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July 16, 2012
National Futures Association announces review of FCM audit practices relating to customer segregated funds
July 16, Chicago - Last week, National Futures Association (NFA) issued an emergency enforcement action against Peregrine Financial Group, Inc. (PFG). NFA took this action after NFA determined that PFG had failed to maintain adequate funds in segregated accounts, and that PFG's Chairman may have falsified bank records and filed false reports with NFA. PFG subsequently filed for bankruptcy protection and PFG's Chairman was arrested, dealing a severe blow to the public's confidence in the financial integrity of the futures markets. NFA was PFG's designated self-regulatory organization and conducted regulatory examinations of PFG's activities.
Today, NFA's Chairman has requested that the Special Committee for the Protection of Customer Funds, consisting of the public representatives on NFA's Board of Directors, retain the services of Jenner and Block, a national law firm, to conduct a careful internal review of NFA's audit practices and procedures, and the execution of those procedures in the specific instance of PFG, to assure that the right procedures are in place and that they are being properly followed. NFA intends to identify and implement any regulatory oversight changes that may be necessary to improve the detection of fraud and protection of segregated customer funds. The Special Committee is authorized to retain outside professionals to assist in that review, and will review any recommendations made regarding NFA's audit practices and procedures and make a report to NFA's Board of Directors.