Stop us if this sounds familiar: at PFGBest, a well-regarded, Iowa-based brokerage specializing in futures and foreign exchange trading, more than half of the customer funds are missing, its own funds are now frozen, and no one knows what anyone did with the missing $220 million. "You would think that the government would be watching these accounts and doing something," one PFGBest employee told Reuters, about the missing funds and the gigantic mess that PFGBest is in. "The NFA [National Futures Association] can't regulate this industry." Ouch. And that employee is probably right, as The National Futures Association, the organization which self-regulates the futures industry, froze PFGBest's assets while regulators said the company lied about its deposits by more than $200 million, according to The Wall Street Journal's David Benoit.
It's helpful to think of PFGBest as a pocket-sized version MF Global debacle. The missing funds aren't anywhere near the $1.2 billion that went missing at MF Global, but a lot of it sounds the same with the firm allegedly dipping into customer funds, large sums of missing money, and frozen assets. Though, PFGBest CEO Russell Wasendorf Sr.'s failed suicide attempt probably doesn't have an MF Global equivalent.
What makes PFGBest arguably more frustrating than MF Global is that no one has apparently learned any lessons from what happened at MF Global nine months ago, and there's still no working system to protect people from this type of fraud. And it's more embarrassing especially since Wasendorf and co. had just been in trouble with the NFA this past February for a Ponzi scheme they failed to recognize, according to a Reuters report. At this point, it's still unclear what happened to those customer funds, and it doesn't look good as The Wall Street Journal is reporting that PFGBEST customers were notified this morning that their trades were being "liquidated."
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.