PFGBest founder 'attempts suicide as $200m goes missing from accounts'
Russell Wasendorf Sr is in critical condition in hospital after regulator issues emergency order to freeze broker's operations
- Simon Goodley
- guardian.co.uk, Tuesday 10 July 2012 06.20 EDT
PFGBest is thought to be much smaller than MF Global, which collapsed last year sparking anxiety over the stability of the brokerage industry. Photograph: Justin Lane/EPA
The founder of the US broker PFGBest is said to have attempted suicide as it emerged that more than $200m (£130m) appeared to be missing from clients' accounts.
Russell Wasendorf Sr, a 40-year veteran of futures markets, was found in his car near the company's Iowa headquarters and is in a critical condition at the University of Iowa Hospitals, according to local news reports.
The apparent suicide attempt came hours before the National Futures Association (NFA), an industry group that also plays a regulatory role, said it had issued an emergency order to in effect freeze PFGBest's operations after finding that a US bank account the broker said contained $225m in customer funds actually held only $5m. "It appears that PFG does not have sufficient assets to meet its obligations to its customers," the NFA said.
One PFGBest broker told Reuters that Wasendorf's son, Russ Wasendorf Jr, had informed employees about the events earlier in the day, saying a suicide note had been found alluding to financial troubles with the company. The younger Wasendorf "sounded like he was in another world", he said.
"Everybody here is obviously in shock," said the broker, adding that some employees had begun packing up shortly after the announcements. "Pretty much everybody around here said we're doomed."
The news is likely to renew anxiety over the stability of the brokerage industry less than a year after the collapse of the much larger MF Global. PFGBest, which has brokered trades in US commodity and forex futures and options for 20 years, told customers their funds had been frozen and clients would be allowed to close open trading positions, but would not be able to withdraw funds or make new trades until further notice.
The company told clients: "Some accounting irregularities are being investigated regarding company accounts … Until further notice, PFGBest is not authorised to release any funds."
Local law enforcement officials said the investigation would be likely to pass soon to the US attorney's office.
PFGBest is thought to be less than a 10th of the size of MF Global when it filed for bankruptcy last year, so the impact should be less severe. However, many traders are still missing money from that collapse, so the news will still be felt keenly in the industry.
Peregrine Financial Group brokerage said to be $220 million short in customer funds
July 10, 2012 5:14 AM
(AP) A regulatory group ordered accounts frozen at Iowa-based brokerage Peregrine Financial Group late Monday, saying it hasn't been able to account for $220 million in customer funds, following what the company said was a suicide attempt by its founder and chairman.
The National Futures Association said it received information that PFG may have falsified bank records, and that the company only had about $5 million of $225 million it had claimed to have in a deposit account. The association, an industry group that serves as a self-regulatory role, said PFG could not demonstrate that it meets capital requirements and rules requiring it to segregate customer funds.
A PGF spokeswoman didn't return phone messages and emails from The Associated Press, and several messages left at PFG's offices in Cedar Falls, Iowa, and Chicago were not returned.
But in a statement to its clients, the company said its founder and chairman, Russell R. Wasendorf Sr., attempted suicide earlier Monday, though it provided no information on his condition. The company said the attempt prompted investigation of "some accounting irregularities."
Lauren Nelson, spokeswoman for PFG customer Attain Capital, said her company has a "substantial amount" of business with PFG and is still assessing how badly its accounts were affected. Nelson provided a copy of the PFG client statement to the AP.
The futures association's action bars PFG from most trading, except as needed to liquidate customer accounts. The company also can't accept any new customer money except to cover existing accounts.
It was unclear late Monday if the government would get involved. Pete Deegan, spokesman for the U.S. Attorney for the Northern District of Iowa, said he could neither confirm nor deny any investigations handled by the office.
But the move is likely to increase scrutiny on an industry still smarting from the implosion of futures firm MF Global last October.
MF Global, a brokerage headed by former New Jersey Gov. Jon Corzine, filed for bankruptcy protection, crippled by disastrous bets on European debt, less than two years after Corzine became CEO.
A bankruptcy trustee is still trying to recover $1.6 billion in money missing from MF Global's client accounts. That case prompted calls for increased regulation of the futures industry.
A message left at a phone listing in Cedar Falls for Wasendorf wasn't returned Monday. The local sheriff's office said it had no information on the suicide attempt, and the local hospital said it didn't have a patient listed under his name.
