US Bank to pay $18M to customers of collapsed brokerage to settle suit alleging lax oversight

Lifestyle and BudgetAssociated Press

U.S. Bank will pay $18 million to settle a civil lawsuit filed by regulators alleging that it mishandled customer funds of a collapsed Iowa brokerage.

U.S. District Judge Linda Reade approved a consent decree Wednesday that orders the bank to return the money to customers of Peregrine Financial Group, Inc.

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The order settles a lawsuit brought by the U.S. Commodity Futures Trading Commission alleging that U.S. Bank allowed Peregrine founder Russell Wasendorf Sr. to improperly withdraw millions of customer funds to use for other expenses.

Wasendorf is serving a 50-year prison term after he was convicted of stealing $215 million from customers over two decades.

The consent decree says U.S. Bank has already taken "significant remedial action" in its handling of customer funds that are supposed to be held separately.