Reuters: Bankruptcy News: CME Group plans $2 mln payout to former Peregrine clients

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CME Group plans $2 mln payout to former Peregrine clients Oct 25th 2012, 16:45 CHICAGO | Thu Oct 25, 2012 12:45pm EDT CHICAGO Oct 25 (Reuters) - CME Group Inc plans next month to begin paying $2 million to former clients of Peregrine Financial Group, the failed futures brokerage looted for years by its now-jailed founder. The payments will go to nearly 200 farmers, ranchers and cooperatives who traded on CME's exchanges, a CME spokeswoman told Reuters on Thursday. The payouts are CME's first from a fund it established in response to the collapse of MF Global last October, which left a $1.6 billion shortfall in customer funds and shook confidence in an industry where the safety of customer money had long been an article of faith. CME designed the $100 million fund as a backstop in case the unthinkable should again happen. It launched the fund in April, offering protection to farmers and ranchers who use CME's markets to hedge grains and livestock. Three months later, Peregrine filed for bankruptcy. Founder and CEO Russell Wasendorf Sr. has pled guilty to stealing more than $100 million from his customers and is currently awaiting sentencing in a jail in Iowa. So far Peregrine's bankruptcy trustee has released about $123 million from the estate back to former customers, or about 30 to 40 percent of what they were supposed to have in their accounts. CME's fund pays up to $25,000 to individuals and $100,000 to agricultural coops. Most of Peregrine Financial's futures customers had less than $50,000 in their accounts. If combined payouts from CME's fund and the funds returned by the bankruptcy trustee exceed the total in any given customer's account, CME's fund will be repaid the difference from the estate, according to an agreement between the bankruptcy trustee and CME filed in court this week. Link this Share this Digg this Email Reprints

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