U.S. Bank is being examined by investigators in relation to its role in overseeing client funds allegedly misappropriated by Peregrine Financial Group Inc., the Wall Street Journal reported today. The failed brokerage maintained an account holding client funds at a U.S. Bank branch near its headquarters in Cedar Falls, Iowa, according to court filings, and authorities are examining whether Peregrine Chief Executive Russell Wasendorf Sr. supplied fake bank documents to auditors in order to mask illicit use of his clients' money. Wasendorf is at the center of a probe into the futures and currency brokerage, which filed for bankruptcy on Tuesday after regulators uncovered what they called "missing" funds and alleged fraud.
In related news, the U.S. Trustee Program yesterday named a new trustee in Peregrine Financial Group Inc.'s bankruptcy case, according to the Wall Street Journal today. Ira Bodenstein of Shaw Gussis Fishman Glantz Wolfson & Towbin LLC said that he has accepted the appointment. He now is in charge of unwinding the Cedar Falls, Iowa, brokerage firm—whose clients' accounts were frozen this week amid a suspected $215 million shortfall in customer accounts.