PFGBest Update: NFA on hook for $870k?

If you’re going to read mainstream media coverage of the PFGBest scandal, and you’re not reading the Wall Street Journal – particularly Jacob Bunge – you’re doing it wrong. Today they report:

The note and the statement, which a person familiar with the situation said were left by Peregrine Chief Executive Russell Wasendorf Sr., blames the fraud on “mean spirited” regulators that dogged his firm, saying they were looking to put firms out of business rather than protect commodities investors. The statement also said that deceiving the regulators was “relatively simple.”

“Most of the misappropriated funds went to maintain the increasing levels of Regulatory Capital to keep [Peregrine] in business and to pay business [losses],” said the signed statement, which was reviewed by The Wall Street Journal. The statement says the misappropriated customer funds also were used to build Peregrine’s headquarters in Cedar Falls, Iowa, and to “pay Fines and Fees charged by the regulators”

At first glance, one might think this news item is a bad thing. After all, he’s saying the money was spent.  But hey- at least it’s not in some Swiss bank account we’ll never find. If much was spent on hard assets – like his private jet – that may be better for the customers as they can expect to get some sort of value from their sale, even if it is just cents on the dollar. Every penny counts.

Another silver lining? The NFA – those regulators that bungled this “relatively simple” fraud for two decades – are the ones who received the money. The problem is that it wasn’t theirs to receive; Wasendorf Sr. stole it from the client segregated funds. However, what this means is that they know exactly where it is (in their war chest).  We’re here to ask them to immediately return said funds to the courts to be included in the bankruptcy proceedings.

We can see from the NFA’s website that PFG has paid the NFA and CFTC $870,000 over the years. We are reaching out to various legal representatives to argue that those funds should be put towards making clients whole. True, this is hardly enough to make up a $200 million shortfall, but it is certainly enough to get things started in the right direction.

 Dear NFA – please send $870,000 to the customer assets pool of the bankruptcy immediately. 


  1. That would be a good start — as well as suing the NFA and CFTC for criminal negligence, if some of the reports regarding their regulation are true.

    Who gets the royalties from the upcoming book sales?

  2. yes, that 800k would surely help!

  3. did anyone notice that NFA has a $42 million fund balance based on their 2011 annual report (2012 should be out any day)? While it can’t cover the whole loss, it can definitely cover a piece. Also, what about the CPA “firm”. Isnt there some requirement for them to have liabilitiy insurance? Also, does NFA have D&O insurance? The problems with Peregrine start at the top–the highest levels within NFA. I know, i worked there for a very long time. Even the most senior levels of NFA have no previous work experience. They get great benefits, pretty much work 9-5, get year round flex time, great health benefits (especially the execs) and a generous 401 k match (maybe that should be suspended and put in a fund for PFG clients?). Why leave? it’s pretty comfortable. So you have a group of apathetic underachievers who have a pretty cushy lifestyle and are paid pretty well for no accountability. Time for change and it needs to start at the top.

  4. I agree, the NFA should be held accountable for their negligence. These people were given the responsibility to make sure that firms like PFG Best are not supposed to do this. Once all the assets from PFG are liquidated and we cant squeeze anymore money from them. We should file a class action law suit against the NFA and CFTC. Because of their incompetence, hard working Americans are suffering. Last I checked, the law is supposed to protect the people and hold corporations responsible for their actions. The NFA never really cared about “regulating the industry.” All they care about is the bottom line and their company vacations. These people are just as scummy as Wasendorf Sr was.

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