Peregrine Financial may have "viable" claims versus banks: trustee

Peregrine Financial Group's bankruptcy estate may have "viable" claims against JPMorgan Chase & Co and U.S. Bancorp for harm done to clients of the now-failed brokerage, and may pursue them in court, Peregrine's trustee said in a filing this week.

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The trustee, Ira Bodenstein, wants the federal bankruptcy court in Chicago to put on hold a lawsuit by the firm's former clients against the father-son duo that formerly ran the brokerage and the banks that handled their business. In the filing, Bodenstein said the lawsuit could interfere with his efforts to return money to creditors and former Peregrine Financial customers.

The firm, once one of the largest U.S. independent futures brokerages, filed for bankruptcy last July after its founder and CEO Russell Wasendorf Sr. confessed to bilking his clients of more than $100 million in a nearly 20-year-long fraud.

Wasendorf Sr. is now serving what is expected to be a lifelong sentence in a high-security prison.

His son, Russell Wasendorf Sr., says he had nothing to do with the scam and is on the verge of bankruptcy himself. <ID:L2N0DN1U4>

But the banks that held money for the brokerage and its customers are seen as having deeper pockets, and for months the trustee has had them in his sights.

JPMorgan has $18.2 million and U.S. Bank hold $6 million of Peregrine Financial's funds, according to the trustee's statement of cash dated April 15. The banks say that at least some of that money is theirs.

A JPMorgan spokeswoman and a U.S. Bancorp spokesman declined to comment on the allegations in the lawsuit.

"Although the Trustee's investigation remains ongoing, the facts reviewed to date suggest that the Estate possesses a number of viable claims against the Wasendorf Defendants as well as the Bank Defendants," the trustee said in Wednesday's filing.

The allegations in the lawsuit by clients "provide ample basis to conclude that the Wasendorf Defendants and the Bank Defendants breached a variety of duties owed to PFG and caused harm to all of PFG's creditors," the filing continued.

If that lawsuit is not stayed, the trustee argued, the banks could use it as a defense against the trustee's claims.

Wasendorf Sr. stole over $215 million from clients over the years, using faked bank statements to fool regulators, U.S. prosecutors said. Most customers have gotten less than a third of their money back.

(Reporting by Ann Saphir; editing by Andrew Hay)

April budget surplus is biggest in five years

The United States posted its biggest monthly budget surplus in five years in April, the Treasury Department said on Friday, adding that revenues are running at a record high so far this year thanks to higher taxes and an improving economy.

The April surplus was $113 billion, about $6 billion higher than economists' expectations and the highest surplus since April 2008, according to the Treasury. The surplus in April 2012 was $59 billion.

Treasury usually posts a surplus in April, when most Americans pay their taxes, but Washington's budget fortunes are shifting more quickly than most analysts had anticipated.

The better state of the government's finances will likely be a factor in budget battles in Congress over whether further belt-tightening is needed.

The administration and Republican lawmakers both seek a broad deal to cut the budget deficit, but clash over the White House's insistence that any reductions in spending on health and retirement programs be offset with higher taxes.

More cash means the United States also gets more time before it runs out of borrowing room under the legal limit on the nation's debt. While a temporary suspension of the debt ceiling expires on May 18, Treasury Secretary Jack Lew on Friday said the nation will be able to keep borrowing until at least early September as the Treasury deploys emergency cash maneuvers.

The government has received $1.6 trillion in taxes so far this year, a record high for this time period and 16 percent above last year's level for April, due to an expiration of payroll tax cuts, higher taxes on richer Americans, and an improving economy.

Tax receipts for last month, at $407 billion, were 28 percent higher than receipts in April 2012.

Because of the higher revenues, the U.S. government has said it expects to pay down debt this quarter for the first time in six years.

The cumulative deficit for the fiscal year, which started in October, was $488 billion in April, down 32 percent from the first seven months of fiscal 2012. That puts the United States on track to have its first yearly deficit below $1 trillion in five years.

Government spending was $294 billion in April, in line with figures from last month and above the year-ago level of $260 billion. In the past seven months, government spending has fallen 1 percent to $2.1 trillion compared to the same period last year.

(Editing by Andrea Ricci)