAL WITH FCPA VIOLATIONS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged Texas-based medical
device company Orthofix International N.V. with violating the Foreign Corrupt
Practices Act (FCPA) when a subsidiary paid routine bribes referred to as
chocolates to Mexican officials in order to obtain lucrative sales contracts
with government hospitals.
The SEC alleges that Orthofixâ's Mexican subsidiary Promeca S.A. de C.V.
bribed officials at Mexico’s government-owned health care and social services
institution Instituto Mexicano del Seguro Social (IMSS). The chocolates came
in the form of cash, laptop computers, televisions, and appliances that were
provided directly to Mexican government officials or indirectly through front
companies that the officials owned. The bribery scheme lasted for several years
and yielded nearly $5 million in illegal profits for the Orthofix
subsidiary.
Orthofix agreed to pay $5.2 million to settle the SEC’s charges.
According to the SEC's complaint filed in U.S. District Court for the Eastern
District of Texas, the bribes began in 2003 and continued until 2010. Initially,
Promeca falsely recorded the bribes as cash advances and falsified its invoices
to support the expenditures. Later, when the bribes got much larger, Promeca
falsely recorded them as promotional and training costs. Because of the bribery
scheme, Promeca's training and promotional expenses were significantly over
budget. Orthofix did launch an inquiry into these expenses, but did very little
to investigate or diminish the excessive spending. Later, upon discovery of the
bribe payments through a Promeca executive, Orthofix immediately self-reported
the matter to the SEC and implemented significant remedial measures. The company
terminated the Promeca executives who orchestrated the bribery scheme.
The SEC's proposed settlement is subject to court approval. Orthofix
consented to a final judgment ordering it to pay $4,983,644 in disgorgement and
more than $242,000 in prejudgment interest. The final judgment would permanently
enjoined the company from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the
Securities Exchange Act of 1934. Orthofix also agreed to certain undertakings,
including monitoring its FCPA compliance program and reporting back to the SEC
for a two-year period.
Orthofix also disclosed today in an 8-K filing that it has reached an
agreement with the U.S. Department of Justice to pay a $2.22 million penalty in
a related action.
The Securities and Exchange Commission today charged Texas-based medical
device company Orthofix International N.V. with violating the Foreign Corrupt
Practices Act (FCPA) when a subsidiary paid routine bribes referred to as
chocolates to Mexican officials in order to obtain lucrative sales contracts
with government hospitals.
The SEC alleges that Orthofixâ's Mexican subsidiary Promeca S.A. de C.V.
bribed officials at Mexico’s government-owned health care and social services
institution Instituto Mexicano del Seguro Social (IMSS). The chocolates came
in the form of cash, laptop computers, televisions, and appliances that were
provided directly to Mexican government officials or indirectly through front
companies that the officials owned. The bribery scheme lasted for several years
and yielded nearly $5 million in illegal profits for the Orthofix
subsidiary.
Orthofix agreed to pay $5.2 million to settle the SEC’s charges.
According to the SEC's complaint filed in U.S. District Court for the Eastern
District of Texas, the bribes began in 2003 and continued until 2010. Initially,
Promeca falsely recorded the bribes as cash advances and falsified its invoices
to support the expenditures. Later, when the bribes got much larger, Promeca
falsely recorded them as promotional and training costs. Because of the bribery
scheme, Promeca's training and promotional expenses were significantly over
budget. Orthofix did launch an inquiry into these expenses, but did very little
to investigate or diminish the excessive spending. Later, upon discovery of the
bribe payments through a Promeca executive, Orthofix immediately self-reported
the matter to the SEC and implemented significant remedial measures. The company
terminated the Promeca executives who orchestrated the bribery scheme.
The SEC's proposed settlement is subject to court approval. Orthofix
consented to a final judgment ordering it to pay $4,983,644 in disgorgement and
more than $242,000 in prejudgment interest. The final judgment would permanently
enjoined the company from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the
Securities Exchange Act of 1934. Orthofix also agreed to certain undertakings,
including monitoring its FCPA compliance program and reporting back to the SEC
for a two-year period.
Orthofix also disclosed today in an 8-K filing that it has reached an
agreement with the U.S. Department of Justice to pay a $2.22 million penalty in
a related action.
