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PFGBest

Discussion in 'Scam Alerts' started by Dave Hanson, Jul 9, 2012.

  1. Dave Hanson

    Dave Hanson Private, 1st Class

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    PFGBest just blocked all new orders. The sole owner, Russell Wasendorf Sr., attempted suicide this morning (July 9) in his car outside the firm's headquarters. It came right after the NFA announced it was investigating accounting irregularities at PFGBest. I have my account with them. Has any member had any prior experience with PFGBest?
     
  2. Dave Hanson

    Dave Hanson Private, 1st Class

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    PFGBest is Peteregrine Financial Group of Chicago. The National Futures Association commenced a MRA (Member Responsibility Action) against them today. The MRA states that PFG reported having $225 million on deposit at US Bank a few days ago when in reality they have only $5 million. That's pretty shocking. It will be big news globally. Russell Wasendorf Sr. is toast. I have many thousands (but under one hundred thousand) US dollars in my account. Are there any reputable forex brokers?
     
  3. PipStar

    PipStar Sergeant

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    This is why you should never deposit all your funds with one broker. And one should make regular withdrawals and keep just
    enough funds in their account to cover margin for trades. I have learned this many years ago.
    It is not looking good regarding PFG when it appears from reports so far that 200 million is unaccounted for.
    That's a lot of money. If this money cannot be found, one has to wonder how clients are going to get their funds back.
    I hope for the best. I have no funds with PFG as I abandoned brokers in the USA a long time ago.
     
  4. Pharaoh

    Pharaoh Colonel

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    Hundreds of millions missing and an attempted suicide. This one's getting interesting.
     
  5. BigT1

    BigT1 Sergeant Major

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    Another embarrassing, self-inflicted Black-Eye for my Industry. You spend a lifetime working for small, honestly earned gains, while a few pigs ruin the environment for all. Makes me sick. What's worse is the regulator's may have either been complicit in a cover-up for more than a year, or were completely incompetent in oversight (especially after recent reveals in the the firm's recent past). Anyone who has funds at a firm that claims segregated accounts should separately confirm their account balance with the fiduciary bank said to be holding them, from time-to-time.
    .
    See the NFA official release:
    NFA takes emergency enforcement action against Chicago futures firms Peregrine Financial Group, Inc. and Peregrine Asset Management, Inc.
    and:
    PFGBest Owner Attempts Suicide, Leaving Client Funds Frozen at Futures Broker (UPDATE 2) | Observer
    .
    Anthony Ingrassia, CTA NFA ID#: 0278164
     
    #5 BigT1, Jul 10, 2012
    Last edited: Jul 10, 2012
  6. 4evermaat

    4evermaat 2nd Lieutenant

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    Thanks for this update. So much for "strong" regulation. If those funds are in fact missing, the customers will NOT get their money back (its just not there to pay). It proves what quite a few people were saying all along. Western regulation may be good at spotting unfair conditions, but especially in cases of fraud the trader is ultimately responsible for who they place their faith with. Saying offshore brokers cannot be trusted is very foolish only based on their offshore status. PFG had a very strong reputation which carried over from its futures business.
     
  7. Pharaoh

    Pharaoh Colonel

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  8. BigT1

    BigT1 Sergeant Major

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    Folks,
    As a registered CTA, I am sickened by this occurance. Perhaps I can shed some light on the root of this problem; and pose some possible solutions.
    .
    First, CTFC is the governmental body that is charged by Congress to set the rules and regulations codified by law. The CFTC has established and charges its DSRO (Designated Self-Regulatory Organization), the NFA, to audit and enforce their rules. Due to the low pay scales for such federal government employees, the NFA (and the NASD, the stock counterpart under SEC authority) basically wind up hiring cub lawyers and college grads in Accounting and Finance to staff their audit teams. In general, these employees have little or no prior fiduciary experience, and limited knowledge about the instruments, about trading, about life. To make things worse, in general they have no intention of remaining in these entry level positions as a career due to these conditions. Rather they use their first job as a regulator to parley their newfound acquaintenceships within the firms they are charged to audit into higher paying careers jobs, after a few years with their SRO.
    Therefore, they have little incentive to aggressively inspect, irritate, or uncover anything other than the most blatant incompetence or malfeasance. The main goal is to catapult their personal careers in the financial industry and you don't do that by being the bad cop. Indeed you bend over backwards to assist the firm in correcting any issues found.
    .
    In this case, there were significant findings of wrong doing at this firm going back more than a year. Either the NFA was complicit in a cover-up, or was completely incompetent at most basic auditing. This is not rocket science. Verifying the bank accounts against the records of a firm is bookkeeping 101.
    .
    Part of the answer is for the US government to wake up and authorize the hire of experienced, senior people, those who have been regulated and have a clean 20 yr work history and do so at proper industry salaries. Furthermore, prohibit them by contract from later joining any firm they have audited or who has had a negative regulatory history for a period of 5 years after working for the SRO.
    .
    Secondly, The Banks that profit from, and are hired by, the FCMs and Broker-Dealers to act as custodians of the segregated account funds, should be required and be held responsible for monitoring the reported statements of their financial customer firms to ensure that daily, the balances claimed by the customer do not differ signifigantly from the balances shown on the books of the bank. If they do, or if there is rapid change in aggregate holdings, it should be required they immediately report to the SRO. As usual, the banks get a free ride, paying zero interest on segregagted funds, and should be held criminally and financially responsible for failure to oversee their regulated clients' balance statements. If they don't like it, they don't have to do this kind of business.
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    Third, There should be enacted the most serious criminal penalties for any Licensed Financial Professional who intentionally diverts a clients' funds. At the Executive level, I believe this should extend to the death penalty; even though for the general public I have always been opposed to it. When one voluntarily accepts the mantel of fiduciary responsibility for another's assets, and thus gain the priviledge of earning outsized salaries, bonuses, and commission, one should be held to the most stringent standards. If death by firing squad was in place, I don't think we would have the Madoffs, Corzines, Ponzis, and a host of others now and in the past to deal with; and the industry and public interest would be much better served. This should extend through international treaty to transcend barriers to extridition that would otherwise apply.
    .
    Just one man's opinion.
    Anthony Ingrassia, CTA
    NFA ID#: 0278164
     
