Home > General Topics > Wall St. News > PFG freezes accounts, CEO attempts suicide

PFG freezes accounts, CEO attempts suicide

  1. Mr. Wasendorf is in critical condition. Accounting irregularities are being cited and the NFA reportedly has frozen customer accounts.
  2. As the Clearing firms are going down, so does liquidity in the futures market. tsk tsk tsk
  3. Makes you wonder about the real story behind his seeming success that was actually a house of cards.
  4. Who will be next?

  5. Who is left?
  6. PFGBest had $400MM in customer segregated accounts at the end of April.
  7. There needs to be an SIPC equivalent for futures accounts.
  8. I would remove all funds from US based brokers as the shits ready dominos effect is started and will not stop.
  9. emg with his $800,000 or $8,000,000 or $80,000,000 and continuing to trade 1 contract should prepare a withdrawl notification with its broker or we might see another thread, "Where did I go wrong, and I LOST!! :D
  10. I can only imagine the level of screaming if they did this, as premiums are passed through to traders.
  11. How many MF Global refugees opened an account at PFGBest?
  12. I have to imagine no firm is safe. pretty scary stuff. I wouldn't be surprised if any firm closes.

    Luckily, I have my money with a Nigerian representative who only needed 100,000 before he gives me lottery proceeds of over 15 million.

    Is this a great world or what?
  13. In a Member Responsibility Action, released Monday afternoon, NFA alleges that PFGBest’s reported customer funds deposited at U.S. Bank did not match the amounts NFA found when NFA contacted the bank Monday. On June 29, 2012, PFGBest reported to the NFA that they had nearly $400 million in customer funds, of which approximately $225 million was purportedly deposited at U.S. Bank. The actual funds found in the account were approximately $5 million.

    Furthermore, the NFA alleges that in contrast to purported bank confirmations submitted to the NFA that sought to confirm U.S. Bank balances as of February 2010 and March 2011, reported balances of approximately $207 million and $218 million, respectively, were actually less than $10 million for each of these months.

    NFA says in the MRA that PFGBest was unable to demonstrate to the NFA that it had sufficient capital to meet its minimum adjusted net capital requirements or segregated funds to meet its obligations to customers.

    John Lothian update
  14. http://pointsandfigures.com/2012/07/09/pfg-best-accounting-irregularities/

    The CEO of PFG Best has tried to kill himself. Supposedly, his firm, PFG Best may have had some accounting irregularities. They weren’t a full line clearing firm of the CME. So, at first blush, this looks a lot different than the MF Global scandal.

    Clearing firms are under enormous pressure right now to make a profit. The way most of them are structured, they make a profit from earning interest on the float from accounts. In a 0% interest rate environment, it’s pretty tough to earn any money. Very few, if any, firms want to commit the capital necessary to become a full line clearing member these days. Most take the Introducing Broker (IB) route PFG did.

    John Lothian tweeted the sad news first. I didn’t know Russell Wasendorf really well. He was on the retail side of things. He had built a pretty innovative firm in PFG, and I knew some people that worked there. They were all straight up people. As far as I know, PFG never traded their own account, unlike Jon Corzine at MF Global. Corzine had his own P+L line.

    The futures industry is littered with people that have killed themselves. I have known a few. Off the top of my head, I can count at least ten people since 1986. It’s terrible when you are so depressed that it comes to that. Here is a place to get help.

    Some of my fellow traders are sitting in dark rooms right now. The marketplace as they knew it has been ruined. They don’t know what to do. Once you are in a cycle of depression, it’s awfully hard to break. You can try James Altucher’s daily practice, but when you are in the cycle it probably won’t work. You will have to seek pro help.

    Trading is very tough on your psyche. It wears you out. It’s easy to get depressed, especially when other things aren’t working in your life. It’s frustrating.

    In PFG’s case, my gut says the embarrassment of the accounting problem would have caused the firm to go under. Wasendorf had poured his life into that firm and couldn’t live with the consequences. Too bad.

    It’s another wart on the futures industry that has absorbed plenty in the past few years.
  15. I'm reading that they're short closer to $380mm.
  16. You're giving Wasendorf too much credit. At least alive he can face trial.

    I doubt this is a basic accounting irregularity. It's pretty fucking hard to lose $220 running a small company.....money might have been stolen or purloined.

    PFG was never a 'reputable' company. MF was. For a time, MF Global was a VERY reputable company, doing 8.5 million lots per day average, #1 on CME, CBOT, NYMEX, COMEX and ICE.

    PFG mostly attracted small retail traders, which is unfortunate, because it looks like a bunch of their money is missing.

    When I think of PFG I think of that arse Phil Flynn, who churns accounts with POA yet somehow flies under the RADAR with NFA.

    Fuck those guys. We need some prosecutions already.
  17. Don't worry. Nobody on ET trades, so nobody here posting got an account at PFG
  18. As I have said before, I do not know why anybody touches futures.
  19. LOL, Mf was reputable "for a time", what the fuck does that mean? They were reputable as long as it took to accumulate enough money to make the executives rich and get away with screwing everyone else? A lot of companies were reputable at one time or another, and most likely PFG was also, even though they dealt with us pathetic retail traders. I've never had an account with them, but I have with IB and Advantage Futures. My guess either or both could screw me at any time.
    I am all for going after these clowns personal wealth after they screw the pooch. And all their families wealth, on top of jail terms in real federal prisons, no country club prisons. They should be just as subject to Bubba and his crew of ass raping queers as the guy who sells a couple of pounds of coke, maybe even more so. I bet alot of these pansy execs who are sold as tough guys, would change their tunes if they knew they would go to a real prison, and lose their wealth, and have their pansy kids end up in public schools.
    I'll never hold enough money at any firm that would cause me to be broke, or in a position of loss of ability to pay bills. Regardless if they steal my money I am going to take care of business.
  20. Chicago CTA, you are cracking me up. Who is reputable to you? Jpm? Goldman? Lehman? BOA? Schoenfeld?
  21. Huh? They run one of the largest FX bucketshops out there. LOL.

  22. Phil jumped ship to some no-name firm a month ago, must have known something was brewing.

    I'm embarrassed to say I was checking these guys out since they were advertising a competitive X_Trader pro monthly rate, fortunately I was too lazy to pick up the phone.
  23. This failure imo is more serious that the mfglobal fiasco.

    Mfglobal, while heavily leverged and poorly run, appeared to be in compliance with segregated account rules right until the very end, when they tried to do some last minute transfers.

    PFG appears to have simply falsified bank records for years, no better than your standard ponzi scheme. Shocking for a firm that is a member of finra, sipc, nfa.

    The regulatory agencies have repeatedly shown no ability to catch fraud before it happens.

    I've said it before and I'll say it again. Unless your money is at a large institution that has implicit government support and is deemed "too big to fail", its vulnerable to loss.
  24. No float and every Tom Dick and Harry want Rolls Royce service at 0.99 a round turn all in right

    ...the race to the bottom has ended and you win...the FCM took your money before you lost it.
  25. http://www.zerohedge.com/news/pfgbe...the+survival+rate+for+everyone+drops+to+zero)

    Remember when the entire segregated account fiasco was supposedly fixed in the aftermath of the November 2011 MF Global bankruptcy, and where regulators: the CFTC, the SEC, the CME, and anyone you asked, swore up and down this would never happen again? Turns out that 7 months later, the spirit of MFG has struck again, only this time with one letter switched: it is now known as PFG, as we suggested first 3 hours ago when we broke the story. From the just filed affidavit by Lauren Brinati who is working with the National Futures Association, which in turn has just filed notice prohibiting PFGBest from operating further, and freezing all of its accounts:

    On or about June 29, 2012 PFG reported to NFA that it had approximately $400 million in segregated funds, of which more than $225 million were purportedly on deposit at U.S. Bank
    On or about July 9, 2012, NFA received information indicating that PFG's Chairman may have falsified bank records
    On July 9, 2012, NFA made inquiry with US Bank and learned that rather than the $225 million that PFG had reported as being on deposit at US Bank just days earlier, PFG had only approximately $5 million on deposit at U.S. Bank.

    Translation: another $220 million segregated account pillage has just taken place, in the vein of none other than Jon Corzine and MF Global.

    The money has now officially vaporized.

    It is truly wonderful of the NFA to finally get involved, after PFG's clients have lost about 98% of their cash held with the firm.

    In other potential news, a rather prominent New York bank, recently closely associated with marine wildlife, may have just cut its Q2 losses by up to $220 million.

    And now for a moment of sarcasm, courtesy of Jack Pearson.

    PFGBEST’s goal during MF Global’s demise was to get MF Global customers their money back. fb.me/1tPLObJyL

    Is this our Jack Pearson? :)
  26. <iframe width="420" height="315" src="http://www.youtube.com/embed/IkJqKOb0ZhY" frameborder="0" allowfullscreen></iframe>

  27. I found the tweet in PFGBest's twitter feed & found it ironic & sent it to them & someone there must've gotten a chuckle out of it because they put it in the article.


    That youtube video link I posted a few pages back where it talks about a Character award they won was even better. ...in an irony sort of way. I'm surprised they didn't use that.

    note: I'm not laughing at the situation, far from it, I feel terrible for those with accounts there. I hope it all works out well for everyone involved. I have no account there. I saw the zerohedge initial article afterhours & was bored & dug around the net to see what I could find about them.
  28. Really, mean MFG wasn't the only one? Surely this won't happen to me.. .
  29. Does anyone see a link showing the number of customers they have? curious about how big a firm they are in the futures world. didn't they used to be at the traders expos?
  30. "In addition to his financial firm, Mr. Wasendorf founded several publications during his career, including SFO – Stocks, Futures and Options, the Official Advocate for Personal Investors, according to a biography on the firm’s website. He also serves on the FCM Advisory Committee of the National Futures Association."

  31. "Great Broker! Would recommend them. They've started TV Advertising which I think is always a sign of confidence from a broker looking for new wealth to manage. "

    That's what Beau Wolinsky wrote about them in the brokers review section just 3 months ago!
  32. Doh!

    Sorry Blowinski. Hope you didn't take that bet with Atticus...

    "Great Broker! Would recommend them. PFGBEST has great technology" - bwolinsky April 16, 2012 9:11 PM

    I am currently using Multicharts to trade at PFG Best, and until the MC8 64bit version there was a connectivity problem that was only corrected after the 64 bit was written.
    Between my e-signal feed for Multicharts, and the DOM I see in my account, the datafeed of pfg best appears to lag up to 0.2 seconds which was worst case latency estimations when I called to ask about this.

    I place my orders automatically in a lead account, and those orders get filled at the average price with my autotrading accounts at 1:1 size and 3 units.

    They have helped me especially create a repoirte with an important business partner, and that's my broker's experience with CTA's at that firm.

    My broker has made sure that I was always in front of a crowd when I was trading for my CTA, and I've really appreciated the show of support.

    My commission rates are around $6/rt, and I've considered that to be the basement for beginning traders. Right now I've had a great experience since March 9th 2012 after moving to MC8 64 bit. The connectivity problems were gone after that upgrade eliminated the issue, but since a 64 bit database is not compatible with a 32 bit database I find I'm still using MC7.4.4906 to do my optimizations since the 64 bit version is missing data because the databases aren't compatible.

    As this relates to pfgbest, I have noticed no lag time with my trading station, and I think if you're into automated trading look into these guys and see what they have to offer, because I've had no technical problems aside from updates that have sometimes come out with bad betas but they usually take care of this problem promptly, and if you've seen doms I find it useful in anticipating price, but I have noticed a 1-3 second lag between DOM on PFG Best and E-signal through Multicharts when it comes to bids and offers and size.

    I think PFGBest is an amazing broker, and has great technology. Ever since March 9th 2012 I've been happy with the way things are working with them, because it wasn't like I didn't have models that couldn't work, it was that the machine I was using had buggy software between the handshake at Multicharts and PFGBest. They resolved this with 64 bit, and created a bandaid called Stunnel.exe for 32 bit 7.4 users.

    I've found their technology has done everything I asked it to do. I've had a great experience autotrading with them, and have had no connectivity problems since the 64 bit MC8 beta.

    While I'm disappointed in the incompatible database issue Multicharts always allows you to revert to a previous version, and I'm hoping to work with them to see about loading my databases onto their computers so they can solve the database compatibility issues that aren't relevant to PFG Best's connectivity now, but they were the only thing from a perfect experience in reliability and the lag I noticed in their quote updates compared to my e-signal feeds in Multicharts.

    Great Broker! Would recommend them. They've started TV Advertising which I think is always a sign of confidence from a broker looking for new wealth to manage.

  33. don't keep all your eggs in one basket. Just enough to cover margins :)
  34. It appears that the Robbins World Cup that Beau was talking up as a means to prove his systems has been taken offline as well. PFG appears to have been the sponsor, so I'd assume that they were the executing broker for the various advisors that were listed in the competition.

    Maybe someone can clear it up...
  35. You don't seem to catch the nuance that before Corzine took over and screwed up what was then a 'medium-sized commodity firm' MF Global was a major presence in listed futures. Spun off from London's Man Group, the company enjoyed a strong reputation as an independent broker.

    Whom do I like? I think the following clearing firms are good:

    ADM Investor Services
    Advantage Futures
    Dorman Trading
    Rosenthal Collins Group
    Knight might even be worth checking out; formerly Penson, now they're back by some real dough...might become a good firm.

    How about you? Whom do you trust?
  36. Q -- where did the largest loss of seg funds occur?

    A -- Lehman's London operation ... around three billion US.

    Segregation works just fine if the money is there. The problem is it is not always in the seg account when the bust happens. I'm not sure why people equate segregation with safety. It only segregates your funds in the bankruptcy and even then only if it has not been stolen, speculated with or, as at Lehman, improperly segregated. About three billion was lost because of sloppy segregation ... not even fraud.

    Counter party risk is real and there are lots of ways to get bitten in the ass.
  37. Robbins Trading has been a division of PFG for several years now... they sold to PFG some time ago.

    People often ask me why I demand day-trade margin in my trading accounts, why I would never trade thru any IB that doesn't offer $500 for eminis or $1000 for CL intraday margins.

    This is exactly why. I want the least possible capital working inside any brokerage account to handle trade size. Non-trading morons like emg with his $100,000 per one (1) ES contract nonsense is just false rhetoric that plants the wrong seed inside impressionable minds.