Sunday, July 22, 2012
HOUSTON MAN & CO. CHARGED WITH ALLEGED COMMODITY POOL FRAUD
FROM: COMMODITY FUTURES TRADING COMMISSION
July 11, 2012
CFTC Charges Houston-based Christopher Daley and his company, TC Credit Service, LLC, with Solicitation Fraud and Misappropriation in $1.4 Million Dollar Commodity Pool Scheme federal court enters order freezing defendants’ assets and preserving books and recordsWashington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an anti-fraud enforcement action in the U.S. District Court for the Southern District of Texas, charging Christopher D. Daley (Daley) of Houston, Texas, and his firm, TC Credit Service, LLC (TCCS) (doing business as Del-Mair Group, LLC) with operating a commodity pool scheme that fraudulently solicited and accepted approximately $1.4 million from the public. Daley was owner and sole employee of TCCS, and none of the defendants has ever been registered with the CFTC.
On June 19, 2012, a day after the CFTC filed its complaint, the Honorable Judge Lynn N. Hughes, of the U.S. District Court for the Southern District of Texas, issued an emergency order under seal, freezing the defendants’ assets and prohibiting the destruction of books and records.
The CFTC complaint alleges that from at least January 2010 and continuing through at least November 2011, Daley and TCCS fraudulently solicited and accepted at least $1,427,688 from at least 55 members of the public to participate in a commodity pool to trade crude oil futures contracts. TCCS did not at any time during this period maintain any commodity accounts in its name, and Daley’s personal trading accounts sustained consistent net losses each month, according to the complaint. Daley, however, allegedly used only a portion of pool participants’ funds to trade futures contracts, while misappropriating the rest of the funds. Daley used at least $100,000 of pool participants’ funds to pay for personal expenses, such as rent and personal loan payments, and transferred approximately $195,000 of pool participant’s funds to his own personal bank accounts, according to the complaint.
The complaint further alleges that Daley made fraudulent misrepresentations and omissions of material fact, including (1) misrepresenting that Daley’s trading in crude oil futures contracts generated and would generate 20 percent monthly returns on deposits, (2) misrepresenting that the pool never had a losing month, (3) misrepresenting that the pool’s value had increased 60 percent for the year as of March 2011, and (4) omitting that Daley misappropriated pool participants’ funds, that the pool never maintained any commodity interest account in its own name, that Daley’s personal futures trading accounts sustained consistent monthly losses, and that Daley was not properly registered as a Commodity Pool Operator with the CFTC. Moreover, the complaint alleges that Daley issued false account statements to pool participants to conceal the fraud.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of federal commodities laws.
CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Patricia Gomersall, Christine Ryall, Antoinette Chance, Paul Hayeck, and Joan Manley.
July 11, 2012
CFTC Charges Houston-based Christopher Daley and his company, TC Credit Service, LLC, with Solicitation Fraud and Misappropriation in $1.4 Million Dollar Commodity Pool Scheme federal court enters order freezing defendants’ assets and preserving books and recordsWashington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an anti-fraud enforcement action in the U.S. District Court for the Southern District of Texas, charging Christopher D. Daley (Daley) of Houston, Texas, and his firm, TC Credit Service, LLC (TCCS) (doing business as Del-Mair Group, LLC) with operating a commodity pool scheme that fraudulently solicited and accepted approximately $1.4 million from the public. Daley was owner and sole employee of TCCS, and none of the defendants has ever been registered with the CFTC.
On June 19, 2012, a day after the CFTC filed its complaint, the Honorable Judge Lynn N. Hughes, of the U.S. District Court for the Southern District of Texas, issued an emergency order under seal, freezing the defendants’ assets and prohibiting the destruction of books and records.
The CFTC complaint alleges that from at least January 2010 and continuing through at least November 2011, Daley and TCCS fraudulently solicited and accepted at least $1,427,688 from at least 55 members of the public to participate in a commodity pool to trade crude oil futures contracts. TCCS did not at any time during this period maintain any commodity accounts in its name, and Daley’s personal trading accounts sustained consistent net losses each month, according to the complaint. Daley, however, allegedly used only a portion of pool participants’ funds to trade futures contracts, while misappropriating the rest of the funds. Daley used at least $100,000 of pool participants’ funds to pay for personal expenses, such as rent and personal loan payments, and transferred approximately $195,000 of pool participant’s funds to his own personal bank accounts, according to the complaint.
The complaint further alleges that Daley made fraudulent misrepresentations and omissions of material fact, including (1) misrepresenting that Daley’s trading in crude oil futures contracts generated and would generate 20 percent monthly returns on deposits, (2) misrepresenting that the pool never had a losing month, (3) misrepresenting that the pool’s value had increased 60 percent for the year as of March 2011, and (4) omitting that Daley misappropriated pool participants’ funds, that the pool never maintained any commodity interest account in its own name, that Daley’s personal futures trading accounts sustained consistent monthly losses, and that Daley was not properly registered as a Commodity Pool Operator with the CFTC. Moreover, the complaint alleges that Daley issued false account statements to pool participants to conceal the fraud.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of federal commodities laws.
CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Patricia Gomersall, Christine Ryall, Antoinette Chance, Paul Hayeck, and Joan Manley.
Friday, July 13, 2012
CFTC SEEKS ORDER FREEZING ASSETS AND RESTITUTION OF CUSTOMER FUNDS IN COMPLAINT AGAINST PEREGRINE FINANCIAL GROUP, INC.
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Files Complaint Against Peregrine Financial Group, Inc. and Russell R. Wasendorf, Sr. Alleging Fraud, Misappropriation of Customer Funds, Violation of Customer Fund Segregation Laws, and Making False Statements
Commission Seeks an Order Freezing Assets and Restitution of Customer Funds.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint in the United States District Court for the Northern District of Illinois against Peregrine Financial Group Inc. (PFG), a registered futures commission merchant, and its owner, Russell R. Wasendorf, Sr.(Wasendorf). The Complaint alleges that PFG and Wasendorf committed fraud by misappropriating customer funds, violated customer fund segregation laws, and made false statements in financial statements filed with the Commission.
The National Futures Association (NFA) is PFG’s Designated Self-Regulatory Organization and is responsible for monitoring and auditing PFG for compliance with the minimum financial and related reporting requirements. According to the Complaint, in July 2012 during an NFA audit, PFG falsely represented that it held in excess of $220 million of customer funds when in fact it held approximately $5.1 million.
The Commission’s action alleges that from at least February 2010 through the present, PFG and Wasendorf failed to maintain adequate customer funds in segregated accounts as required by the Commodity Exchange Act and CFTC Regulations. The Complaint further alleges that defendants made false statements in filings required by the Commission regarding funds held in segregation for customers trading on U.S. Exchanges.
According to the Complaint, Wasendorf attempted to commit suicide yesterday, July 9, 2012. In the aftermath of that incident, the staff of the NFA received information that Wasendorf may have falsified certain bank records.
In the litigation, the CFTC seeks a restraining order to freeze assets, appoint a receiver and preserve records. Further, the litigation seeks restitution, disgorgement, and civil monetary penalties among other appropriate relief.
The following CFTC Division of Enforcement staff members are responsible for this case: William Janulis, Jon Kramer, Thaddeus Glotfelty, Melissa Glasbrenner, Rosemary Hollinger, Scott Williamson, Richard Wagner.
CFTC Files Complaint Against Peregrine Financial Group, Inc. and Russell R. Wasendorf, Sr. Alleging Fraud, Misappropriation of Customer Funds, Violation of Customer Fund Segregation Laws, and Making False Statements
Commission Seeks an Order Freezing Assets and Restitution of Customer Funds.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint in the United States District Court for the Northern District of Illinois against Peregrine Financial Group Inc. (PFG), a registered futures commission merchant, and its owner, Russell R. Wasendorf, Sr.(Wasendorf). The Complaint alleges that PFG and Wasendorf committed fraud by misappropriating customer funds, violated customer fund segregation laws, and made false statements in financial statements filed with the Commission.
The National Futures Association (NFA) is PFG’s Designated Self-Regulatory Organization and is responsible for monitoring and auditing PFG for compliance with the minimum financial and related reporting requirements. According to the Complaint, in July 2012 during an NFA audit, PFG falsely represented that it held in excess of $220 million of customer funds when in fact it held approximately $5.1 million.
The Commission’s action alleges that from at least February 2010 through the present, PFG and Wasendorf failed to maintain adequate customer funds in segregated accounts as required by the Commodity Exchange Act and CFTC Regulations. The Complaint further alleges that defendants made false statements in filings required by the Commission regarding funds held in segregation for customers trading on U.S. Exchanges.
According to the Complaint, Wasendorf attempted to commit suicide yesterday, July 9, 2012. In the aftermath of that incident, the staff of the NFA received information that Wasendorf may have falsified certain bank records.
In the litigation, the CFTC seeks a restraining order to freeze assets, appoint a receiver and preserve records. Further, the litigation seeks restitution, disgorgement, and civil monetary penalties among other appropriate relief.
The following CFTC Division of Enforcement staff members are responsible for this case: William Janulis, Jon Kramer, Thaddeus Glotfelty, Melissa Glasbrenner, Rosemary Hollinger, Scott Williamson, Richard Wagner.
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