Days after receiving a letter from a former Peregrine Financial Group (PFG) customer complaining about the lack of progress in getting money back to former PFG customers and a general lack of communication with customers, Ira Bodenstein, Chapter 7 trustee in the PFG bankruptcy, asked a judge for permission to increase the pay of the PFG general counsel from $380,219 to $400,000.
The request was part of a motion to continue to operate the PFG estate through Nov. 12. It notes that the trustee had retained 57 of the 241 PFG employees to help in unwinding the firm at the outset of his appointment and has since reduced the number of employees to 35.
Yesterday the Commodity Customer Coalition (CCC), along with a former PFG customer, filed a limited objection to Bodenstein’s motion to increase the pay of PFGBest General Counsel, Rebecca Wing.
It notes, “While the CCC understands that the Trustee may indeed require the services of Ms. Wing in order to quickly administer the estate, we find the request more than a little tone deaf. Firstly, the increase is applied to total compensation, not just her base salary. It also lacks any structure to pay the increase on the basis of production, which would provide a financial incentive to find and return property that belongs to customers. Moreover, to date customers have not received a single penny of their funds.”
The motion states, “it has become apparent that Ms. Wing’s services are invaluable. Ms. Wing contains a wealth of knowledge regarding the Debtor’s business and has extensive experience as a commodity/financial services attorney. Based on the outstanding services provided by Ms. Wing, the Trustee requests authority to modestly increase her annual compensation to $400,000.
Morgan Benson, co-founder of Bouchard Capital, who pointed to the failings of the liquidation process in closing his trading business in a letter he sent to the trustee, expressed great disappointment in the trustee. “Seems like [the trustee] has a lack of focus on getting us our money."
Benson was hardly a lone voice as several former PFG customers felt left in the dark and unsatisfied with the trustee's explanation for why they have not received any of their money. The trustee has indicated that he cannot trust the books and records of PFG because of the fraud involved. CCC co-founder James Koutoulas says that is not a valid reason for the long delay. "Daily customer statements went out to thousands of clients not to mention their brokers. All of them had to report any errors within 24 hours or they'd accept them," Koutoulas says. "If those were off in the slightest, the fraud would have been discovered years ago."
The CCC added in its objection, “The primary reason for the raise – the retention of Ms. Wing – fails even cursory scrutiny. In a saturated legal market with record unemployment for attorneys, we find it highly improbable that Ms. Wing – the general counsel of a firm which is under investigation for a multi-million dollar fraud – will be darting out the door for another opportunity anytime soon.”
They concluded, “Before we start doling out customer money to Russ Wasendorf’s executives, let’s dole out some customer money to those who rightfully own it. “