Peregrine Financial Group, Inc. Trustee Website

    Hon. Carol A. Doyle
    Northern District of Illinois
    Jul 10, 2012
Bankruptcy Court Forex Judgments Upheld On Appeal

On August 15, 2016, United States District Judge John J. Tharp, Jr. entered an order affirming two prior rulings by the Bankruptcy Court related to the treatment of claims by customers who held accounts with PFG for retail foreign exchange (“Forex”) and over-the-counter spot metals (“Metals”) trading.

In Secure Leverage Group Inc., et al. v. Bodenstein (14 CV 5024), a group of former Forex and Metals customers sought the return of funds held by PFG at the time of its bankruptcy on the grounds that Forex and Metals contracts were “commodity contracts” within the meaning of the Bankruptcy Code. Therefore, the plaintiffs argued, their claims were entitled to the same priority afforded to futures customers. The Secure Leverage claimants also asserted that PFG held the funds they deposited for Forex and Metals trading in trust, such that those funds are not part of the bankruptcy estate. The Bankruptcy Court rejected both theories and, on appeal, Judge Tharp agreed, endorsing the Bankruptcy Court’s rationale and affirming its judgment in favor of the Trustee.

In Miller, et al. v. Bodenstein, (15 CV 4260), a second group of Forex and Metals claimants, represented by the same attorneys as the Secure Leverage plaintiffs, filed a class action lawsuit on behalf of all of PFG’s former Forex and Metals customers, in which they asserted new legal theories in support of their claims for the return of funds deposited for Forex and Metals trading. Because the Miller class action lawsuit was filed more than two years after the claims bar date, the Bankruptcy Court dismissed the lawsuit as untimely. Again, Judge Tharp agreed and affirmed the Bankruptcy Court’s entry of judgment in favor of the Trustee.

The Secure Leverage and Miller claimants have until September 14, 2016 to appeal Judge Tharp’s ruling to the Court of Appeals for the Seventh Circuit.