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The Tale of Two Peregrines  
Product Ref: 13/526C Company: Peregrine Financial Group
Peregrine Investments Holdings Ltd

Product Type: Case Industry: Investment Banking and Brokerage

Related Product(s): Teaching Note
Authors: Amy Lau   Agnes K Y Tai
Founded in 1980, Peregrine Financial Group, Inc. (:PFG;) was incorporated in 1992 as a futures commission merchant in the USA and officially registered with the National Futures Association, specializing in commodities and foreign exchange futures brokerage services. In 2008 PFG was rebranded as PFGBest, it purported to have customers in more than 80 countries and more than US$600 million in customer assets by 2012.

On 10 July 2012 PFG filed for Chapter 7 protection after its founder and chairman, Russell Wasendorf, Sr. attempted suicide. In his suicide note, he described his fraudulent act of embezzled as much as US$220 million from PFG・s bank accounts in the past 20 years. He admitted that his ego was too big to admit failure and so he cheated.

A totally unrelated company Peregrine Investment Holdings Limited (:PIHL;) was founded in 1988 by former Citibankers Philip Tose and Francis Leung who were backed by many of Hong Kong・s business elites. It was :Asia・s only indigenous investment bank; and took prominent roles in the local bourses.

PIHL underwrote a US$265 million bond issue by Steady Safe, an Indonesian transportation company, which collapsed by the end of 1997. In January 1998 PIHL was forced into liquidation after it lost all liquidity and failed to get white knights or emergency relief from the Hong Kong Monetary Authority.[1] A report commissioned by the Hong Kong Government cited poor risk management and flawed internal control as the causes for the downfall of PIHL. [1] Enright, M. (2001) The Peregrine Debacle. Asia Case Research Centre, The University of Hong Kong. 2001/124C
Functional Area : Accounting & Control
Finance & Investments

Learning Objective: 1. Students can learn about (a) regulatory oversight, (b) corporate governance, (c) risk management (d) internal control (e) roles of external auditors (f) purported financial strength and (g) the significance of liquidity to a financial firm. 2. Students can learn about risks a company takes when making expansion beyond its core competence, and the roles of board directors in corporate governance, risk management and internal control.
Length: 29 pages Country: Hong Kong SAR
United States of America

Pub. Year: 2013 Level of Difficulty: 2
This product type is available in the following language(s):      English
Related Information: N/A
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