The National Futures Association, the regulator which had direct oversight of Peregrine, said it had learnt on Monday of the shortfalls in 2010 and 2011, and ordered Peregrine to stop doing further business.
Peregrine reported holding $400m on behalf of customers in late June, but on Monday an NFA inquiry revealed only a fraction of that amount was deposited at the broker’s bank.
The futures association also said it “received information indicating that PFG’s Chairman may have falsified bank records”.
The NFA, who had responsibility for auditing the broker’s accounts, said that PFG last month reported that it had $400m in segregated funds, of which more than $225m were deposited at US Bank, a bank based in Minnesota.
After contacting US Bank on Monday, the NFA found that PFG had only $5m on deposit there. Further, the NFA found that two balances of $207m and $218m reported by PFG for February 2010 and March 2011, respectively, at US Bank were false. PFG only had less than $10m for each of those months, the NFA said.
The CFTC, the futures market regulator filed a complaint on Monday against the broker and Mr Wassendorf, alleging fraud.