--Customers of PFGBest saw trades held with the firm liquidated by Jefferies

--Jefferies liquidated a "substantial portion" of those positions; to liquidate remainder in "a fair and reasonable manner"

--Jefferies doesn't expect to incur "any loss in respect of PFG"

(Adds information on customers' access to cash, CFTC lawsuit, beginning in first paragraph.)

 
   By Jacob Bunge and Brett Philbin 
 

Customers of embattled futures and currency brokerage PFGBest saw trades held with the firm liquidated Tuesday, though their assets remained out of reach.

All open trading positions held by clients of PFGBest were to be liquidated by Jefferies Group Inc. (JEF), which clears transactions for the struggling company, customers were told in a notice early Tuesday, a copy of which was reviewed by Dow Jones Newswires.

Clients that traded through PFGBest said they were unable to access their cash after their positions were sold, however, as funds were frozen while regulators looked into an apparent shortfall in customer assets held with the firm.

Jefferies confirmed in a statement that it had "liquidated a substantial portion of those positions and expects to be able to expeditiously liquidate the remainder in a fair and reasonable manner," adding "after which all proceeds of the liquidation will be maintained in segregated accounts."

Jefferies said it began closing out the positions after PFG was unable to meet a margin call that the investment bank made in response to an action by the National Futures Association, the futures industry's self-regulatory body.

Jefferies, which had trading positions held on behalf of PFG's clients secured by cash held in margin accounts, said it doesn't expect to incur "any loss in respect of PFG."

Shares of Jefferies dropped 1.6% to $12.43 following the company's confirmation of the clearing relationship with Peregrine Financial Group Inc., PFGBest's parent company. A spokeswoman for CME Group Inc. (CME) confirmed that Jefferies remained "in good standing" as a member of CME's clearinghouse.

A spokeswoman for PFGBest did not respond to requests for comment Tuesday.

Late Monday, PFGBest's brokerage and retail customers had their accounts frozen as regulators began looking into the company's books, following what PFGBest described to clients as a "suicide attempt" by founder and Chief Executive Russell Wasendorf, Sr. at the company's Cedar Falls, Iowa, offices.

In June, the company reported to the Commodity Futures Trading Commission that it held approximately $400 million in customer assets.

On Tuesday, the CFTC sued PFG and Wasendorf, alleging violations of rules set up to protect customer funds and false statements made to regulators. Shortfalls in customer funds held by PFG dated back to at least February 2010, according to the CFTC, and a July audit revealed about $215 million in missing customer money.

Write to Jacob Bunge at jacob.bunge@dowjones.com