No broker is safe right now.

Discussion in 'Retail Brokers' started by Grandluxe, Jul 14, 2012.

  1. http://market-ticker.org/akcs-www?post=208410
    ....

    In a complaint filed on Tuesday alleging fraud, misuse of customer funds and making false statements to regulators, the Commodity Futures Trading Commission said the discrepancy between PFGBest's reported balance and its actual cash had been going on since at least February 2010.
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    February 2010?!

    So let's see.

    We have a Madoff-style scam here rather than a Corzine one (or is it? Remember, Corzine's firm may well have been in trouble for quite some time, according to many -- including Janet Tavakoli!) not that this will provide any comfort to the customers who got robbed blind.

    This still leaves the obvious question open: Where were the auditors and accountants?

    Yeah, I know, the NFA allegedly was "monitoring" balances and was "scammed." But here's the problem, from my point of view -- how the hell do you get duped for two+ years like this without some sort of willful blindness and/or just crap for controls and procedures?

    Everyone knows the first thing you look at when you're verifying a company's claims is the bank balance. And you get it directly from the bank too -- you call them, if you have to.

    There's another problem with the so-called "verifications" here as well -- balances are called "balances" because, well, they balance. Which means there's a series of transactions in and out.

    How do you get an allegedly forged balance to total out on the ledger unless you also forge all of the line items in the journal? It would be very hard to do this and not get caught if anyone bothered to look at the transaction-level detail.

    Which means nobody did.

    For more than two years.

    Which means nobody is looking at the ledgers at any of the other firms out there either.

    Think about that last line for a while, and exactly how much "regulation" and "monitoring" is going on at these firms just might sink in.