The big topic within the finance community this morning is the suspension of Iowa-based brokerage firm PFGBest and Chicago-based investment funds Peregrine Financial Group and Peregrine Asset Management — all controlled by online trading pioneer Russel R. Wasendorf Sr., according to Bloomberg’s Matthew Leising — after regulators discovered a $200 million cash shortfall in the two latter firms’ customer accounts.At the same time, Wasendorf apparently tried to commit suicide (unsuccessfully).
The matter of the missing money sounds eerily similar to what happened last year with MF Global.
What’s even more weird: Wasendorf was interviewed by PBS in December about the missing funds at MF Global:
” ‘Every single day [a futures commission merchant] must file a segregated report. On Friday, prior to the (MF Global bankruptcy) everything was fine, on Monday the bells went off,’ according to Russ Wasendorf, Sr., founder of FCM PFGBest.
“Speaking on PBS Nightly Business report, Wasendorf, a former NFA board member, offered one potential opinion on the case of the disappearing $600 million: ‘Something happened in the middle of that time. Futures regulations work just fine. Once the money was transferred it went into a new regulatory environment, probably covered by banking rules, which supersede the regulations of the futures industry.’ “
According to the formal complaint from Peregrine’s regulator the National Futures Association, the fund reported yesterday it had $400 million in customer accounts, of which $225 million were deposited at U.S. Bank.
But the NFA discovered there was actually only $5 million on deposit there.
PFGBest, the brokerage, released a somewhat enigmatic statement about its status, “Due to a recent emergency involving Russell R. Wasendorf, Sr., a suicide attempt, some accounting irregularities are being investigated regarding company accounts.”
It’s not clear whether Wasendorf’s apparent suicide attempt touched off the investigation, but they happened within hours of one another. According to WCFCourier.com’s Jon Erickson, Wasendorf, was airlifted to an Iowa City hospital in critical condition after he was found in his car outside the company’s headquarters in rural Cedar Falls, Iowa Monday morning.
The only saving grace of the whole situation, according to Attain Capital as reported on Futures Knowledge, is that unlike MF Global, there are evidently no mega-bank counterparties in play, “Meaning – maybe, just maybe, customers and vendors alike may see some of their money returned.”