PFG Best/Peregrine Futures Customer Account Class Action Lawsuit
Berger Montague served as co-lead counsel in a class action on behalf of futures account holders of PFG Best/Peregrine, whose segregated account funds have been effectively frozen following reports of “accounting irregularities” at the futures brokerage firm and a reported suicide attempt by its founder and owner Russell R. Wasendorf, Sr. The complaint in the action is available here. The court’s order appointing Berger Montague as co-lead counsel is available here.
Peregrine’s Class Action Background
Peregrine was the nation’s second largest non-bank, non-clearing futures commission merchant. Under federal law, Peregrine was required to keep any customer funds in specially-designated accounts separate from the company’s general operations funds. For many years the company accepted funds from thousands of customers, processed trades, and gave the appearance that it was complying with federal law.
In July 2012, Peregrine’s former owner, Russell Wasendorf Sr., attempted suicide in the parking lot of the company’s Iowa offices and left a note admitting that he had stolen millions of dollars in customer funds over the course of two decades. Peregrine quickly declared bankruptcy and the Commodity Futures Trading Commission froze all customer accounts. In the aftermath, customers learned that approximately $200 million was missing.
The initial lawsuits were filed in the summer of 2012 and litigation continued into 2015. Girard Gibbs LLP and one other firm were appointed to represent the proposed class.
Both U.S. Bank and JPMorgan filed motions to dismiss the case, asking the court to end the lawsuit in their favor. The court denied much of U.S. Bank’s motion (and did not rule on JPMorgan’s motion because of the settlement). The parties proceeded through lengthy discovery, in which many tens of thousands of documents were produced and in which about 20 depositions were taken.
JP Morgan Chase Settlement
In January 2015, the court granted final approval of a settlement with JPMorgan Chase worth $17.25 million.
The class definition for the JPMorgan settlement covered “all persons who currently maintain or formerly maintained commodity futures or option accounts at PFG or who are current or former PFG customers with accounts opened for the purpose of trading futures or options on futures on a U.S. futures exchange under section 4d of the Commodity Exchange Act, 7 U.S.C. § 1, et seq., and 17 C.F.R. § 1.20.”
Class members with allowed claim in the Peregrine bankruptcy case automatically received payment unless they excluded themselves. Class members without an allowed claim were required to submit a claim form, the deadline for which has now passed.
U.S Bank Settlement
In November 2015, the court granted final approval to a $44.5 million settlement with U.S. Bank. As part of that order, the court directed that notice go out to the members of the settlement class: all persons or entities who held money, property, and/or securities pursuant to 7 U.S.C. § 6d(a)(2) at PFG as of July 10, 2012.
The notice contains details about the settlement, which we recommend you read if you believe you may be a class member.
Class members with an allowed claim in the Peregrine bankruptcy case will automatically receive a payment from this settlement unless they exclude themselves. For class members without an allowed claim, the deadline to submit a claim form to participate in the settlement passed on August 21, 2015.
The settlement follows an earlier settlement between U.S. Bank and the Commodity Futures Trading Commission worth an additional $18 million, for which the court concluded that lawyers from Girard Gibbs and the other firms representing plaintiffs were “wholly or substantially responsible.”