NEW YORK — Eight months after the shock bankruptcy of MFGlobal, another respected futures brokerage, PFG, is being sued for fraud by US regulators in the latest black eye to confidence in futures trading.
In a complaint filed Tuesday in an Illinois federal court, the US Commodity Futures Trading Commission accused Peregrine Financial Group and its sole owner and chief executive, Russell Wasendorf, of misusing customer funds.
The CFTC alleged that PFG and Wasendorf — who it said tried to commit suicide at PFG’s Iowa office on Monday and is thought to be in a coma — “failed to maintain adequate customer funds in segregated accounts.”
The CFTC alleged they falsified information in filings and overstated the company’s bank deposits, leaving a shortfall that currently, and has previously since 2010, exceeded $200 million.
The CFTC alleged that PFG and Wasendorf used customer funds for purposes other than those intended by its customers, and said “the whereabouts of the funds is currently unknown.”
Tuesday is a “sad day for the futures industry (and) what’s left of PFG,” said Phil Flynn, an energy analyst who left the company on May 31.
Flynn told AFP that one of the reasons he quit the company was news reports saying that PFG was allegedly involved in a Ponzi scheme in Minnesota.
Since February a string of US press reports, in Minnesota and in Iowa, where PFG is based, have suggested links between PFG and a $200 million Ponzi scheme run by Trevor Cook, who is serving a prison sentence.
Victims of Cook’s Ponzi scheme filed a federal lawsuit against PFG, alleging the firm played a key role in the fraud.
“I had concerns based on what I was reading,” Flynn said. “I had no proof that they were doing anything wrong.”
Flynn said “apparently everybody is gone” at the company where he worked for five years. The financial press has evoked layoffs by the hundreds at PFG.
Peregrine executives were not immediately available to comment on the lawsuit.
The Federal Bureau of Investigation said it was involved in the case.
“We are assessing the situation and reviewing the facts,” said an FBI spokeswoman in Omaha.
The CFTC suit came a day after the National Futures Association (NFA), responsible for monitoring PFG for compliance with reporting requirements, took an emergency enforcement action against PFG and Peregrine Asset Management.
The NFA blocked new or additional customer accounts or funds, alleging PFG had failed to prove it met capital and segregated funds requirements.
According to a July NFA audit, “PFG falsely represented that it held in excess of $220 million of customer funds when in fact it held approximately $5.1 million,” the CFTC said.
The PFG troubles evoked memories of larger MFGlobal’s spectacular collapse last October and the disappearance of more than a billion dollars in customers’ funds.
James Williams, an energy specialist at WTRG Economics, lamented the latest blow to the markets.
“Commodities trading has an increasingly bad image,” he said, adding that the majority of traders are “straight-up and honest people.”
Trump’s racism is ‘disqualifying’ for him to remain as president: former White House lawyer
Former acting Solicitor General Neal Katyal explained on MSNBC on Thursday why he viewed President Donald Trump's racist attacks on four women of color in Congress as disqualifying.
Anchor Brian Williams read a quote from Susan Glasser of The New Yorker.
"Half of the country is appalled but not really sure how to combat him; the other half is cheering, or at least averting its gaze. This is what a political civil war looks like, with words, for now, as weapons," Glasser wrote.
Lawrence O’Donnell reports on the growing movement for the impeachment of President Donald Trump
Anchor Lawrence O'Donnell reported on the growing movement for the impeachment of President Donald Trump during Thursday evening's "The Last Word" on MSNBC.
"The House of Representatives conducted a symbolic vote on a hastily written impeachment resolution by Democratic Congressman Al Green in reaction to the president’s tweeted comments that the House of Representatives voted to condemn as racist," O'Donnell reported. "The impeachment resolution had nothing to do with the [Robert] Mueller investigation and referred only to the president being unfit for office because of the language that he has used recently about members of Congress and immigrants and asylum seekers."
Video proves how far the Trump’s GOP has gone from the era of Ronald Reagan and HW Bush
The immigration policies of Donald Trump’s presidency would have no room for his GOP predecessors Ronald Reagan or George H.W. Bush—who both embraced work visas, family unification, easy border crossings and a better relationship with Mexico.
That counterpoint can be seen in a very short video clip from the 1980 presidential election where Reagan and Bush—who became Reagan’s vice president for two terms before winning the presidency in 1988—were asked about immigration at a campaign debate in Texas. Their responses show just how far to the right the Republican Party’s current leader, President Trump, and voters who have not left the GOP to become self-described political independents, have moved on immigration.