J.P. Morgan Objects to Terms Proposed by Peregrine Trustee

Date : 08/06/2012 @ 5:10PM
Source : Dow Jones News
Stock : JP Morgan Chase & Co. (JPM)
Quote : 92.8  1.52 (1.67%) @ 7:27PM

J.P. Morgan Objects to Terms Proposed by Peregrine Trustee

JP Morgan Chase (NYSE:JPM)
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   By Josh Dawsey 

J.P. Morgan Chase & Co. (JPM) on Monday filed an objection to the terms proposed by the trustee attempting to untangle the financial assets of collapsed brokerage Peregrine Financial Group Inc.

Attorneys for J.P. Morgan, which served as a clearing bank for Peregrine Financial, asked an Illinois judge overseeing the case to ensure the company can recoup all costs, expenses and attorneys' fees related to any subpoena it may be served by trustee Ira Bodenstein.

Mr. Bodenstein hasn't subpoenaed J.P. Morgan as of Monday, but a July 31 motion filed by the trustee prevents banks from recovering costs, a move J.P. Morgan said in its motion is "exceptional and impermissible."

Mr. Bodenstein is charged with recovering all assets from Peregrine, whose founder Russell Wasendorf Sr. is accused of defrauding investors out of more than $200 million. Mr. Wasendorf was arrested July 13, three days after his firm filed for bankruptcy and five days after he attempted suicide near the company's Iowa headquarters, leaving behind what authorities called a confession note.

It is unclear how much financial exposure J.P. Morgan has in the Peregrine case.

A spokesman for J.P. Morgan wasn't immediately available for comment.

J.P. Morgan in its motion also warned it would reserve all rights to object to subpoenas filed against any non-debtor entities or subsidiaries related to Peregrine, which did business as PFGBest. It also asked any possible subpoena of J.P. Morgan be delivered directly to attorneys representing the bank instead of the chief executive, as Mr. Bodenstein's filing requested.

The bank is being represented in the case by Mayer Brown LLP's Chicago office.

Write to Josh Dawsey at joshua.dawsey@dowjones.com

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