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In the wake of the Peregrine Financial Group liquidation, a mere nine months after the MF Global bankruptcy, Horizon advocates cash segregation in separately managed accounts and, where appropriate, advises that excess cash be swept away into custody/trust accounts at banks or other financial institutions.

"As a service provider to the alternative investment industry for over 20 years, we support industry-wide best practices and close scrutiny of margin accounts and custody arrangements,” said Pauline Modjeski, Horizon President.

“While the unfortunate news about Peregrine Financial serves another blow to the futures industry, fraud can occur in any asset management business. It is critical for all investors to be vigilant about the preservation of their capital and to be sure that their idle cash is not in a commingled margin account.”

Horizon offers the following advice for investors, both institutional and retail:

• The return of capital should be paramount to the return on capital
• It is imperative to know where the cash component of your assets are being held and the safeguards in place for those cash balances
• Cash holdings should be diversified if the amounts are material
• Be aware of the risks of certain short-term cash-like instruments as a substitute for cash
• Ask if your asset manager has cash and custody accounts at financial institutions

Press release

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