    I clear mainly thru Dorman and have no reason to think they are anything other than rock-solid... but I've seen enough in my 12 years at this game to want minimum possible cash exposed for leveraged use.
  38. I have always felt exactly the same way. Why wouldn't I have the bulk of my funds FDIC and/or SIPC insured rather than subject to the vagaries of segregation?

    if you want to trade ES in 10 lots give 'em six grand ... ok, seven if you're a sport but to leave them $20,000 or worse yet $30,000 is simply a speculation without an upside.

  39. Totalled. $5MM remaining. Word is that Wassendorf blew most if it in short index calls and short wheat. What a degen. I hope he goes asystole.
  40. Website remains: http://www.robbinstrading.com/world_cup_championship/
  41. About a month ago I found a dusty cache of SFO magazine, which was heavily sponsored by PFG. His face was on the back of every mag. The content was insipid and useless and I tossed the sub long ago, but still had some old ones lying around.

    I remember thinking, this guy looks like a real sleazeball. Pomade hair, corny smile, wedding ring prominently posed for every picture, and some description of how he started his business from his basement. Offering what every trader wants -- streamlined funds transfer.

    Anyone who puts his own face on every ad with a pose trying to declare I Am Honest usually ends up the opposite.
  42. +1

    NT multi-broker license and multiple brokers/clearing firms = peace of mind.
  43. hopefully he puts all his capital in this 'amazing' broker.
  44. SFO was owned by PFG.
  46. http://abcnews.go.com/US/wireStory/...-missing-iowa-brokerage-16744763#.T_u36_WDmSo

    By MICHAEL A. LEE AP Business Writer
    CHICAGO July 10, 2012 (AP)

    A regulatory group says it can't account for $220 million in customer funds at Iowa-based brokerage Peregrine Financial Group and has ordered the company's accounts frozen.

    In a statement to clients, PFG explained the action being taken by the National Futures Association. It also said its founder and chairman, Russell Wasendorf Sr., attempted suicide earlier Monday.

    PGF officials didn't return email and phone messages from The Associated Press.

    Attain Capital spokeswoman Lauren Nelson says her company has a "substantial amount" of business with PFG and is assessing its accounts. Nelson provided the PFB statement to the AP.

    The National Futures Association, which serves a self-regulatory role for the industry, says it received information that PFG may have falsified bank records and had about $5 million of $225 million it claimed.
  47. http://www.elitetrader.com/br/?action=view&R_FirmID=194

    PFG review on Elite Trader

    found Bwolinsky's review..... I wonder if he thinks it's still great and would recommend it.

    "Great Broker! Would recommend them. PFGBEST has great technology" - bwolinsky April 16, 2012 9:11 PM

    I am currently using Multicharts to trade at PFG Best, and until the MC8 64bit version there was a connectivity problem that was only corrected after the 64 bit was written.

    Between my e-signal feed for Multicharts, and the DOM I see in my account, the datafeed of pfg best appears to lag up to 0.2 seconds which was worst case latency estimations when I called to ask about this.

    I place my orders automatically in a lead account, and those orders get filled at the average price with my autotrading accounts at 1:1 size and 3 units.

    They have helped me especially create a repoirte with an important business partner, and that's my broker's experience with CTA's at that firm.

    My broker has made sure that I was always in front of a crowd when I was trading for my CTA, and I've really appreciated the show of support.

    My commission rates are around $6/rt, and I've considered that to be the basement for beginning traders. Right now I've had a great experience since March 9th 2012 after moving to MC8 64 bit. The connectivity problems were gone after that upgrade eliminated the issue, but since a 64 bit database is not compatible with a 32 bit database I find I'm still using MC7.4.4906 to do my optimizations since the 64 bit version is missing data because the databases aren't compatible.

    As this relates to pfgbest, I have noticed no lag time with my trading station, and I think if you're into automated trading look into these guys and see what they have to offer, because I've had no technical problems aside from updates that have sometimes come out with bad betas but they usually take care of this problem promptly, and if you've seen doms I find it useful in anticipating price, but I have noticed a 1-3 second lag between DOM on PFG Best and E-signal through Multicharts when it comes to bids and offers and size.

    I think PFGBest is an amazing broker, and has great technology. Ever since March 9th 2012 I've been happy with the way things are working with them, because it wasn't like I didn't have models that couldn't work, it was that the machine I was using had buggy software between the handshake at Multicharts and PFGBest. They resolved this with 64 bit, and created a bandaid called Stunnel.exe for 32 bit 7.4 users.

    I've found their technology has done everything I asked it to do. I've had a great experience autotrading with them, and have had no connectivity problems since the 64 bit MC8 beta.

    While I'm disappointed in the incompatible database issue Multicharts always allows you to revert to a previous version, and I'm hoping to work with them to see about loading my databases onto their computers so they can solve the database compatibility issues that aren't relevant to PFG Best's connectivity now, but they were the only thing from a perfect experience in reliability and the lag I noticed in their quote updates compared to my e-signal feeds in Multicharts.

    Great Broker! Would recommend them. They've started TV Advertising which I think is always a sign of confidence from a broker looking for new wealth to manage.
  48. What's the effect on the SnP futures tomorrow? None?
  49. Yup, these regulatory firms are a friggin joke. SEC, CFTC, NFA. Some real stupid idiots inside those places.
  50. I got as far as Metatrader 4.

    Nuff said.

    If you do get smart enuf to stay away from futures, you still need to be smart enuf to know what NOT to get involved with in FX.
  51. A 0.05% reduction in futures market liquidity or something unnoticeable like that...

    Besides that... Nothing else.

  52. when they go after your ass you would no longer consider them to be "real stupid idiots." truly wasteful remarks are those that call other people/ organizations derogatory names.
  53. So what's left? IB? Are all the retail futures traders going to end up at IB?
  54. The owner may have been a crook but SFO wasn't such a bad magazine for general market related info. They had some decent interviews with leaders in the industries. That said, I got it for free and DEFINITELY wouldn't have paid for a subscription.

    His face plastered all over the magazine was irritating. Now knowing that PFGBest owned the magazine, I can see why.

  55. While I was exaggerating for effect I believe most profitable day traders with a $500 margin requirement have little need to keep more $1,000 per ES contract in an account. It has nothing to do with what a big account is or what is a small account but rather, as you have pointed out, what is sufficient. Putting capital at risk makes sense as long as you do not risk more than you need to.


  56. Is there anything in place since the MFglobal scam that will potentially make these retail traders whole at some point ??
  57. What a nightmare. I really hope the traders affected by this eventually get their money back.

  58. The Fed's zero interest rate policy is not stimulating the economy, it is screwing savers, and it seems to be, at least in the case of MF Global, causing FCM's to take on new risks in order to generate revenue.
  59. You're one of the few people to notice this...it's as if no one understands that there is a real dark side to this perpetual ZIRP b.s.
  60. This is why I stick to equity markets and have multiple brokerage accounts to stay under SIPC limits.

    You can't trust these people. I would not touch a futures account.
  61. How about just raising commissions? I don't understand why there isn't a really simple requirement: no customer fund commingling. Period. It works for equity accounts, should also apply to futures.
  62. Ron, far far more FX bucketshops have gone under then FCMs. Do you want me to start posting them? There are probably 5 a month that get shut down. FX bucketshops are the least safe place for your money. Of course you already knew that. You were just trying to add negative value again to the convo. LOL.
  63. I got what you were saying. My point is unless something is obvious when a new chump takes over the firm you thought was good, and safe, things can turn and everyone, but the clowns cleaning up are the last to know. MF, Madoff, you name it, they all took some big time players through a world of financial pain, not just the retail guy. All those smart, in the know people didn't figure it out.
    I mentioned Advantage in my post, and IB as I can sweep my cash to an insured account. Again, at any point some idiot at any of these firms could do something stupid, and there goes the firm and my money. To be honest I cleared through RCG I think 15 years ago, and I spent time every week calling to get statements corrected. They had positions wrong, money wrong, etc. I was always able to have it corrected, but I closed up and swore to never go back. Then again, I swore I'd never open with IB again, and I have an account there now. So far so good, and the people I worked with opening the account were fantastic. One of which responds on ET.
    My Dad use to tell me stories about companies he worked with as a lawyer. The nicest, smartest, well off, church going guys were sadly just as likely to step over the line for money as everyone else. Some as a result of a bad decision that should have just been a bad decision, but they got scared, as it was their responsibilty to always be right they thought, and they would double down so to speak. As usually happens it would fail even bigger, and everyone else paid. They would get fired, but still have all their pay and bonuses and perks, but the little guys got laid off, or let go.
    This crap isn't unique to equities, or futures brokers, hedgies, etc.
  64. the same for ANY government organisation anywhere. look at europe!
  65. Interesting, Advantage is actually fairly far down the list. Thanks
  66. I remember in 2005/2006 that Ken Wood was pushing his cult crew over to get PFG accounts, in part, to autotrade his losing system (and who knows what kind of financial kickbacks for himself), acting like he was best buds with the owner. At the time, I thought, "well, that's one broker I definitely need to avoid".
  67. Those ATLAS ratings are truly laughable. I bet nobody who works for that firm has ever traded a single lot.

    Would you really open up an account with INTEGRATED BROKERAGE SERVICES and Frank Lesh, a convicted embezzler before using Crossland, LLC out of the Chicago Board of Trade building?!?

    ....ANd good luck opening up an account at BOCI or "Stephens, Inc."

    What a joke.

    And IRONBEAM over Advantage?!!

    ADM is in the middle? They have $4 BILLION in *net* revenue; $42 BILLION in total assets and are predominantly a COMMODITIES PROCESSING COMPANY with physical, producing assets all over the world, especially here in the US.
  68. It was/is a FREE magazine, essentially a slick marketing device to hook people into trading (with PFG of course). Cheap bathroom reading.

    Bodybuilding magazines do the same thing: own supplement companies and then promote their products within. M&F, Flex, MD.

    Is it no wonder that traders are often bodybuilders--a lot in common.
  69. Holder should get thrown under the jail, in a special dungeon with Corzine and Madoff. Not that it will happen, though...
  70. RCG and Crossland at the bottom? Does someone understand how they compile their rating?
  71. What does having trading experience have to do with analyzing the financial and fiscal data of various business entities? :confused:

    I'm a very experienced trader, yet I couldn't tell you jack about the inner workings of a given FCM.

    And it should be pointed out that Atlas had rated PFG in their bottom 5 before they blew up. So obviously their analysis methodology isn't too shabby.
  72. Its a shame he didnt succeed. Fucking crook.
  73. It's a shame that Corzine didn't try.
    Still there is time. We live in hope. Maybe someone can help him.
    Get these two together for a game of russian roulette.
  74. But with 6 bullets.
  75. So what are the next Futures Brokers that will be going down.
  76. Dissolve all financial "regulatory" agencies: SEC, FINRA, NFA, CFTC.

    They just give people a false sense of security that the government is there to protect your money.

    They don't protect anything. Madoff, R. Allen Stanford, MF Global...all flew under the radar. Just like the police, they can only come in afterward to prosecute.

    People need to realize all of these investment firms are private companies answering only to their investors and managers. Some are honest, some are not. You invest or trade at your own risk, just like with any other business.
  77. This is like the 1970s again. Crappy volatile markets for retail investors, brokerage firms blowing up, missing securities,etc..

    Like Hayden Stone etc.. days.
  78. LOL!
  79. I was thinking along the same lines. I don't have time now to look through their criteria, but something seems odd.
  80. Why were they blowing up in the 70s? Surely not low rates on float?? :confused:
  81. After the 70s came the 80s and 90s ...
  82. Link?
  83. hahaha...:D :D :D
  84. There is no oversight anymore, at least none that can be trusted. We're now in an era where financial statements, earnings reports and statements of financial condition can be and are falsified and the regulators are either incompetent or in collusion with those they are meant to regulate.

    At this point, the only thing anyone who chooses to continue to participate in the financial markets can do is to take a gamble that the broker they have their money with isn't one of the bad ones. But understand that we are ALL gambling with our money now, just by having it sit in account with with ANY broker anymore, because no one truly knows anymore. Truly we are in the moment in time where return OF your capital is far more important than return ON your capital.

    Good luck to all.
  85. Friends who use them tell me they are well run but AMP is self clearing with low capital, runs a rapidly growing shop with lots of IB's, low margins and small accounts. On the plus side they say they do not trade their capital. I do not mention them to knock them ... as I said they seem to run a solid business and there model seems successful. I mention them to illustrate some of the things you look for as you do further analysis.

    Amp as an example seems ideal for a guy with limited capital trading a one or even a two lot posting a couple of thousand to start. And as Mav points out a much better shot that some currency scum bucket shop. It bears pointing out that in most cases even if a firm gets in trouble segregation does get you out whole. I think in this current case segregation probably will not matter. The money has to be there for you to get it and it sounds like it has already put on its hat, coat and gloves and waved goodbye.

    Counter party risk matters. When my partner and I had three small firms -- one in NYC, one in London and a tiny presence in Lugano, Switzerland -- we looked at our counter part risk every day. You need to know who owes you money and not count on a concept like seg funds but on a balance sheet or insurance (FDIC, SIPC etc.) that you have faith in. Risk matters!!

    BTW ... just to be clear, given there very low margin requirements i would not hesitate to put a small sum -- $5,000 or $10,000 -- with AMP and trade 5 or 10 lots through them. I just would not post $50,000 against a small balance sheet. Where is the edge?

  86. Off-topic, but this needs to be corrected. If you are starting to trade with 1000-2000 USD, you better start with FX. Something like OandA is a perfect choice. You can trade any size, compared to futures where minimum you can go is an emini. So you are not over-leveraged and risk of ruin can be easily minimized.
  87. not a peep from BoWo, I am actually concerned, Bowo are you out there?
  88. From what I read, PFG was supplying allegedly accurate bank data to the NFA. Why would the NFA allow members to self-report on their current bank assets in customer accounts? Shouldn't the bank supply that directly to the NFA? If I'm reading that right, this is a gaping hole in the reporting process.
  89. I almost opened an account with them! :mad:
  90. AMP is not a clearing firm. They are a nonclearing FCM.

  91. looks like he's done for
  92. this business is filled with crooks no doubt, fear and greed!
  93. They were watching porn with the SEC.

    300 mil is alot of hookers and blow. Hope the dude had fun.

    Since this turd is not connected like John C. I wonder how long before Obum-a makes an object lesson out of this.
  94. This is yet another example of government oversight being such an illusion.

    The CFTC actually got a budget increase for FY 2011 - up to $203M.