    #8 BigT1, Jul 11, 2012
    Last edited: Jul 11, 2012
  9. BarrySDCA

    BarrySDCA CommercialNetworkServices.com Representative

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    this just proves there is no real benefit to regulation until traders accounts are insured against these shenanigans like SIPC or FDIC. Only then will "NFA" be seen as a competitive advantage/a good thing.
     
  10. BigT1

    BigT1 Sergeant Major

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    NO! The FDIC was created to relieve depositors' anxiety with regard to placing their monies in Chartered Banks following the numerous bank failures of the 19th & early 20th centuries. The SIPC was created to assure some modicum of protection for those who dealt with securities firms that failed or committed fraud. Neither were put in effect to enable or immunize crooked operators and insulate completely happless investors.
    .
    Unlike commercial banks whose primary business revolves around making secured and unsecured loans over time, involving considered judgements on the creditworthiness of borrowers where a measure of risk is assessed in good faith and where failures can occur due to bad judgement, Custodial Banks like US Bank Corp (as in this case), State Street Bank, NY Bank Corp, Mellon Bank, etc., these banks' Custodial Banking Services are presumed to be largely a riskless business activity. Gobs of "Free Money on Deposit" and we can charge fees too! The warehousing of secuities (pieces of paper), of gold, diamonds, and other precious commodities; the holding of cash, the clearing of bank transactions with other well capitalized firms, the transfer of currencies in physical form, and and the instantaneous electronic transfer of funds from bank-to-bank, or other qualified ACH entities. So First for these entities, all the profits and the capital of the Custodial Bank should be held at risk against any Custodial banking shortfalls, for the failure to fulfill their primary legal fiduciary responsibilities that are at the heart of Custodial Banking.
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    The legal standard is, or should be: The Custodian shall be required to know, or shall have been reasonably expected to know the true condition of the firms for whom they act as a Custodian at all times. If this were the actual case and so enforced, the Bank and its bankers would be in, on, over, and under those firms whose money they hold. If they knew that literally their firm's and their personal licensure, their careers, their personal assets, their life, plus the assets backing their shareholders' valuation, and their bondholders' principal were all truly at stake before even a single dime of federal guarantee funds would be forthcoming from the taxpayer; believe me, this could not, and would not have occurred.
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    For those of you who will assert: Oh, the FDIC and SIPC funds come from fees paid by their member firms! I say, those fees are simply passed through to the retail customers, who not only are the ones who prima facie remain at risk even after paying this bill, but are also expected to ulitimately fund the cost of the entire industry's insider malfeasants. When those pidling, window-dressed SIPC and FDIC buffer funds are depleted, it remains the US Taxpayer who is on the hook to back the system and its banks with unlimited funds, now being borrowed in truckloads from still willing international lenders. US taxpayers remain unwilling to stare reality in the eye. But for how long can this continue?
    .
    Be it also known: The worst disasters likely still lay ahead. Ex.: Whenever you hear of a vulture firm descending upon some wounded corporate carrion, ripping its flesh, exporting its jobs and underlying businesses, firing its workers, busting its unions, draining its treasury, raiding its Pension fund, and then driving it into bankruptcy; remember it is the the US taxpayer backed by the PBGC (Pension Benefit Guaranty Corp) that is unloaded upon. This woefully underfunded government insurance plan must then slash payee benefits, and dump the remainder of underfunded future costs upon the US Treasury, while the corporate raider buys a few more Cadillacs for his wife, drops a dime in the collection box, and rides off into the sunset on his jet ski on a sunny New Hampshire lake.
    .
    When this garbage balloon pops, it will surely make these escapades seen today look like mere chicken scratch.
     
    #10 BigT1, Jul 11, 2012
    Last edited: Jul 15, 2012

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