Regulators asked a federal court Thursday to reject a bid by U.S. Bank (USB) to dismiss a lawsuit over its alleged role in Peregrine Financial's embezzlement scandal.

In its opposition, the CFTC argued that U.S. Bank inappropriately based its motion to dismiss on a challenge to the adequacy of regulators' evidence rather than on the validity of the allegations themselves.

"These arguments are not properly resolved on a motion to dismiss," the CFTC said in the court filing.

The Commodity Futures Trading Commission sued U.S. Bank in June in U.S. District Court for the Northern District of Iowa, alleging that it allowed Peregrine's former chief executive to misuse funds from a segregated account for the brokerage's customers. Peregrine CEO Russell Wasendorf embezzled more than $100 million from clients over the course of almost 20 years. He is currently serving a 50-year prison sentence.

U.S. Bank, a unit of $352 billion-asset U.S. Bancorp (USB) in Minneapolis, filed a motion to dismiss the CFTC case earlier this month.

"U.S. Bank did not know about the Peregrine Ponzi scheme-indeed we were a victim of the same scheme," Tom Joyce, a spokesperson for U.S. Bancorp, said in an email. The CFTC's lawsuit seeks to impose on the bank responsibilities it had and alleges violations that it never committed, he said.

"Banks are not responsible for losses generated by customers who are fraudsters; nor are they responsible for the lapses of regulators," Joyce said. "This lawsuit is an inappropriate attempt to reassign blame to our bank."

A trustee of the Peregrine estate said in May that it may bring charges against U.S. Bancorp and JPMorgan Chase (JPM), which also held Peregrine funds, for alleged breach of duty to Peregrine's customers.

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