    The undeniable fact of the matter is that if the government auditors had simply double-checked the accounting figures directly with the FCM's bank, then the damage wrought by MF and PFG would have certainly been considerably less.

    It seems that the CFTC auditors take the FCMs word at face value for account balances without ever checking directly with the bank supposedly holding the FCM funds.

    Yep, bigger government is the answer.
  95. Word is he was in the car with Wassendorf....and he was naked. Ewww....
  96. LOL:D
  97. Which was the last equity broker to have this sort of problem? This only happens to the brokers without any federal guarantee. Not saying gov't should backstop futures brokers, but it's too flip to say that tighter regulation might not have helped the futures merchants and more importantly the customers.
  98. Now the word is that the RW pushed the money offshore into some RE-development that was failing. I don't think the CME is going to be picking up this check...
  99. I think the feds should absolutely back-stop FCMs as is done with equities. Obviously the only method is to actually LOOK at the books forensically. HTF did this Wasendorf clown get by with $5MM in the box for this long?
  100. Was PFG and exchange guaranteed broker like Vision? If that was the case doesn't the exchange have to make all customers whole regardless or reason?
  101. This is my key takeaway as well. With all of the ability to toss data around these days, how they could have missed requiring the banks to supply that data directly is beyond me. Obviously, whatever costs the banks incur would ultimately be passed on to the account holders, but who cares? That's a cost I'd be glad to help defray if it means more objective reporting of bank assets.
  102. Nope, swing and a miss. How about the freaking regulators not taking account balances at face value from the entities supposedly being regulated ? How is it that a government bureaucracy with a $200M annual budget cannot verify with the bank supposedly holding the segregated funds what the FCM claims in its' regulatory filings ? How fundamentally simple is that...

    Why should we insure something as taxpayers when the smarter, more efficient, more honest way of doing things correctly is for a government auditor to actually do their jobs correctly in the first place ? Why should taxpayers subsidize more government incompetence when you have a $120K per year government accountant with a ridiculous pension and benefits plan that is too lazy or inept to check the FCM's figures against the bank account balance ?
  103. Exactly! How MANY auditors does it take to simply verify the balances directly with the bank holding the customer segregated funds? If the guy assigned to this particular FCM is too incompetent to do the job, then hiring 5 more guys that are just as incompetent doesn't solve a f'ing thing.

    We have the rules and regulations to prevent this sort of stuff, but it sure as hell doesn't seem that we have the personnel to implement it. Sounds alot like many other sectors of this economy, to be honest...
  104. Honestly, that sounds like something a guy could get away with in 1982, not 2012. Truly pathetic that such a shoddy scam could cause another major blow to the industry.
  105. Doesn't the bank have an address."Wasendorf had set up a post office box in Cedar Falls, Iowa, according to a second person involved in the matter. It was to that post office box that NFA sent the documents, which were addressed to the bank." We're living in a cartoon. Un freaking believable.
  106. This is my key takeaway as well. With all of the ability to toss data around these days, how they could have missed requiring the banks to supply that data directly is beyond me. Obviously, whatever costs the banks incur would ultimately be passed on to the account holders, but who cares? That's a cost I'd be glad to help defray if it means more objective reporting of bank assets. [/QUOTE]

    The answer is below:


    The source offered new details on how Wasendorf allegedly carried out the deceit, which involved the forging of confidential documents that the NFA uses to verify a broker's cash balance with its depository institution.

    Wasendorf intercepted these documents after they were mailed by the NFA, the broker's first-line regulator, to U.S. Bank, where PFGBest had said it had well over $200 million on deposit, the person said. The NFA has said the account actually held just $5 million this week.

    Wasendorf had set up a post office box in Cedar Falls, Iowa, according to a second person involved in the matter. It was to that post office box that NFA sent the documents, which were addressed to the bank.

    The post office box was neither in Wasendorf's name nor registered to the bank, the second person said.

    Wasendorf then forged signatures and fabricated bank balances on the documents and simply mailed them back to the Chicago-based NFA, the person said.
  107. If true this more than warrants an investigation of the NFA.
  108. Looks like the verification of the physical mailing address was the point where the process broke down.

    Not sure how the NFA could have known that address was fake. Still, they should have gamed out scenarios whereby fraud could occur and flagged that step of the confirmation process. The guy was clearly a motivated criminal taking advantage of a process loophole.
  109. What do you investigate them for? Not being able to anticipate how someone could use a process loophole to commit fraud?

    I suppose that is some kind of negligence, but other than fixing it after the fact (it appears they were in the midst of fixing it with the electronic confirmations), what can be done? Hundreds of other companies used the same process and didn't commit fraud (it would appear), so can you really blame the process?

    I'm not defending the NFA, although I'm sure their defense would start off with a statement along these lines.
  110. The only way the NFA could have sent the documents addressed to the bank to a PO box that had nothing to do with the bank is for someone involved in the fraud to have provided them the address.

    The dummy PO box was most certainly not listed on the banks website. Doesn't reasonable due diligence require that the NFA get the bank's address either directly or from the banks website?

    And if the official arrangement was for all said documents to be channeled to the bank via PFG, that violates one of the most basic rules of verification.

    Any way you look at it, it stinks.

    If it is true, of course.
  111. The question is what happened to the ~ $200M how and where did it get siphoned off to?

    and how many more crooked CEO's are out there?
  112. There probably should have been a step to verify with the banks. BUT, if the NFA member is providing the NFA the bank's contact information, there is still the opportunity to provide a fraudulent contact. If I tell the NFA to call so-and-so to verify the bank address and that person is in on the fraud, how would the NFA know?

    A big bank like U.S. Bank isn't going to have every address on its website, either, so I'm not sure you could necessarily verify it that way.

    Definitely agree with you that if they were sending docs to PFG to send to the bank, that's ridiculously flawed.
  113. Google "U.S. bank cedar falls Iowa" and you will see a listing that gives all 6 locations.

    Perhaps auditors work differently in the States. My experience across Asia is that external auditors will ask that the authorised signatories for bank accounts sign and stamp a standard authorisation letter requesting the bank release account details to the auditors. The auditors then deal directly with the banks.

    Account numbers and bank branch details are obtained by the auditors from the bank statements and correspondence at the audit location

    This is in 3rd world and developing countries of course. Developed countries may do things differently.
  114. +1
  115. How is it that the auditing accountants at the CME, ICE, NYSE-Euronext, Eurex, etc. etc. [ ie, all of the futures exchanges who audit their FCMs and General Clearing Members routinely as a condition for Membership ]; the auditing accountants at the CFTC [ the ultimate authority who is charged with enforcing the law ]; and the auditing accountants at the NFA [ the industry's self regulator authority ] - all missed speaking with the custodial bank directly and independent of the regulated entity...

    Is this a chronic disease that Accountants just take the regulated entity's word that the money is there ? WTF ?

    Again, what is so difficult about contacting the custodial bank directly ? Is it beneath the level of a Certified Public Accountant to actually do the physical verification ?

    Problem Identified: Accountants are lazy dolts not to be trusted when it comes to verification.
  116. Yes, we get it...and that's why I said this is the type of crime that I could see happening 20-30 years ago as oppossed to the present time. How in the hell the NFA, CFTC doesn't electronically verify the funds is beyond me. There is absolutely no reason for this go-between at the P.O. Box; in fact it adds costs to the process of auditing these FCM's.

    The altering of account statements/bank statements is something umpteen hedge funds have been caught doing which has led to billions of dollars lost in client assets. The regulators are put in place to act as an objective third party and to verify that the funds are where they are supposed to be and the totals check out. Directly to the banks website is obviously best practice...as evidenced also by the fact that this whole sham didn't unravel until the auditors finally wised up and demanded an electronic verification.

    So why exactly are we arguing about this again?
  117. When I come across stories like this, I try to anticipate what a defense lawyer would say if it came to pass that there was a trial or some type of liability hearing.

    That said, I'm not arguing on behalf of the NFA or auditors except to the extent that they can say:

    1. No verification process is flawless and each additional layer of verification increases costs for decreasing marginal benefit

    2. 99.9% (or whatever) of customer assets are where the FCM's claim they are

    From the story, it wasn't clear what the NFA knew about the P.O. Box. I would speculate that the person responsible for the sending of those documents just saw a P.O. Box and figured it was the right place to send them or the PFG CEO submitted the address documentation as if the P.O. Box was the bank's. Yes, that's wrong, but when you haven't had a problem with this kind of fraud in the past, it just doesn't register that someone would do that. Obviously, if this kind of interception of documents meant for the bank holding the segregated accounts has happened before and the process was the same, it's even worse.

    I definitely feel bad for those impacted. I know that I would be freaking out right now if I were an account holder there. But, like I said, I just try to figure out how someone on the other side of the table would try to defend themselves.
  118. Those are valid points, but I have to disagree with your claim that there would be additional costs in the process of e-verification. In fact, I think that the NFA/CFTC made a mis-step when they revealed that this entire fraud was unconvered as a result of demanding an e-verification...It almost sounded as if this was standard practice for other FCM's and that the Principal of the firm oppossed it, for obvious reasons, because it would reveal the siphoning of the customer funds.

    It's just hard for me to believe that the regulators would just be "getting around to" e-verification in the middle of 2012. This is something that should have been implemented at least 10 years ago.
  119. Well said. Re: PFG, Corzine, Madoff, wtf is wrong with these people

  120. It would require every bank in the country to implement e-verification for Auditors.
    How long have the banks provided this service?
    Was a law ever passed to force every bank in the country to provide this facility. If so when? If not then im sure lots of banks dont even allow it yet.
  121. How many FCM's have you seen that use some community thrift or credit union to hold customer segregated funds?

    The banks that hold these funds are the biggest in the country...
  122. The fact is the heart of the audit process is that the CPA contacts financial and other institutions directly and receives written verification of funds/assets under their custody. While verifying liabilities can be tricky -- sometimes they just do not appear on the books of a company -- not verifying the accuracy of financial assets on deposit with a bank is simply absurd.

    Assuming a firm audited PFG's statements -- and that may not be the case -- if you lost money here think class action against the accountants. Confirming bank balances is audit 101. It is truly impossible to screw up. That's why Madoff used a tiny firm that he kept stored in his pocket. They were part of the fraud.

  123. Who are PFG's accountant/auditors? wouldnt surprise me if they are another small shady outfit in the back pocket of the CEO.
  124. I agree. I have to wonder what the NFA has been spending its budget on while e-verification sat on the back burner.
  125. This. The entire "industry" - from brokerage to regulator, is neck-deep in fraud. Somebody tell me the CFTC couldn't directly check account balances at a FCM's bank. It's bullshit.
  126. This. The whole thing is criminal. The CFTC is filled with criminals!
  127. More likely they just incompetent, jerking off to Porn all day like their buddies at the SEC.
  128. I believe they must be clearers to be guaranteed.
  129. No futures broker is guaranteed by the exchange.

    Where did you get this bad information from?
  130. Probably the same Nigerian helping out Blue Turtle :D

  131. Glad I'm not the only guy with a bullshit detector.

    Look, if a Government Regulator accepts a fucking "PO BOX" as an acceptable address to send crucial regulatory documents - like requests for bank statements - and neither confirms that PO BOX is owned by the bank (..a fucking PO BOX!!!), nor confirms the veracity of those statements over the phone (or fax!), this has scam written all over it. How exactly was the "PO BOX" address provided to the NFA? Obviously, it wasn't provided by US Bank! So what, did the NFA ask Rumpelstiltskin what address they should send the bank documents, too? What are we, in grade fucking 2!?? Last time I checked, every bank account is tied to a specific branch number and transit ID, whereupon a 3 mins search on US banks' website, will give you the exact mailing address, phone number, and fax, to call in to that branch location!! Any one remember funding their brokerage account here??? RrrrrrrringRrrrrrrinng. Hi! This the NFA. One of your largest fucking customers claims to have a quarter of a billion on deposit with you, in segregated accounts. They only have 5 million? Okay, thanks. BYE.

    No, that would be too complicated. Much easier to *mail* the documents to a strange, unlisted PO BOX, instead.....Seriously...And I'm supposed to believe a crew of CPA's who passed the CPA exam, can't figure this out? This is a scam....

    This is reminiscent of Madoff who single-handedly forged TENS OF MILLIONS of order tickets, customer and bank account statements, himself!! God knows how he "cleared" all those false trades and reconciled it under the watchful noses of his accountants and regulators who were surely pouring over his books, every quarter, as "per regulation"...?!??! The scariest part about all this is, nobody bats an eye. Nobody has the slightest inkling that none of this shit adds up, in the slightest. The good 'ol SEC is on the case! :D
  132. As I said, this whole thing stinks.

    I do not have an account with PFG, but if I did, I would most certainly look into filing a complaint against the various Regulators and the Futures Exchanges involved with PFG.

    From the NFA website - http://www.nfa.futures.org/nfamanual/NFAManual.aspx?RuleID=1003&Section=1



    Financial Requirements.

    One of the principal functions of NFA is to establish, audit and enforce minimum financial requirements for its FCM, FDM and IB Members and to receive and analyze financial reports from those Members. No such requirements currently are established under NFA rules for other Members of NFA, such as CPOs and CTAs. Under the Joint Audit Agreement, executed between NFA and the various exchanges, the futures exchanges are responsible for financial compliance for exchange-member FCMs, although at the request of an exchange NFA may perform those functions for such FCMs.
    End Quote.

    Surely ensuring compliance with the various sections stipulating segregated customer funds means not just looking at it on reports submitted by the FCM but independently verifying the funds are actually where they are supposed to be.

    Up to the time of the MFG fiasco, I was being actively solicited by a Lind-Waldock broker to open an account with them. Fortunately, I had not taken that step. As I see it, with MFG and PFG, that makes 2 bullets that have missed me. How much more needs to happen before the folks in authority do something about this mess?
  133. If you want to open a futures trading account with the $2,000 minimum, you need to fill out a dozen-paged agreement, provide a picture license or passport for proof of id and under no circumstances fund with third-party checks where name on check does not match exactly the name on account.

    Three years ago the NFA sent two agents from NYC to my house which is a four-hour drive just to verify it's a real address, I'm a real person and it's safe for me to manage friends & family retail accounts. Two guys, four-plus hour drive to physically verify I am who I hold myself out to be.

    Yet this guy could transact nine-figure account bank statements thru a PO Box in a state hundreds of miles from where the company physically resides?

