U.S. regulatory authorities have announced that nearly $220 million belonging to clients is missing from PFGBest brokerage firm accounts, just hours after the founder of the company attempted suicide, informs CNBC. This new event has refueled concerns about brokerage industry stability, less than one year after the scandal of MF Global collapse. After the bankruptcy of MF Global it was discovered that about $1.2 billion was missing from customers’ accounts.
PFGBest has announced its customers that funds from accounts opened with the company were blocked and that they can only liquidate open positions, without withdrawing money or initiate new transactions. National Futures Association, a U.S. group of industry with regulatory powers, announced it decided to immediately stop the operations of PFGBest, after discovering that a bank account which the company said it contains $225 million had only $5 million.
The announcement came just hours after PFGBest founder and chairman, Russell Wasendorf Sr., was found in his car, near the company headquarters after a suicide attempt. PFGBest, which was intermediating transactions for the past 20 years, has sent customers that it is in liquidation, “in the context of investigation of irregularities in company accounts.” PFGBest customer accounts should hold $400 million, less than one tenth of the MF Global funds when the brokerage firm went bankrupt.
One of the PFGBest brokers said that the son of Wasendorf Sr., Russ Wasendorf Jr., informed the employees about the events, saying he found a note announcing the suicide, with allusions to some financial problems in the company. Young Wasendorf “seemed to be in another world,” said the broker. The local office of sheriff has said that they don’t have information on attempted suicide, and the local hospital reported that there is no patient admitted under the name Russell Wasendorf.
Russell Wasendorf Sr. began his career as a commodity trader from his basement in 1972, offering seminars and programs for other traders. In 1990, Wasendorf launched Peregrine Financial Group, which would later become PFGBest. The business expanded in the late ’80s, after investments in the stock market in the context of “Black Monday” crash in 1972, according to the company website. PFGBest has expanded strongly over the past decade, opening offices in Canada and Shanghai, and by acquiring rival Alaron in 2009.
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