Peregrine Financial auditors lacked skepticism - study
SAN FRANCISCO, Jan 31 (Reuters) - Auditors of Peregrine Financial, whose former CEO on Thursday was sentenced to 50 years for stealing $215 million from his customers, lacked the skepticism needed to assess the risk of fraud at the now-defunct futures brokerage, a study released on Thursday showed.
Although audits of Peregrine were conducted in a "competent and proper fashion" and were "dutifully" implemented, auditors did not look closely enough at the firm's financial losses, the way it handled its financing, and its internal controls, according to the study by Berkeley Research Group LLC.
The study was commissioned by the National Futures Association (NFA), the regulatory body responsible for auditing many of the smaller U.S. futures brokerages, including Peregrine Financial.
Critics have blamed NFA for not catching the fraud, which CEO Rusell Wasendorf Sr conducted and concealed for nearly the entire 20 years he ran the company.
NFA said in a statement that it would adopt an extensive list of recommendations by the consulting firm, including better training of its auditors to instill more skepticism.
(Reporting by Ann Saphir; Editing by Bernard Orr)