    Someone(s), somewhere was getting paid. That ain't a one-man show from end to end. How could it be?
  134. Did he die?
  135. Some questions/points I would ask are as follows:

    1) Who were PFG’s auditors? Did they not verify the balances either?

    2) While many of these FCM’s are private, should it be required that they have audits performed by reputable third party auditors which are in turn made available to clients?

    3) Who else at PFG was aware of this scheme? Surely somebody in Operations, Accounting, Finance would have been in daily correspondence with U.S. bank considering over half of the clients funds where there to the tune of $200M plus. Are you telling me these statements were hand provided to the group by Wassendorf himself?

    4) What type of work did anybody doing business with PFG ask? As a client you have the right to ask to confirm balances yourself. I would not expect a retail client to do this, but I would expect an IB, CTA, CPO, etc, to do their own proper due diligence. There entites out there claiming they did due diligence obviously they do not know how to perform due diligence either as they would have pressed for confirmations.

    Are the Regulators to Blame? The simply answer is no. I think it is really easy to blame the regulatory agencies in this situation. Nobody ever wants regulation and when a fraud happens it is said the regulators did not do their job accurately. What about the frauds they do detect, what about the fines they do hand out? Often times they don’t get credit where it is due, but fall on the sword when things go wrong. In a world where a firm can operate in accordance with regulations one day, become fraudulent the next and when the masses complain about any form of regulation I find it tough to throw mud.

    So what is the solution to the Seg Problem? My suggestion would be that on a daily basis not only does every FCM have to report their daily seg number to the NFA, but their custodian banks also need to independently report the daily account balance to the NFA. Obviously this needs to be done electronically with a full automated reconciliation performed daily between the two. Sound simple right? How many FCM’s are there? How many bank/custodian accounts do FCM’s have? Do all FCM’s only invest custom assets in cash? What about cash equivalent’s? Do all banks have the means to deliver a file electronically in a secure manner? This solution is achievable, but it does not happen overnight.
  136. http://www.nfa.futures.org/NFA-investor-information/PFG.HTML

    Russ Wasendorf Sr., the founder and CEO of PFGBest, reportedly attempted to commit suicide this morning outside the corporate headquarters in rural Cedar Falls, company officials confirmed Monday afternoon.

    Please make another attempt! but make sure you die this time :mad:

    On July 9, 2012, NFA made inquiry with U.S. Bank and learned that rather than the $225 million in customer segregated funds that PFG had reported to NFA as being on deposit at U.S. Bank just days earlier, PFG had only approximately $5 million on deposit at U.S. Bank. NFA also learned that, in contrast to purported bank confirmations submitted to NFA that sought to confirm U.S. Bank account balances as of February 2010 and March 2011, that reported balances of approximately $207 million and $218 million, respectively, PFG's actual balances at U.S. Bank at those times were less than $10 million for each one of these months.
  137. So, I guess NFA will require $100k minimum to day trade futures from now on? This will be to protect the traders... from themselves of course... :(
  138. I have a MANAGED trading account cleared through PFG. Thank god I did not give them more. Where do I start to see if my money exists. I am Canadian and I sure am getting sick and tired of hearing Americans cannot get their regulatory systems in order. Does anyone have any brains down there other than the criminals? You sure look like a bunch of dumb lazy fat clowns to me and the rest of the world one again.
    I expect to possibly lose some money investing but this is simply assinine and rediculous in 2012. You guys are hopeless. Yes I'm am pissed beyond belief. And you deserve it.

    And to the clowns on this thread that keep repeating that futures are risky. You need to do us all a favor and jump off a bridge right now for saying this. This is not about
    Futures trading losses you dummies. This is about incompetence and stupidity. Your country is going down the tubes without touching sides because of ignorance and lack of foresight. Calling a spade a spade. Wake up.
  139. Please send this message to Odumbo, US Congress, and Financial Regulatory Agencies...
  140. do birds fly? do fish swim?
  141. Then don't place money with american broker or trade american markets, a*shole...

    You didn't do your due diligence. You don't understand how the business works. You want to play in our markets. So stfu.

  142. If you had your account through their Canadian subsidiary it sounds like you'll be ok because those funds appear to be intact. If your account was opened though the US operation and your funds were held at U.S. Bank, it *sounds* like at least 50% loss and a bankruptcy claim is the only way to start getting some of that back.

    I totally agree with you about the American regulatory fucked up system. I read an article this morning on Reuters that the NFA was ASKING Wasendorf if it would be ok that they be "allowed" to start checking account balances electronically. Can you believe that, the regulator is asking the firm being audited if it would be ok to do more thorough examinations!!!Either this is a huge conspiracy or massive *massive* incompetence on the part of the regulators, no other explanation is possible.

    From Reuters:

    The scheme apparently began to unravel after the NFA began to press Wasendorf, who was an early advocate of electronic trading, to allow the regulator to confirm balances electronically and directly with the bank, rather than in a hard copy via mail, the person said.

    NFA "started getting suspicious. He was resisting this new way of confirming the balance," the source said.

  143. Well, of course the National Fraudsters Association wants more of your money in their bank accounts. Why else would they ban the use of overseas brokers and lower the leverage offered.

    How long is this self-regulation fiasco going to be tolerated?
  144. Sorry to hear about your troubles. But I suspect this wasn't about being "dumb" or "lazy". The problem here is the entire financial system is corrupt to the core, and that includes the regulators. Cronyism is rampant, and the foxes are guarding the henhouse.

    And yes, trust me when I tell you that many of us Americans are just as frustrated and pissed about it as you are. We don't know if our money is safe either. Unfortunately, all the politicians and bureaucrats are corrupt as well, so I suspect nothing is going to change until we get a true collapse and/or revolution. Strap in, it's not over yet.
  145. Stop being an ignoramus. Far more American investors have gotten hurt in this than foreign ones. Should we Americans stop trading American markets as well?

    This has nothing to do with "due diligence", this isn't how "the business works". This was FRAUD that the regulatory entities were supposed to be on the job to prevent. No amount of private investor "due diligence" would have alerted you to the fact that the guy running the brokerage your money is with was forging documents and stealing money.

    So please shut up if you don't understand what actually happened here. Thank you.
  146. Um...

    "Wasendorf intercepted confidential regulatory documents that were mailed by the National Futures Association to what the industry group believed was U.S. Bank, PFG's bank, a person close to the situation told Reuters. Instead, they were sending the documents, used to independently verify a broker's bank balances, to a post office box that Wasendorf had set up, the source said, who declined to be identified."

    So the guy went out of his way to be a criminal. And CTFC ultimately did figure it out;

    Look, no one is saying the regulators are perfect (they clearly are not). But criminals will be criminals.

    No need to blast a whole country and its people for it.

    Read more: http://www.foxbusiness.com/industri...deals-blow-to-futures-industry/#ixzz20JuYNMFg

  147. This is actually not what happened apparently. The NFA knew that the documents were not coming directly from the bank. He didn't intercept anything... they mailed to an address he provided and astoundingly knew that it wasn't connected with the bank at all. In recent weeks the NFA was asking to get documents or electronic verification from the bank directly. So there you have the American regulatory system in a nutshell. Where was the bank in all of this also? Did U.S. Bank have no clue that they were supposed to be holding 200MM and only hold 5MM? Is everyone on the take or just completely clueless??
  148. I agree with that. What I don't agree with was your original premise that this was somehow a normal risk of doing business in the U.S. markets, or that somehow he didn't do his own "due diligence". Again, there is no due diligence an individual investor could have done that could have predicted this outcome.
  149. Do you have a cite for that? Everything I've read implied that the NFA did think they were mailing US Bank directly at the fake PO box that PFG provided to them.

    How could US Bank know what balance PFG should have with them?
  150. "The scheme apparently began to unravel after the NFA began to press Wasendorf, who was an early advocate of electronic trading, to allow the regulator to confirm balances electronically and directly with the bank, rather than in a hard copy via mail, the person said."

    This statement implies they (the NFA) knew they were not dealing with the bank. It defies logic how they could have thought they were so this actually makes sense and explains how Wasendorf was able to perpetrate the fraud for over two years. The NFA turned a blind eye and bears much responsibility for this.

    The CFTC produces a report every month called "Financial Data for FCMs". That should have been a good starting point.
  151. I guess I'm reading it differently - that says to me that they wanted to confirm it electronically rather than going through the mail, not that they were aware he was acting as a go-between previously. I agree it could be interpreted the way you stated.

    Edit: I noticed the reports mentioned the NFA documents were addressed to the bank and not PFG/Wasendorf - if they knew they were sending it to him why wouldn't they address them as such?

    "Wasendorf had set up a post office box in Cedar Falls, Iowa, according to a second person involved in the matter. It was to that post office box that NFA sent the documents, which were addressed to the bank."

    How would US Bank know that PFG didn't also keep customer funds in other banks as well? Does the report you reference specifically break-out where the funds for each FCM are kept, e.g. is there a US Bank line for PFG?
  152. The guy said he "MANAGED trading account"; So I assume (perhaps wrongly) that he's not some random retail guy opening a brokerage account.

    If he's a CTA or an advisor, then he has a duty to perform due diligence on his counterparties. It's a part of being a professional - which includes not parking excessive cash over margin requirements at a relatively small broker

  153. Actually he said he had a managed account which sounds like an account managed by someone else, not him doing the managing:

    "I have a MANAGED trading account cleared through PFG"
  154. Well there usually one main bank that is included in the account opening forms where incoming initial deposits go. My question is what the hell does segregated funds mean if there is no oversight from the bank holding a seg fund account. Did U.S. Bank never question why Wasendorf used the account like it was his own money?

    I'd be curious if anyone still has access to a PFGBest account authorization form if the U.S. Bank account was where customers wired in money. I'd bet almost certainly it was and U.S. Bank has some liability in this also.
  155. And again I ask, exactly what "due diligence" can someone do to know that the CEO of the brokerage has been falsifying bank statements and lying to regulators, and the regulators have been asleep at the switch? How does being a CTA or advisor give someone any greater ability to know that this sort of hidden criminal activity is going on?

    I say again, there is no "due diligence" anyone besides the regulators could have done in this situation to have known that the CEO was stealing money and falsifying documents. That was what the NFA was supposed to be there for. Blaming the victims in this case doesn't hold water.
  156. I stand corrected; Then it's his manager who didn't do the right amount of work, not him.

  157. And what exactly was "the right amount of work" in this case? Please expound in detail.
  158. Did they have an obligation to? Depends on how the custodial account is set up (which, if it's set up by a guy trying to scam money, I'm assuming there'd be little for US Bank to do).

    This is why large clients not only segregate their funds, but deposit at a custodial account.

  159. For one thing, sweep excess cash. Time after time, it's the only strategy that sort of helps when some other guy holds your money;

    You know the account isn't FDIC ensured. You assumed the risk.

  160. It doesn't really matter who the documents were addressed to... where did the NFA receive the address to mail the documents?? My conclusion is they received it obviously from Wasendorf, there is no other reasonable explanation. This is so absurd it almost defies logic how he got away with it for so long. That is really the only question that matters because it will clearly show there was no such thing as an independent audit taking place at all.

    Also, the towards the end, NFA was "asking" Wasendorf to "allow" them to check the balances electronically. Does this make any sense at all? Were they just doing a CYA after it was plainly clear he was a fraud all along? Why would the NFA need to ask to verify an account balance electronically anyway. Incredible.
  161. =========
    He did seem to enjoy his own picture a good bit.LOL:D
    I hope you analyze markets better than people; as if a male ego , basement business start,& wedding ring makes someone dshonestt:D

    SFO mag was a bit elementary, but sometimes helpful;
    not sure why you kept them lying around.Maybe like Rich Dennis they say, kept WSJ,[ stacks of wall Street Journal ]for chairs in Chicago residence.
  162. The way I read that was the NFA was transitioning from a manual system used by all the companies they regulate to an electronic system for all the companies. As they rolled it out, they had to get approval from each company because of legal issues with the NFA just showing up at someone's bank demanding information about their accounts without an approval letter of some kind. PFG was withholding approval, for obvious reasons.

    That's just my take, though, and I don't know that for sure, although it seems to make sense. The NFA had one system with an exploitable loophole in place. Only this one guy (so far as we know) was actually exploiting the loophole. When the NFA asks everyone to move over to a system without the loophole, everyone but this one guy agrees. Because the NFA can't force the issue, it raises a red flag. The guy finally relents to the change and tries to kill himself because he knows the game is up.

    Make sense?

    If this is how it played out, the question is whether there are any other FCMs who resisted this system change and what is their current status?
  163. You guys are being way too lenient with the one entity who has all the legal power and is charged with law enforcement - the CFTC.

    Can anyone dispute that the CFTC has the legal authority to query the holding bank directly with respect to verifying the FCM's reported figures ? Would the CFTC need to show probable cause and get a search warrant ? It seems to me that a CFTC Auditor should be able to do that in the normal course of his duties without a warrant.
  164. No doubt about it. Our entire regulatory system is a farce. None of us should have any illusions about it anymore. We are all on our own now.
  165. Absolutely agree. My only point would be that the process to gather evidence (in this case, for the NFA to realize this guy was not going to just rubberstamp any process change like everyone else was doing) takes time. The guy and his firm had a good reputation in the industry, so it was probably that he was skating by on that and blowing off the NFA while they just thought he was too busy to respond. Maybe if this had been a firm run by some nobody, it would have been brought to the CFTC's attention immediately, but because it was a guy everyone thought was on the up and up, it wasn't. It would be different if the CFTC was the first line of defense, but the NFA appears to play that role as well, so the split in duties makes for inconsistency. Hindsight's always 20/20.

    In a completely different context, how many serial killers get away after being questioned by the police? A lot of times, they have a reputation as a decent person and a plausible story and that's all it takes to shift the focus off of them.

    They say even the best FBI experts can't always catch liars consistently. While one wants to assume that as part of the NFA's audit training, they are taught to assume an adversarial stance toward the audited party from the get-go, it's not something many people can do when the chips are down.

    At the end of the day, being too much of a p*ssy to confront the CEO of a non-compliant regulated entity is not a defense, but yet it happens.
  166. Perhaps not to you but you originally stated that they knowingly mailed it to the firm they were performing the bank asset verification against.

