The fraud at Peregrine Financial Group was uncovered in July 2012 by the National Futures Association (NFA) which used an electronic bank account confirmation system. (See Confirmations: Plugging Into Electronic Confirmations)

In November 2012, the NFA and CME Group announced they would implement an electronic confirmation system for futures brokers. The system, operated by AlphaMetrix, provides a comprehensive check and match of what FCMs say they have in customer funds with what banks say they have.

Chris Hehmeyer, CEO of HTG Capital Partners and chairman of the NFA, says the new system will help regulators and customers assure such a fraud does not occur again.

Electronic Confirmation Resources

  • Chris Hehmeyer on MarketsWiki (link)
  • National Futures Association (NFA) on MarketsWiki  (link)
  • Customer Protection Regulations on MarketsReformWiki (link)
  • NFA Proposed Rule on Protection of Customer Funds, August 2012 (link)
  • Study: Analysis of NFA Audits of Peregrine Financial Group, January 2013 (link)
  • CFTC Final Rule: Reporting, Recordkeeping, and Daily Trading Records
  • Requirements for Swap Dealers and Major Swap Participants (link)
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  • PFGBest’s Wasendorf Arrested – The Audit Confirmation that Caught Him (link)

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