Every now and then, you begin to read a news article, expecting to finish it without more than a shrug on the content. For many of the PFGBest stories that have come out in the past couple of months, that’s been the case.
And then there was today.
We wrote in the past about the NFA attempting to improve its processes by hiring Berkeley Research Group to look into its auditing practices, and where it went wrong with PFGBest. Today, Jacob Bunge with the Wall Street Journal reported on just what the Berkeley Research Group has been up to:
A key financial regulator has interviewed the executive team that ran Peregrine Financial Group Inc. in an effort to improve oversight of the industry, which was heavily criticized in the wake of the broker’s collapse last July.
Investigators working on behalf of the National Futures Association talked with most of Peregrine’s senior ranks, including jailed founder and Chief Executive Russell Wasendorf Sr., over the past month, according to people involved in the process.
Not all that inflammatory, right? They’re trying to learn from their mistakes, so they’re looking at how they were made. Sure, we’d rather they ask Wasendorf where the money is, but progress is progress, and at least they’re speaking with him directly… even if it does sound a bit like the plot of Catch Me If You Can. Except the article goes on to say:
In addition to Mr. Wasendorf Sr., who spoke with investigators at the Cedar Rapids Correctional Center in Iowa, investigators from Berkeley Research Group in December met with his son, Russell Wasendorf Jr., Peregrine’s former president and chief operating officer, according to people with direct knowledge of the matter.
Investigators also interviewed Brenda Cuypers, Peregrine’s former chief financial officer; general counsel Rebecca Wing; and Susan O’Meara, who had been the firm’s chief compliance officer, these people said.
Ok. So they spoke with the senior folks from PFGBest. The same folks who claimed to have no knowledge of the scheme or any wrong doing at the firm. That story was hard to swallow before… but now there are only one of two possibilities – EITHER the questioning indicates that they didn’t know anything, which means they’re wasting time or resources, OR the questioning reveals valuable information, in which case, we’d like to see some accountability.
Really, it’s very difficult to imagine a world in which the executives in charge of compliance and finance had no knowledge of $200mm in client funds disappearing into the night. Either they were grossly negligent, incredibly foolish, or a blend of the two. It’s one thing to pull the wool over the eyes of green auditors right out of college with no understanding of the industry; it’s quite another to “fool” seasoned professionals who you’ve hired to manage your books and regulatory status.
We’ll keep monitoring the situation, but for now, here’s hoping that all of this research yields results in one way or another, and that our version of Frank Abagnale gets what’s coming to him.