    To me that would be far greater negligence then simply not having the procedures in place to prevent this loophole from being exploited as it was. Orders of magnitude differences in incompetence.
  167. Well, I still don't understand what loophole there was if the NFA contacted the bank through the bank's address which is available to anyone with a web browser and half a brain. Paper documents from the bank would have been just as effective as this "new" electronic verification method at uncovering the fraud. I just can't understand how Wasendorf could tell the NFA where to send bank verification requests. The NFA invited the fraud by allowing their audit subject to corrupt the process. Heads should roll and the entire system should be over-hauled. Yes, criminals will always commit crimes but this process actually encouraged/enabled it.
  168. This exerpt came from an NFA Complaint in February of 2012 in which PFG was fined $700K regarding their shoddy compliance practices. Seems that the NFA thought their third party auditor was suspect:

    Page 4, Item 10:


    "An additional concern was the fact that PFG used a firm named Investment Reference ( "IR" ) as its third party provider for conducting annual GIB audits. IR is owned and operated by an individual named Dennis Stahr ("Stahr"). Information available on NFA's BASIC system reflects that Stahr has served as an AP and/or principal at four different firms that have been barred from the futures industry for sales practice fraud."
  169. Why dont you explain to us how this game works genius? Trust me, I wont be touching your makets anymore and same with milions of others.
    Do you really want to defend this stupidity beyond belief where this happned to years in a row. Need I say more you naive kiss ass patiriot?
  170. run the whole lot of scoundrels out of town...
  171. jeb, while you may be technically correct in that administratively some other firm may actually physically clear the trade (I do not know) but effectively you are "all in at AMP". You wire to AMP Global Clearing, you money is in their segregation account and that is the counter party you will look to if things go badly.

    I debated the same issue some years ago regarding Velocity. At the time -- and maybe still -- you wired to them and you counter partied with them. The name of the game is counter party exposure. Who are they? Are they cowboys -- Corzine; if they do options -- AMP does not, a plus -- do they have the systems in place to monitor commodities option traders who are calculated on SPAN? Somewhat more complex margin to run than stock options and, if poorly done, can blow up most of the Western world!

    Again, I'm not singling out AMP except as an example of small firm. They may be the best guys in the world but IB has the balance sheet and maybe will be bailed by the government if needed -- who knows? No one in Washington would notice if AMP had a problem.

  172. I never had a good feeling about PFG...
  173. Weasaldorf was permitted to outsmart your system since at least February 2010 when he had less than $10 million in funds.

    This is sleeping at the wheel with a bottle of whiskey in your hand while shouting, yippee this is fun!
  174. Seems the NFA has had doubts about Stahr for awhile. I just downloaded a complaint (International Commodity Clearing and Steven I. Zander) which stated that Stahr's audits were "woefully ineffective and rarely found any deficiencies".

    So here we have the NFA still relying on audits from a firm more than 5 years after it had found their audits to be in the NFA's words "woefully ineffective". What the hell is going on, this is just a joke of a regulatory system. I see no systemic problems here... moving along... /end sarcarsm :mad:
  175. He tried to commit suicide in a Chevy Cavalier.

    At least we know he didn't blow the $225 million or so on luxury automobiles.
  176. For some comparison about the S&L crisis versus the crisis today I like the comments of William Black.


    In 2007? he came to Calgary to talk about corruption and regulatory capture and law. It was an excellent talk. I bought a copy of his book "the only way to rob a bank is to own one".

    Some research and some thinking convinced me that financial markets are corrupt worldwide now and most have no idea how deep the rabbit hole goes. Along with the money system, all of the corruption will need to be reset as well I think. Until the culprits are finally punished, there are actually two world-wide crises - one of finances, and one of morality. The second is by far the bigger issue in my view.
  177. There is another way to read this comment that would be just scary.

    If the NFA KNEW he was in deficit after their audit after the MF global affair, perhaps they were supporting him until he corrected the problem. However, if their bosses were forcing electronic verification on them this year (to prevent terrorism and crime) they would have had to pull the plug sometime. Would they rather take the heat on not knowing or on supporting him while trying to rectify the problem?

    I am sure that this senario can't be true. The question then would be, are their others out there right now ready to explode at any time?
  178. For an even deeper rabbit hole scenario (that couldn't have really happened) , read my previous post.
  179. MF and PFG would have been much less severe if a lazy auditing accountant could just pick up a phone and call the custodial banker directly in order to verify the FCM's reported figures.

    Our industry is going down the tubes because every freaking auditor is lazy and apparently inept and incompetent it would appear.

    That freaking simple.

    Call the bank - don't take figures at face value from the regulated entity who is the subject of the audit.
  180. Those who do the auditing are there for a reason, to do poor auditing. This is the system they want in place for our current environment, sorry but that is the facts.

    Protect your account capital as best you can and good luck!
  181. Well if the FCM pinky swore the numbers were accurate I guess the auditor had no choice but to give approval. If only he would have checked their other hand to see if their fingers were crossed..
  182. Better grab your PFGBest SpongeBob limited edition set before they are all gone... they are not making anymore of these you know!! Only $259 for 4oz of Silver (2x the market price) and a toy treasure chest but who's counting...

  183. Do they still have any Russ Wassendorf bobbleheads left?

    Please advise.

  184. I just noticed that Robbins, owned by PGFBest, are continuing to update the World Trading Championship as at 7/10/2012.

    Doesn't all this crap effect them?:confused:
  185. One of my very intelligent clients appeared on Fox Business News yesterday afternoon and was interviewed by Liz Claiborne about his PFG account. He explained that after the MF debacle, he had wisely opened several futures accounts in order to spread his risk out. When she asked how much he lost ( with headlights like that, you apparently can get away with such a line of questioning ) he demurred that while the loss stings, it would not alter his trading or his family's quality of life.

    He is the only client I know of who cleared PFG; unfortunately, I have several clients who cleared MF ( two of them are CTA's ).
  186. I agree this incompetance does not belong in the year 2000 +. Just idiotic. There is no way a company can get away with this 2-5 years sucking in more client funds. Regulations and auditing are supposed to make a difference. The system right now is cockamamie and a fares. The employees in charge need to join your unemployment lines and prison cells. It's a complete joke. I would be petrified to have a large futures account with your none existent regulations. Can you imagine losing a multi million dollar account because of these yoyos?
  187. Unfortunately, I have to agree. I can't help but draw comparisons to Soviet era type shit where the oligarchs just "divied up" the state's assets to the favored parties. There is just way too much regulatory capture and lax regulation for those who have chummy, cozy relationships. For everyone else, it's a bureaucratic labyrinth.
  188. It certainly makes me wonder...
  189. (Your link does not open.)

    The more I think about the money I may have lost through PFG and the regulatory system's incompetence the more infuriated I get.

    If I was as incompetent in my business as these regulators are at there's, my family would starve! These people need to be replaced. Who know how many other companies are cooking the books? You will never know because the system in place is useless and so are there people. The crooks are smarter than the regulators are.

    You money is not safe! Let the my loss be your warning.
  190. Actually, they're both in bed, so they're essentially one and the same.
  191. This is not incompetence.

    Think about how many people it takes to run a scam like this.

    1) PFG has their own internal accountants/comptrollers who deal directly with US Bank, using US Bank statements, to reconcile and compile their internal ledgers, on a weekly/bi-monthly basis. Every comptroller/CFO has signing authority for a corporation and informational access to custodial accounts and bank records. It's a joke to even suggest only Wasendorf had access to bank accounts/statements and literally handed them over to accountants, a few times a week - all doctored up - when needed. Logistically, this is impossible and totally outside normal business practices that would raise red-flags to any CPA/CFO. The reason why most people on this thread haven't clued in to this is because they have little-to-no experience in the day-to-day management of a corporation! (not that I do, just apparently a bit more than the yahoos on this thread!)

    2) External auditors would verify those books and records, using source documents.

    3) Regulators would verify those audits.

    4) Either Wasendorf or somebody working at US Bank gave the NFA a PO BOX to send compliance documents too. Either somebody at US Bank was also in on this, or the NFA are complete retards.

    5) US Bank knew PFG's account balance was well-below it's stated net capital on CFTC regulatory filings. While US Bank may not be obligated to snitch on it's customer, they sure as shit knew their balance was far below it's regulatory filing and said nothing. Consider the hypocrisy here: US Banks will drop a dime on any American who deposits or withdraws over 10 grand in cash, under suspicion of laundering or terrorism. But look the other way when 220 million in customer deposits go missing in "segregated accounts"!

    5) NFA never bothered to call, fax or email US Bank directly to verify PFG's account balance.

    This is fraud on a massive, massive scale. Bank statements are the backbone of any corporate ledger, and pass through the hands of no less than 10 accountants (internal/external/regulators) in a highly regulated, fair-sized broker/dealer, like PFG. Don't be fooled by the complete idiots posting on this thread. This is a complete fraud.
  192. Making broad allegations of conspiracy to defraud/collude by NFA and US Bank with PFG based solely on your admittedly "little-to-no experience" and no actual evidence or proof puts you squarely in the same category as other "yahoos on this thread"

    But please don't let a little thing like facts (or lack thereof) stand in the way of your sweeping pronouncements of what really happened and calling everyone else idiots.
  193. Trust me, YOU are a complete and total MORON if you believe this fairy tale was a one man operation. Unlike you, I actually do have a bit of small business experience in finance and accounting operations (>100 employees), and know for a fact accountants and CFO's have direct and daily access to their bankers, deposit accounts, lines of credit and bank statements, which they require on a daily/weekly basis to DO THEIR JOB. I never said I had little to no experience. I said YOU DO. I have some, and apparently much more than the losers on this thread who'd believe the tooth fairy stole their money if the CFTC said so. Think it about, you dumbass. There's at least 2 CPA's over at PFG who run the numbers on a weekly basis, bare minimum. Never mind the regulators, or external auditors. That's at least 3 PEOPLE who knew what was up, on the inside. Next enter the auditors and regulators who are supposed to verify by checking source documents. That's what an audit is, Corky. Or what? You suppose an auditor *checks the math* on the balance sheet a firm submits? Are you fucking kidding me??! Then there's the good ol' NFA. A PO BOX?? Were you born fucking yesterday? You know, after reading the responses on this thread, I can't believe the level of naivety shown by so-called "traders" who are supposed to exhibit a level of cunning and sophistication light years ahead of the sheep on the street. No wonder this country is going to hell in a handbasket.
  194. You make a good point about internal controls and the likelihood that at least the PFG CFO was aware, but would US Bank really know what PFG was filing with the CFTC as its balances? Was the NFA staffed sufficiently to check up on every custodial bank address submitted to it? Maybe US Bank did check those filings and maybe the NFA did have enough staff to follow up on every piece of information each member submitted, but no one here knows for sure.

    We will all know in time, though. Obviously, for a scam running into the hundreds of millions of dollars, there will be more than enough willing participants.
  195. The risk for the industry related to Peregrine is losing the trust of a trader like Jacob Ursel, an 18-year-old investor in Calgary, Canada, who said he has $7,200 frozen in his Peregrine account.


    ok i feel for nthis guy but only $7200??? 18 years old??? HELLOO???

    While Ursel's frozen funds in Peregrine is “not hurting” him financially and he worries about farmers who have lost much more, not being able to get the cash for himself and his other investors has been difficult.

    After getting others excited to try futures trading, “it’s been tough telling them what happened,” he said.

    HELOOO??? an 18-year old recommending futures trading to others????? what has the world come to????
  196. Blah blah blah...

    So your assertion that there are was one or more people at both NFA and US Bank that were involved in the fraud is solely based on your belief that they could not be that incompetent? Great work man. Please continue with your tirade and no evidence.

    PS: No one (but you) have suggested that there was only one person at PFG involved, I can understand why you want to throw up that strawman and not defend your assertions about NFA and US Bank being complicit in the fraud.
  197. It's not naivete, it's a little thing called "getting all the evidence" before making a judgment.

    Is Peter Brandt naive for saying "there's a lot we don't know"?

  198. But what to do? You can never really know who is safe or not. Statistics dosent even matter anymore. I remembered reading a thread a few years back about safety of futures brokers, and quite a few people were saying they wouldnt put more than 20k in brokers like Velocity and Mirus but they would be happy having 250k or more with MF global because of their huge excess capital etc,etc, well we all know what happened.
  199. You're an idiot with no experience in accounting or managerial finance. Ask your CPA, CGA, or neighbor who's a CFO. They'll tell you the same shit, Corky.
  200. People are losing site of the fact that Nfa did uncover this. who ever prevented a fraud before it started? Anyone who invested in a cta or cpo that used these guys should be equally upset with them for not doing proper due diligence.

    Regulators are not the be all end all. I have yet to see a thread giving a regulator credit for actually imposing a fine or preventing malicious behavior though it happens on a daily basis.
  201. Yes, they would. Not only that, but their account manager at the bank would have access to PFG's account history, and would see in 2011, for example, PFG customer deposit account was 250 mill, or whatever. And then, in 2012, it was run down under 5 million. Red-flag?

    Buddy, come on. This would take all of 1 week by an intern. Look at the Atlas list on zerohedge. There's 117 brokers there. Ring-ring, hi, do u hold an address at PO BOX 1234? No, we don't. Thanks bye.

    It's the CFTC's job to play watchdog to these guys. The CFTC has a budget of a quarter of a billion dollars per year. They're entire mandate is to prevent broker thefts, just like this! That's what they're supposed to do!!! CHECK THIS STUFF.

    Now you're talking. See the reuters article? PFG's "auditor"? Some little shithead running out of his 90K house. This is what I'm talking about. A scam like this can't be run without 5-6-7-8-9 people. The paperwork is astronomical and the regulations pile up. Everything has to be checked, rechecked, signed off on, etc etc. That's why the lone wolf Madoff story is a complete joke. Not only did that require at least 7 or 8 inside people, but proves the SEC was totally corrupt and let most of them go! Look at Corzine, for fucks sakes. That guy lost, what? 2.2 Billion from segregated funds? And not a single person was indicted!!
  202. Here's a good one from Peter Brandt:

    "I expect to lose money because of the complete incompetence of the Federal regulators" is how Factor LLC's Peter Brandt describes the farce that has rapidly become bankrutpcy for PFG Best to Bloomberg TV today.

