PFG collapse the latest in a growing list of troubled financial firms unraveling

Thursday, July 12, 2012
By Paul Martin
July 12, 2012

FINANCE – When commodities brokerage firm MF Global collapsed last October, losing $1.6 billion in customer funds in the process, Christopher Dickerson was sure he’d dodged a bullet. Just one month before the collapse, Dickerson had taken the bulk of his money out of his MF Global account. “I was thankful to the Lord I’d pulled my money out,” said Dickerson, who works at a coal mining company in West Virginia. He’d moved his cash, about $250,000 in all, to a smaller commodities brokerage firm based out of Cedar Falls, Iowa, called PFGBest, because it was offering the same services he sought — Dickerson trades futures contracts in his spare time — for much lower fees. “I thought that would never happen again,” Dickerson said. “Stupid me.” On Tuesday, Peregrine Financial Group, which operates PFGBest, filed for bankruptcy, the same day that the Commodity Futures Trading Commission filed suit against the firm for fraud. The day before, police in Cedar Falls discovered the firm’s founder, Russell Wasendorf, unconscious in his car near the firm’s offices after an apparent suicide attempt. According to reports, he has now emerged from a coma. In the complaint, the CFTC accuses Wasendorf and his firm of illegally tapping into customer funds since at least February 2010, and falsely reporting to regulators that it had over $220 million on its books when in reality the firm had just $5.1 million. The complaint also alleges that Wasendorf falsified some bank records he’d sent to regulators. –Huffington Post

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