  203. Here's a good way to summarize the current regulation problem. Is anyone scared anymore when the CFTC or SEC comes in to audit them? The answer is no because they are god awful at doing their job. Doesn't matter how much money they have because the people are either lazy, incapable of doing proper audits, or have no idea what to look for because they were never in the industry to begin with. Until people actually have any respect for regulators being capable of doing their job, can always expect things like this to happen.
  204. Also let's not forget who actually committed the crime. I am shocked that people are not calling for his head along with the employees of the firms heads who had tomhave been complicent in the fraud. Either the son, CFO, various other operational staff were in on this or they were 10000 percent dumber than any of the regulators. There is no way ws was in charge of daily transfer to and from us bank to meet client redemptions and sweep excess cash. Nor was there anyway he was the one preparing and sending the seg report. With that said, wouldn't even the ,ost junior person look at the balance sheet and say, wait a minute we don't have 250m at us bank!!! Unless of course wasendorf sr also hand delivered the f'ing accounting department statements too and they didn't have online access which is highly unlikely.
  205. Singling out a single perpetrator is exactly what Wasendorf and crew want. After his recent marriage, his spouse can be protected somewhat by financial law from bankruptcy proceedings and clawbacks for customer money.

    Never mind that the CFO never had a cpa and was for 12 years "responsible for account balancing and producing a daily segregated funds report. After that she served as Controller of the firm for six years."


    outside gov't TARP auditors that much better than PFG staff at finding discrepancies? ...right..

    Or the "shithead" personal auditor in the suburbs is some woman when caught by the reporters said she "just found out about it." and didn't know "anything".

  206. LOL

    "U.S. futures industry investigators are looking into why Iowa-based collapsed brokerage PFGBest used a tiny accounting firm that appears to be operating from inside a suburban Chicago home to audit its books, according to a person familiar with the matter.

    Experts said the use of such an auditor should have been a red flag to regulators of a futures brokerage with more than $500 million in assets and several hundred employees across the United States as well as in Shanghai and Canada.

    There are comparisons with the way convicted Ponzi schemer Bernard Madoff used an auditor operating out of a strip mall in suburban New York and convicted swindler Allen Stanford's investment firm retained a little-known auditor on the Caribbean island of Antigua.

  207. With respect to to mf global, why has nobody pointed a finger at the cme? They had more onerous responsibility with respect to oversight than the cftc.

    Fraud can always be perpetrated and it is generally caught, I think it is naive to think regulation can happen in real time. And by the way, a 250m cftc budget is hardly enough to implement the Dodd frank act which was thought up by morons who have zero, zero knowledge of the markets or regulatory environment. stop thinking so short sighted people, the problem is at the top, just like the majority of you, these people only know and do as they are told.
  208. ^The problem is regulators are bought and paid for by the industry they're charged to regulate! Wallstreet writes their own rules!

    Note: for the idiots in the thread that say the NFA couldn't call US Bank directly and verify PFG's account balance due to "privacy" concerns....that's exactly what the compliance documents they sent via the mail, empowered them to do!!!!!! COLLECT PFG ACCOUNT BALANCES FROM US BANK. They do it over the phone, or through mail! It makes no difference! They're getting the same information, from US BANK DIRECTLY.
  209. Offer regulators significant bonuses, such as percentage of fraud uncovered or penalties imposed, and see how regulation changes. People will be taking there job more seriously and you will attract talent to the industry. The sec's whistle blowing scheme provides upside of employees or anybody of the general public to provide tips to the sec. Yet I'd a regulator where to uncover a fraud, or hand down violations with respect to lack of controls that could lead to a fraud, they are not compensated. People need incentive to do there job.
  210. Bonuses for the regulators? In this environment?
    They should all be put on notice, and if they do not perform exceptionally, their jobs should be advertised.
    What amazes me is how a large minority of the US lives in a bubble. This needs to be well and truly burst. There are plenty of unemployed people that could do a better job at the regulators.
  211. This is laughable. Offer them bonuses to do their job, which they can't seem to do in the first place? This is pretty amusing. Who do you work for CFTC or NFA? I've heard it all now.
  212. How about they will not have a job if they do not perform their basic function. How's that for an incentive?
  213. Dude, you are making valid points but you are assuming too much (unless you know things for sure). In this case, you are assuming that U.S. Bank will give out that information over the phone. The NFA might only be empowered to obtain that information via mail.

    If I call U.S. Bank and say "I'm with the NFA, can you tell me how much is in the account for PFG?" are they automatically going to give me that info? Yes, they might, if I have some kind of corroborating access code or account number or something, but they also might say, "You have to request that information in writing or in person".

    If the compliance documents specify only one method of information exchange, no other method is going to get you the info.

    One thing I've learned on a couple of process design projects I've done is that you should never assume that the process works the way you think it should work or the way you would design it to work.
  214. I find it hard to picture accountants or auditors taking on the power elite and doing what is right - full steam ahead and damn the torpedos! At least that is my prejudice of the industry from my experience.

    Remember what happens to many whistle blowers. One would think they would be worshiped as heroes. If they pulled people from a burning car at great risk to themselves, people admire them. If they expose the financial truth, they can be hung out to dry and twist slowly in the wind. Their future career options are often limited. People tsk tsk and then go on to the next newspaper page.

    I remember early on in my career being told not to ask such pointed questions. They said go along to get along. I think most people are like that in jobs these days.
  215. Lincoln and brocklanders, you are missing my point. People expect the regulators to protect their money and forsee fraud before it happens. Yet with regulators and public accounting firms as well (pwc, ey, etc,) all of the real work is being done by people with 5 or less years of experience. The fact is these people know very little. It doesn't matter If it is an immaterial fcm (which PFG was) or a fortune 500 company. The majority of auditors end goal is to move to the other side of the business. This is a fact. Why is this? Because all businesses outside of audit pay a premium for former auditors, whether that is tax, corporate, regulatory etc. However, if incentives existed to truly serve as a fiduciary to the public, you would see more people looking for longer careers in these places, driving demand for the jobs and therefore quality of talent.
  216. Why not heavy sentences for dereliction of duty in regulatory bodies? maximum life sentence.
  217. I understand what you are saying and the pay should be competitive and I'm sure they are making a decent salary and good benefits currently even without factoring in any performance bonuses.

    My point echoes what LincolnArmy said... that there are plenty of qualified auditors and accountants who are currently out of work that would certainly do a better job than the clowns who are on the job now.

    If the folks at NFA and CFTC can't (or won't) seem to find the opportunity to pick up a phone and do some basic due diligence on their audit subjects or they are so corrupted by the process, giving them bonuses won't solve the problem. The entire system is suspect in my opinion.
  218. Sorry, but this is crap. Please prove the NFA/CFTC can't verify over the phone a regulated firms account balances at their listed bank.

  219. Grand lux- that is idiotic. Life sentences? I guess I will call on that the next time one of my ctas loses money in a up market u moron.

    People are acting as if the nfa was complacent I this which is absurd. Why the blame is even on them and not the cftc, who has never actually performed an audit in their existence, except when a problem was aReady raised by either the cme, nfa, cbot, ice, ect is beyond me.

    Pfg has had a history of problems, why would you pit money with a firm who has been sanctioned by the nfa multiple times and just been sued by a state in connection with a ponzi scheme??????
  220. LOL, you are not too bright are you?
  221. Man, I am not saying they can't with any kind of definitiveness. I'm saying they might not be able to. A lot of important things can't be done over the phone because there needs to be a paper trail.

    I just don't see the necessity of a rush to judgment.

    Do you think we should just go down to the NFA's offices and string up the person most involved with the PFG account?
  222. Yes ... I do. And I don't even carry an account with them. It may send a nice message!


  223. Yes, it will send the message that anarchy and mob rule are the order of the day. It's hard to put that genie back in the bottle.
  224. I must concede that actions of that nature do have dire consequences. But right now we have clown rule broadly across our society. I might be better off taking my shot with the mob. Dealing with the clowns is just so damn tedious.

  225. Did bwolinsky go bankrupt?

    I read that on a % basis it will be worse than MF global, expected to get only 20-25% back at PFG.
  226. I called Beau yesterday and he's ok.
  227. Believe me, I know the feeling. Life before civilization may have been "nasty, brutish and short" but at least you always knew where you stood and if somebody screwed you over and you killed them, nobody held it against you. To the contrary, they knew not to f*ck with you in the future.
  228. Just more of the same BS from the ponzi scheme they call wallstreet Hide your money from them

    I am putting all of my money in bacon. Everyone loves bacon! It is cured, so it lasts a long time and when I have cornered the bacon market, everyone will PAY!!!!!!
  229. How hard can it possibly be to put laws and regulations and punishments in place where EVERYONE and i mean EVERYONE breaking these laws and regulations would be SEVERELY punished so as to put the fear of both God and the Devil combined, in any and ALL that affect the lives of people like me and all others who have been ripped off? Not to mention all the other honest CTA's, Brokers, customers whos lives and careers are adversely affected by such obvious bullshit which is allowed to go on and on and on!

    I am fed up of white collar crime skating by.
  230. Spot on, the pigs did:eek:
  231. They have deregulated to the point of anarchy. I was fully expecting Obama to work on reregulation but he instead appointed Wall Street as his cabinet. I think that neither political party is going to re-regulate our financial industry and it's a real sad thing really. They only regulated Wall Street after the crash of '29 because an Italian prosecutor went after the good old boys club. We need a prosecutor that isn't an insider and that doesn't seem to be happening..

  232. SIPC already said they won't give him dollars back, but perhaps he can ask for productivity credits instead for when his new monetary system will be in place.

    Poor guy seriously...I hope he didn't lose too much.
  233. I'm I the only one on this great big forum who has lost money with this firm?
  234. Didn't you say you were canadian? I thought canadian futures accounts are insured.

  235. Looks like Larry Williams may lose some $.

    "Like many of you I am in same boat, Louise and I had two 6 figure accounts that have been liquidated and locked up. So what are we going to do?"


  236. Bacon is the perfect investment vehicle.

    Air freshener, exhalted food item whose essence is truly intoxicating, converts from living food item to wood smoked long-lasting edible gold.

    I will keep T-Bills issued by the Fed in my name in the trading account, and lots of bacon in a large refrigerator. Thick cut, applewood smoked bacon.
  237. Canadians had two choices, deal directly with the US firm or use the Canadian branch of PFG. As I read it, the Canadian branches of PFG and MF were fine because they have regulators and the people (Canadians also) with the US company have "regulators" (wink wink, nudge nudge.)

    The regulators in Canada got the MF money back. They likely tightened up the checks and regulations on the remaining companies. They did not announce big headlines and make it look like they were doing something.
  238. Yes, regulators can't catch fraud before it happens, but fraud is less likely to happen if people believe the regulators are good enough to catch them. Right now, the regulators are a joke, and people are angry because of how long PFG was able to keep it going. This went on for a couple years. Also why has Canada been able to protect customers why the U.S. consistently fails to? It's because our regulator are horrible at their job or are too buddy buddy with the people they are suppose to regulate.
  239. I love their awards page http://www.pfgbest.com/about/awards/ :

    Among the many awards, there is this gem:

    "PFGBEST <...> has won a 2011 Iowa Character Award from Character Counts In Iowa. The achievement honors <...> organizations that consistently demonstrate and promote the six pillars of character: trustworthiness, respect, responsibility, fairness, caring and citizenship."
  240. NFA's non-executive chairman Chris Hehmeyer's take on the whole PFGBest debacle:

    "They [NFA auditors] are the ones that uncovered this whole thing," Hehmeyer said, of NFA auditors. "If they hadn't caught him, it could have gotten a lot bigger."

    There you have it. According to Mr. Hehmeyer, the NFA are the heros in this whole thing, after all it could have gotten a whole lot bigger (I guess 200MM+ fraud over 20 years isn't all that large after all)

    Hmmm this is "another" way to look at it from Mr. Hehmeyer's perspective I guess. Wow, this is who is protecting our interests, I feel sick.

    PFGBest regulator: New technology caught $100 mln PFGBest fraud

  241. "Wasendorf said he had sole control over the U.S. Bank accounts and could make counterfeit statements within a few hours using a combination of Photo Shop, Excel, scanner and both laser and ink-jet printers, according to the complaint."

    man this sounds like ET.
  242. yeah, really it takes someone that "sophisticated" to fool our regulators. Clearly, the regulators had to know they were not getting statements directly from the bank all along and just didn't care I guess. He couldn't have used the same PO Box for 20 years as they had only been in Iowa since 2009 and I'm sure have used different banks over the years also, each with a different address. Are we to believe he was somehow able to set up phony bank addresses all these years for different banks in different cities and did it all by himself? Not likely.
  243. Well, as far as I know, all "law enforcement" and "regulatory enforcement" is considered to work on a "best efforts" basis, i.e. there are no "service level agreements" between the general public and the police or regulators. The cops don't show up at your house before you've been burglarized, for example, although they do publish police reports that, if you look at them, might show a string of burglaries in your neighborhood before you get burglarized. It's up to you to find and use that info, though. As sad as it is to say, your expectations kind of have to align with that legal concept, or you're going to be disappointed.

    That doesn't eliminate the concept of "negligence", it just means that the fact of a crime occurring isn't in itself evidence of negligence.

    The CFTC audit after MF Global that concluded there was nothing wrong with any FCMs does sound like negligence, though, and if the CFTC relied on the NFA, they'll probably kick any negligence accusations back over to them.
  244. !!! Just spit my beer all over the place!

    Wonder if they can take that award back?
  245. People are getting mad at the auditors.

    I agree, but wasn't this caught before PFG actually blew up? With mf Global, Corzine blew up the account and then things fell apart.

    So how did they catch PFG?
  246. http://www.canadiancattlemen.ca/new...-pfg-founder-admits-20-year-fraud/1001539528/

    "...The NFA started a new audit of PFGBest about two weeks ago, demanding for the first time that he allow its auditors an electronic, direct look at his bank accounts..."

    before that he was forging bank documents, electronic and paper and the regulators had no clue it was him sending all the documents they requested from the banks.

    on a side note, i am a canadian citizen and was wondering if there were any decent canadian futures brokers out here cause I really want that insurance now with MF Global and PFG
  247. Wasendorf is something else. He's been using his computer to print phoney bank statements for two decades. He went to his local Post Office, told them he was from US Bank and got a POB in US Bank's name. The auditors sent papers to the POB and he sent them forgeries. He didn't allow anybody else access to the bank account. Is that not very complicated or what? Con the local Post Office once and keep making good forgeries.. It's childish almost.

    Regulators have egg on their face of course. They could have very easily checked that the POB belonged to the bank by talking to the bank. Over a twenty year span it never occurred to them?
  248. All the customer's money went to his personal projects/expenditures for 20 years: New headquarters, charities, real estate projects, corporate travels in Italy, "My Verona"...

    Check his face...Is he not the face of success ? The guy looks like he has a whole life of achievement and honest labor behind him. The psychos are not those you think.:mad:
  249. We have nobody who is trustworthy now because essentially the regulators are all asleep or watching porn and the firms are policing themselves. It's a free for all, do what you want, just don't get caught.

    Just like a 3rd world country.

    So right now to be successful at trading, firstly you need a viable strategy, secondly you need to pray hard everyday that your money will still be there the next morning..
  250. http://www.elitetrader.com/vb/showthread.php?s=&threadid=245979

  251. Fair assessment. The next one should be "State of the Banana Republic Address".
  252. IMO the entire system is built on "paper funds" or dollars only shown in accts that are not real. My guess is over 50% of FCM's are at risk due to falsified actual financial holdings. I think exchanges know how bad things are and they are not willing to do anything but cover their ass.

    I have 20% of the money I used to keep in accts just 2 years ago spread over three FCM's. I trade over leveraged these days and I don't give a Damn, but still making my typical monthly nut.

    Next play, looking for solid foreign brokers and shifting trading operations out of the US. The "trends" are looking ugly here and I think the worst is yet to come.
  253. SO what did he do with the $?
  254. Is it possible that this raving maniac -- Bwolinsky -- is rating them well on some services -- TODAY!!

  255. that is hilarious! The frequency of this stuff is crazy.. the reality of it is that there is alot more going on then everyone i think realizes!
  256. BlueTurtle ...

    Can you make an introduction to your Nigerian? My guy has run into a few minor snags -- he assures me they are minor -- yet I have not been able to reach him for a few days. I want to have a backup Nigerian or even have two "my great uncle died and the estate is $13,000.000" deals working at once.

    Hey $26,000,000 is better than $13,000,000.


  257. yeah the reality is there isn't anything different about these scams and the ones coming out of Nigeria!
  258. This gave me a nice chuckle.
  259. My Nigerian called about an hour ago and, believe it or not, there are two oil and gas leases as part of the estate they are transferring to me via their London solicitors. Apparently on mineral rights there is a small transfer tax -- a stamp duty -- that must be taken care of before the transfer of the estate can be completed. It amounts to 1.75% of the expected production till lease expiration.

    The duty has recently been reduced from 3% (to the current 1.75%) and the $22,500 I am wiring to London on Monday will assure the estate transfer is completed by Tuesday. I need just a bit of advice from those here in this thread that have done business with Nigerians: I assume that a 10% tip is sufficient once it is all wrapped up but, if you think it will seem chintzy, I would go 15%.

    Am I in the right range? This guy treats me like I am family and I do not want to offend.
  260. haha.. your getting all kinds of favors.. don't be stingy
  261. more like he will go to prison and everyone there will worship him for screwing so many people over! people take pride in that stuff.. Madoff was quoted in saying " i carried those people for so many years" as if he was doing them a favor.. this people are sociopaths.. i find it a bit relieving that he just might have felt guilt about it by the fact that he failed to commit suicide.. but you know i've had friends tried to commit suicide... anyone that really wanted to suceeded! except one of my friends who stuck a 22 in his mouth pulled the trigger and the bullet bounced out of his skull somehow and out of his eye socket! he lived and figured since that attempt didn't work that it just wasn't suppose to happen and walked into an AA meeting and thats how i met him ... so who knows maybe the guy planned on getting caught instead of dying.. nothing surprises me NOTHING!
  262. He had the passenger-side window open. Ya.
  263. see there ya go... the creation of a reality in which he feels guilt was the entire show.. i'm sure alot of people bought it.. you know alot of people generally i see end up having a chip on their shoulder.. They are the ones that feel that everyone is out to get them or just generally selfish and strike back by lying cheating and stealing.. me personally i think its much more challenging to make money honestly... Trading is the most self revealing thing i've done.. Although alot of what i've learned about peoples lower nature has to do with dealing illegal things in my youth before i got sober.. This guy though reminds me of so many masters of the universe that dont' really know anything!
  264. http://dailycaller.com/2012/07/03/full-tilt-poker-ceo-arrested-in-nyc-for-alleged-ponzi-scheme/

    United States law enforcement arrested Full Tilt Poker’s chief executive, Ray Bitar, on charges that Full Tilt was being run like a Ponzi scheme. Bitar voluntarily surrendered in New York City, Forbes reported.

    Bitar returned from Full Tilt’s headquarters in Ireland to John F. Kennedy International Airport, where the FBI arrested him on Monday.

    “I know that a lot of people are very angry at me. I understand why. Full Tilt should never have gotten into a position where it could not repay player funds,” Bitar said.

    Bitar faces a potential 145 years in prison if he is convicted on all counts.

    Federal prosecutors have issued an indictment that uncovered new allegations about Bitar’s attempts to conceal Full Tilt’s inability to repay its customers.

    “For the last 15 months, I have worked hard on possible solutions to get the players repaid,” Bitar said, “Returning today is part of that process.”

    The government claims Full Tilt still owes its players approximately $350 million, according to Forbes.

    Anyone see a connection?

  265. yeah.. in society someone gets ripped off EVERYDAY! We should make this post alll about how messed up things are in business! oh wait ti already is hahaha.. everyone feels guilty when they get caught.. i believe based upon survivorship bias and the fact that we only hear about the people that do get caught.. there are probably tons of people getting away with fraud..
  266. :D what are you drinking tonight?

    Only joking :p
  267. haha no i'm not drinking.. if i had really relapsed i'd be running mexicans across the border for 2 grand a head and living in a third world country like a king probably but definitely not on a trading forum talking about suicide by commodity hedgefund exploits. and thank God i'm Sober..
  268. That's like saying the engine on the car is rock solid, it's just that the wheels fall off randomly at high speed.
  269. wow, anyone that has a lawn like that shouldn't be trusted haha
  270. Is that what made it a green building, just don't cut the lawn???
  271. Thank you!

    Made $800,000 on that house thinkin to sell for a good 4 mil?
  272. Looks like you got a shout out from Zero Hedge. Good luck man, hope it turns out well for you.
  273. Baby said if she's not chewing her whole life on any loss than 7 ounces of silver is just crazy; It would mean the bitch ass ex-wife stole all the silverware while she was feeding her during her alloted time for custody!


  274. better not show up in court stoned...judges take a dim view...
  275. how were you getting the pictures to show up directly in the post?
  276. +1
  277. You guys in Canada have your share
  278. I've had 17 straight months of clean drug tests.

    Am smoking insense and St John's Wort to ingest Niacin and have lost 45 pounds!

    Kind of expensive though, and just bought a 3 chamber bong.
  279. i didn't know you could smoke St. Johns Wort.. haha Good for you for losing weight!
  280. "But he had no sympathy for regulators: "I have to say I don't feel bad about deceiving the regulators," the note said. "They made the decision to be my enemy."

    .... so he was forced to steal the investors money because the regulators were his enemy? How is that reasonable?

    Sounds to me like he is the classic ego, holding himself out as a good person forced to do things by outside ghosts. I am sure all the innocent men in prison can relate.
  281. Only because they are stoned and can't see straight:eek:
  282. When they aren't watching porn! :p
  283. classic psychopath narcissism.. they will get upset at somebody, beat them to death, all the while saying "see what you made me do".
  284. Lazy accountants cannot pick up a phone and directly check a party's purported account balance with the custodial banker.

    That fucking simple.
  285. Perhaps the Real Estate in Romania was part of a disappearing plan.
  286. Red Flag #2 is interesting.

    Quote: Peregrine in fact did NOT terminate Aslin, other than simply stating so in writing to FINRA in an attempt to avoid the firm's having to comply with the Taping Rule. End Quote.

    It is explained in the article that Best Direct (PFG) mislead FINRA and that became the basis of a court case, but nobody picked it up.

    However the fact that Best Direct was a subsidiary company meant that they could terminate the individual and that would not affect his position in the parent company. Two separate legal entities here, and the author seems to miss that point.

    It does illustrate the lengths to which PFG went to avoid scrutiny.
  287. The larger question is:

    Who else may be embezzling customer funds?

    I'm now convinced that there may be more firms in the same predicament.

    What other firms are sending out red flags similar to PFG and MF Global?

    let's start this discussion....
  288. I BET ITS LIKE 20 percent of the companies out there..
  289. Well, the real spine of the issue is: how many corporations and financial entities are audited by accountants too lazy and too incompetent to directly confirm the entity's account balance figures against what the Bank can confirm ? This is a much broader issue than just futures clearing.

    Seems like we have systemic risk based upon audit accounting practices and the direct verification of stated funds versus actual funds held at a bank.
  290. which brings up a good point..in many of the fraud cases the outside auditor is in the pocket of the auditee (aah humm..inactive cpa here)...

    a good start would be to check who the outside auditor is for a particular firm and start there....

    "Bubba's CPA Firm" for a large broker would peak my interest...

    Personally, if it's not a top-tier CPA firm this would also peak my interest
  291. The real kicker with this is that somehow (accidentally?) the NFA actually received the real U.S. Bank statement last year showing only a 10MM balance. They then apparently contacted Wasendorf (or he found out from the inside) who then sent them the "correct" one showing 200MM+ and then NFA left it at that even after having seen both conflicting statements for the same account!!! I'm starting to think it was more willful incompetence rather than laziness. So much for self regulation.
  292. scratch my previous statement...

    Pricewaterhouse Coopers was the auditor for MF Global..so that's a dead end
  293. It's not just the NFA quite frankly.

    Or even the securities industry.

    I now question everything done by an auditor. Look at what happened with Arthur Andersen LLP and the Enron debacle.
  294. No auditing firm can possibly pick up on a fraud that is committed within a few months of collapse. as in the MF case. BUT PFG was years ... maybe decades.

  295. My vote is for the FED and the government. Both are sending out red flags and it is astounding to me how many don't realize how serious the problems are.
  296. i would love to start a business with a bunch of professional traders bear raiding companies that are full of crap!
  297. When sino forest stopped trading, I wondered about their auditors. I then googled "lawsuits against ernst and young" and was amazed at what I read.

    My conclusions:

    1) Most auditors must have huge legal bills these days.

    2) What the heck do auditors get paid for these days? Reading their boilerplate paragraphs in financial statements seem to say, we can't really audit and take no responsibility but want the huge fees anyways.

    3) The markets have grown more risky in the last decade or so.

    4) But who will watch the watchers?
  298. Sorry, comp's down after 6 years.

    Upgrading to a 6x 10 core that will be the foundation of the networks I'm developing for FCM's.
  299. Actually, Wasendorf could have done wires all day long at a moment's notice at US Bank.

    Just about every week before this happened, I had been wiring multi-thousand dollar checks and all they needed was my driver's license.

    Trust me! And if this man thinks he can get away with this he's got another thing coming...but then again, he tried to kill himself, so he probably wasn't trying to get away.
  300. Does anyone in here know if OptionsHouse is insured? Stock options accounts have the same 250k securities insurance as normal equities accounts, correct?
  301. It is a securities account and the SIPC protection (although not quite what you describe) is identical.

  302. [​IMG]
  303. How was PFG able to post margin requirements when half it's customer deposits were gone?
  304. 1. Author have won PFG competition Marketzar ( with paper account)
    in 2007
    -some 2000 $ ( first attempt 1 - place ,second -2 place)

    Price Money was received only with assistance Court of IOWA

    2 .Some time before (1 year) author tryed to play in PFG competition
    with paper account ,but in 3 Place was rejected some time before contest ended ...

    Without any ground ..

    Have had suspect ,that not all is okay by PFG long time before

    Multiple time's sended message's to CTFC ,but as my money was not involved ,stopped this kind of activities
  305. Photoshop?

  306. I wondered this myself! With only $6mm in the bank and a few thousand accounts, I do not understand how they met margin requirements....

    Maybe somebody could weigh in........

    Is it possible their initial margin requirements to support client positions was actually LESS than $6mm ???
  307. Bucketed the trades maybe?
  308. Half of it customer deposits *in excess of* margin funds posted with Jefferies are gone.

    The margin deposits with its Clearing Broker, Jefferies, are all present and accounted for.

  309. Good info. That makes sense because PFG had listed about $400mm of Cust Seg Funds in the most recent CFTC report (on website "View Financial Data for FCMs"), but in this fraud case it was a bank account of $200mm that was being discussed.

    Thanks for the reply post.
  310. I'm not sure commission rates are so low as to impair the firms with a solid business model. Unlike securities you need to do pretty large volumes in the aggregate to qualify for meaningful commission breaks and that means that most traders doing three or five lots are paying close to the full shot. Obviously the firms costs to execute a five lot are no greater than to execute a one lot yet, until the customer meets the monthly minimums, he is paying five times the commission on the larger trade. And, even after he meets that first threshold commission break, he is paying at least 80% of that one lot commission multiplied by five.

    While it is true that a major source of firm's income -- interest -- has been decimated by the no interest environment we live in, commissions relative to costs are not all that bad for well run futures firms.

    I totally agree that not making money is no excuse for stealing from the customer but we must always remember that the thief needs no excuse. He steals because he can and because he is a thief. It is opportunity that drives him and the dismal state of the audit procedures at a firm like PFG provide opportunities beyond all reason.


  311. One never knows what they're capable of until they're faced with the brink of bankruptcy. This is especially true if that person has always been a success throughout their life up until the point of business failure.
  312. i can relate! i'm in florida everyone has went bust here! they either admit it or they don't.. but mostly anyone involved in construction real estate or mortgage lending when completely out of business.. its hard to float your boat when the ocean is drying up
  313. So, for a customer who had run their account rationally, at a balance just above the minimum margin requirement, reducing their exposure to their broker .. one might wonder whether they should get their entire (margin) balance back, seeing as it is actually there at Jefferies. (Margining being the corner stone of centrally cleared exchange traded deriverturds.)

    Maybe it's a question of who the customer was facing (PFG), vs ultimately where their funds sat (Jefferies).

    I assume (sadly), that at the end of the day, this will revert to communism, where the prudent are ultimately forced to subsidise "others".

    Your cash may be wholly at Jefferies, but it becomes common property compensation for the most exposed, highly intelligent guys, collecting a real 0% APR on imaginary PFG cash balances.

    There are few dumber places to put unused cash than in a borkerage account.
  314. i never even heard of this company before this.. but i never traded futures either.. plus i use IB for everything..
  315. I trust IB in their Canadian legal environment way more than anything in the American Post-regulation age environs.
  316. Unfortunately brokers currently only have to post margin on the net positions of all of their customers.

    So if longs and shorts in say the emini are about equal among a broker's customers, the broker has to post only a minimal amount of margin with its clearing firm and/or the exchange.

    The CFTC is changing this soon.
  317. Thankfully. Considering your explanation which is shorter and clearer than the official release, one has to wonder at the level of naïveté that could theoretically accept $1 margin for $100 million overall trades. That could be the nett difference.
  318. I posted in the PFG thread, thought the MFG folks may be interested that there's a senate hearing set, Wednesday, August 1, 2012, at 09:00 AM. The Committee will conduct a hearing to continue its ongoing examination into the collapse of financial firm MF Global as well as the recent collapse of Peregrine Financial Group.

    There's always a live feed provided as well as a tape replay. The CCC has a link on their site for the hearing. http://customercoalition.org/

    Senator Roberts provided some fireworks at the last hearing, I expect some serious questioning of both the MFG and PFG trustees, the NFA's Roth and CME's Duffy, CFTC's Gensler and Sommers.

    I got violated in both MFG and PFG, both Senate Ag Committee Chairwoman Stabenow (D-MI) & Ranking Member Roberts (R-KS) are getting another letter from me as inept as that sounds, nevertheless.
  319. I think it's good that you write to them. If more people do perhaps they might do something about this scandalous situation.

    I'm not American so even though I have money on the line I'm pretty much a spectator here.
  320. Well spotted. School boy mistake on my part.
  321. Ummm ... just for the safety of the rest of us, what broker are you using now? (Wink wink, nudge nudge)

    Seriously, I have a lot of sympathy for you since I am sure there are others in this boat.
  322. Brokers apparently can't make money on 2 dollar commissions, so they resort to many tricks to make their big money. The PFG CEO said that he managed to lose money almost from day one but made it up on volume and photoshop purchases.

    All of us would be wise to ask the question "How are they screwing me at this particular place/ business? ...." A little thought would help you surface several surprises where money and life is concerned.

    Banks are a spread business on money. With low interest rates, the FED is literally destroying their business every single day. The longer it goes on the more trouble when interest rates finally turn.

    Retail is a spread business on goods (many treasures pretty worthless when removed from the store.)

    Brokers are a spread business ( AKA bend over and spread em)

    I have never figured out what government is all about. Some kind of security against things which government really can do little about? The ghost in the machine? A kind of insurance play against things they do to you in the first place? I am not sure.
  323. Also the CFTC change (if it really does go through later this year) is going to require brokers to post vastly larger security deposits (aka margin) with their clearing broker or the exchange.

    This will greatly reduce the customer cash left with the broker to "invest" for the benefit of the broker.

    Since much broker profitability is based on the various ways they can "invest" this customer cash, I am wondering how many brokers will go out of business. It should also force discovery of any other brokers who do not really have this customer cash unencumbered. There may be brokers with accounts labeled "Customer Segregated Funds" at the bank, who nevertheless have pledged these accounts for other purposes.
  324. The CME has proposed that they hold the funds but rebate interest back to the firms.

  325. Thanks for the kind words, it is appreciated.

    I'm out of the game for the moment, not with anyone, the reason at this point must be all too obvious.

    MFG'ed, PFG'ed, now I'm OMG'ed.

    I'll have to do my due dilligence first on a new broker. You know that Larry Williams and his wife Louise both lost 6 figure accounts at PFG, seeing as I'm a follower of Larry Williams, I'll take into account where he's moving to in my decision process.
  326. The interest would be approximately zero on the kind of conservative investments the CME would make.
  327. As it should be in this zero rate environment. But in other environments it will be higher. I have no problem with my money (that they are drawing interest on) being kept in bills or other short term very highly rated paper.

    Or would you prefer the Penson approach of taking down racetrack paper?

  328. The point I was making is just that some brokers who have been investing their customer segregated funds in higher yield investments may withdraw from the business or raise fees.

    I am just saying watch out for that, not that it is a bad thing! Marginally profitable brokers will become even more marginal. If some of them are still investing in racehorses or whatever undetected, we may have more failures.

    That is a reason to avoid marginal brokers in my opinion. That would be the action item to consider.
  329. "The first time we heard it was an outlier, then it happened again".

    Isn't murder an outlier? Your point is?

    Just to add, after it happened again, if it happens yet again people are going to be upset. So the first 2 times people were not upset?

    This is the quality of leadership that gets elected?
  330. this thread will never die! haha
  331. Noticed that bwolinsky has been uncharacteristically quiet.

    I wonder how the lawsuit goes.
  332. At this point I would like to ask if anyone (or everyone) sees jut how insane it was for people to focus on the fact that no one in an American account had lost money for x number of years. When the foundation is faulty it does not matter that building has not yer collapsed and you could see how weak the foundation of segregation (and the rules governing it were) 20 years ago or 50 years ago.

    Disaster was a long time coming but it came. And NOTHING has been fixed.
  334. +1

    I am glad I am a dual citizen now American/Canadian. Canucks are protected Americans are screwed. CIPF will protect Canadians.
  335. Ah - so it was the regulators to blame for fining him too much. That is likely to be a first in history. Not sure how that excuse flies in the face of his admission to starting the fraud almost immediately after starting his business. Did regulators know something early and fine him big right off the bat?

    Generally speaking churches are against theft, embezzlement, lieing, stealing, drugs, drinking, suicide, etc. I am not sure if he is going for breaking all 10 commandments in his lifetime or not. (I am sure the pastor didn't have money with PFG.) There doesn't seem to be much there to work with for the pastor.

    We should have as much compassion for him as he did for the people he harmed.
  336. " Linda Livingston, a pastor at Ascension Lutheran Church who knew Wasendorf in high school, told the judge that Wasendorf could move in with her and her husband if Wasendorf was allowed to leave jail....."

    so a 3 way............:D
  337. Almost like the petty dictator of a small country before it all falls apart. Complete with palatial holdings and propaganda arms (the futures magazine). In delusion even in the last days. "Here have some free wine bottles from the liberated segregated customer funds!"
  338. On a related matter:


    "The authorities came to believe that an employee in MF Global’s Chicago office transferred the customer money, perhaps inadvertently, to banks like JPMorgan Chase."

    Interesting wording - does that mean that a rogue clerk and a fat finger incident occurred but nobody knew for a few years about it? Good on JPM for rescuing customers.

    One poor fellow even lost "potential interest" - a real sad tale of woe! (I lose some "potential profits" every year! Could I file a claim somehow?)


    Perhaps there is hope for PFG as well given time.
  339. A primer on how to forstall continuing inquiries. Years ago the head of the securities department of a major New York law firm told me that you can steal as much as you want in the investment business without doing time. Just be sure that you can make everyone whole if you get caught.

  340. Here's some news that I was hoping for :


    "A federal judge rejected U.S. Bank's motion to dismiss a lawsuit that accused the bank of letting Peregrine Financial founder Russell Wasendorf Sr secure loans against money that belonged to his brokerage's customers, a court filing showed......"

    So there is still hope that U.S. Bank might settle and make PFG customers whole or nearly so......
  341. Why is this ruling so surprising? US Bank MUST and WILL pay for its employees gross negligence not to say criminal acts.

    Not to forget about interest for every investor they owe money + a nice fine to NOT REPEAT it.....
  342. Exactly right!

    But you are about the first person I have seen on any forum to say that, or indeed to say anything at all on U.S. Bank liability.

    People are far too apathetic and have been focusing on how to write off losses for tax purposes or on future reforms instead of first and foremost getting their money back!

    Thank goodness the CFTC has now sued U.S. Bank (after waiting a year). We also have the class action lawsuit pending. It is very helpful that other banks sued by regulators on a variety of issues have been settling recently and paying out billions to do so. It sets the right tone. Hopefully this one will have the same outcome.

    I was afraid for a while that the Trustee might cave and settle with U.S. Bank on grossly inadequate terms just to get the bankruptcy finished quickly. U.S. Bank has been stalling on even paying back the remaining cash balance of PFG's accounts without an agreement with the Trustee that it likes.

    Fortunately the CFTC suit makes it impossible for the Trustee to settle with U.S. Bank for too small an amount while the suit is pending.

    If you know of any forums or ways to increase pressure on this issue, please post them!
  343. US BANK's negligence and forestallment has been well known by my attorney's since they interviewed Russell Wasendorf <u>JR</u>.

    Their involvement will pass this judgement but doesn't curtail them from amends like lost profits or how they handled my accounting department's balances.

    If on one day you see a double wire be added to your account, then that money should be the signal something's not right at all...
  344. They have just proposed the second distribution. The first was 30% for customers who used U.S. exchanges. The second will be only 7%.


  345. This makes me sick...
  346. More news.

    The Trustee is proposing an agreement with the class action plaintiffs to coordinate their suits against the banks and other defendants.

    That part sounds fine to me in principle.

    However, I am puzzled by one part of the agreement which is cited by the WSJ in a story titled
    "Peregrine Trustee, Customers Strike Deal Over Legal Claims" :

    "One condition of the trustee's agreement is that the customers and Peregrine settle legal claims against one of those banks, J.P. Morgan Chase Bank."

    Why is the Trustee requiring that customers's representatives settle with JP Morgan? What are the terms of the proposed settlement? Are they favorable or are we just giving up our claims against JP Morgan for no good reason?
  347. No, it is because JP Morgan held custody of assets transferred between them and US Bank where segregated accounts were held and so Morgan was creating the actual segregation while US Bank handled the pools futures transactions in a ledger whose only purpose was to total funds up to required margin levels and segregate the excess margin by showing that this was at JP Morgan And held futures positions for benefit of the accounts allocation in the commingled pool with US Bank and this is what made the scheme illegal in that segregation is only with regard to the funds held by the investors excess margin meaning cash only protects futures customers who are not participating in the market but otherwise own the contracts in the commingled pool when at maintenance margin call levels the excess margin ended less than the required maintenance margin agreements between investors and the exchange's FCM PFG defaults in this scenario because it ended up being that by segregating excess margin only that makes it possible for maintenance calls for trades in the US Bank commingled we'll just say large fund that what is left over in the supposed segregated accounts at JP Morgan where funds I personally wired from US Bank to JP Morgan House accounts when funds are received they are treated as funds of the broker and this allowed PFG to cast a shadow on who really held the securities of this particular FCM so that PFG's CEO Russel Wasendorf regularly used this particular account to move all cash positions to it in order to show the company's results were stable and so JP Morgan loaned money that captured the US Banks segregated Assets at JP Morgan by margining excess liquidity through tally direct accumulation of firm when accounts were merely held to task and keep notes as to who and how much money is being made.

    This embezzlement is still illegal because underwriters at both banks and particularly with regard to the Morgan House account using excess liquidity as collateral allowed the CEO to create a fraud which could not have been detected by NFA or CFTC officials without live wire monitoring of bank accounts so that funds for the purpose of segregation appeared to be segregated in that everything is accounted for but when maintenance calls in the market exceed excess liquidity being truthfully lower than shown by the excess liquidity of the JP Morgan House Account only that house account being composed of nearly 24,000 accounts presented an opportunity for PfG's CEO and his son to essentially make PFG appear to be more capitalized than it really was since loan payments came due which washed customer segregated funds away at Morgan leaving accounts at margin or maintenance levels to be capitally deficient and produced a default that froze all cash positions and per CFTC requirements resulted in clients being only able to close open futures positions and wait for their return of capital which if loans made via JP Morgan's House account were not represented in debentures to be part of PFG's assets they really were in fact property of nearly 24000 individuals and entities so while customer money was segregated any banks writing loans using segregated asset account values reported by PFG as being part of an FCM and brokerage house account allowed a fraud to occur that cleverly combined the rudimentary appearance of so-called house accounts which have different stature and meaning between the futures and securities industries. Because PFG was also a Broker-Dealer, it used a non compliant oversight to facilitate the legal categorization of house accounts as property of that dealer, whereas in the futures industry house accounts should be internal proprietary trading capital earned through successful trading in properly classified fund level accounts.

    Thus, both US Bank and JP Morgan are guilty of gross criminal negligence that allowed futures customers to segregate cash to JP Morgan's PFG BEST'S House account and through some quick software upgrades allowed the account of every customer's deposit to immediately be considered equity in a securities over categorization which determined custodial uses under SIPC for brokerage accounts but granted to futures customers access for the company to install loans and debit customer funds as they new debts issued to PFG made the possibility that the liquidity wash instantly took a day's margin or maintenance level to be undercapitalized in the sense that were there losses in the commingled fund list of positions at the FCM sent excess liquidity available through the establishment of a futures customer's registration and remittance to JP Morgan House account to be pledged and paid as collateral for various loans the CEO Wasendorf made through the fraud and thus even though PFG had some of the best securities and futures trading algorithms available to it the fact is that at one point a debit to the house account was taken because it was identified and legally considered to actually be net equity of the company when the net equity of the company was literally trivial to the eventually is momentary when House accounts were somehow not large enough to one the positions of every customer's loan so the futures customers have received compensation thus far of 30% and another 7% interim distribution that should be tacitly refused and denied by the judge who should fair side-by-side that illegally modified loans cannot be used to deny owners equity that was segregated but through the compliance procedures made books and financial records able to withdraw and leverage all deposits made towArd PFG's numerous other failed ventures.

    Both JP Morgan and US Bank are directly responsible for the misrepresentation of the house accounts as bona-fide property of PFG and so with illicitly nonregulated investment activities allowed lenders to contact these banks with regard to the "net equity" of "PFG's House Account." So, in failing to verify the purpose of funds verification requests and checks allowed the CEO to make customer property appear to be net equity attributable to PFG when it was actually the customer's own sacred segregated money that was fraudulently bankrupted through illegal approval of loans and oversights who did not verify directly whether reports in bank statements were true or not. However, given if true, the account was commingled in cash, broke down to dtc number parceled between securities and futures customer accounts who deposited via FBO remarks in wires verifying a net equity investment securities regulators consider as equity investment in the company but through software along with securities individualized the accountability of every deposit to be fraudulently used as money on JP Morgan and US Bank response to debentures written against their net equity so since nobody was aware that fund ach wires checks and transfers were essentially bunched into one dtc number gathered out then futures customers house deposits thereby misrepresented so that both JP Morgan and US Bank should have been able to deny reporting PFG's CEO Russell WAsendorf then used to obtain the loans that ultimately caused PFG's default.
  348. are you on speed or something? that had no punctuation.
  349. IPhone5 response is just too hard to scan.