I would imagine that the NFA had not taken any of the tips or warning signs about PFGBest too seriously. Up until last week, Mr. Wasendorf, the CEO of PFGBest, was prominently listed as a member of their advisory board.
And as you may recall, a few days ago I posted an article from Atlas Ratings that had placed PFGBest in their lowest 5% of brokers because of their odd financials.
PFGBest had just been given a clean bill of health by NFA in January, in the so-called rigorous industry review inspired by the spectacular failure of MF Global in November.
From their website:
"National Futures Association (NFA) is the industrywide, self-regulatory organization for the U.S. futures industry. We strive every day to develop rules, programs and services that safeguard market integrity, protect investors and help our Members meet their regulatory responsibilities.
Managing risk by trading futures and options on futures contracts is a vital component of the global economy. Every business day tens of millions of futures contracts are traded on an increasingly broad spectrum of products, including agricultural commodities, oil, precious metals, equities, treasury bonds, financial indexes and foreign currencies.
Investor confidence is crucial to the success of the futures markets, and the best way to gain investor confidence is to ensure that the highest levels of integrity are demanded of all market participants and intermediaries.
Membership in NFA is mandatory, assuring that everyone conducting business with the public on the U.S. futures exchanges-more than 4,200 firms and 55,000 associates-must adhere to the same high standards of professional conduct.
NFA is an independent regulatory organization with no ties to any specific marketplace. We operate at no cost to the taxpayer. We are financed exclusively from membership dues and from assessment fees paid by the users of the futures markets."
And in related news, Customer Dodged Bullet, Tranferred Account From MF Global Just Before It Collapsed (wait for it) and put it into PFGBest, where it is now being liquidated/frozen.
I genuine feel sorry for anyone who is taken in by these crooks. It is a terrible thing to see. The markets are rigged against the private investor from top to bottom by the big Banks and trading desks. And if you do occasionally win, the money and assets are squandered and embezzled by sociopathic insiders.
Regulations? We don't need no stinking regulations. Let's strike them all down, and let the devil have his day.
Do you think Wall Street is trying to send you a message? G-E-T O-U-T!
At Peregrine Financial, Signs of Trouble Seemingly Missed for Years
BY AZAM AHMED AND PETER LATTMAN
CEDAR FALLS, Iowa —...
As the founder Russell Wasendorf lies in critical condition in an Iowa City hospital, Peregrine’s angry customers are asking, How could futures industry regulators have missed another potential fraud? The scandal comes just months after MF Global , the defunct futures brokerage firm, lost more than $1 billion in clients’ money.
It now appears that regulators missed the red flags for years.
In 2004, a Peregrine client sent a letter to the National Futures Association, the firm’s primary regulator, and the C.F.T.C., asking it to intervene to prevent it from misusing customer money, according to a person with knowledge of the correspondence and a copy of the letter obtained by The New York Times. Five years later, a tipster wrote to the N.F.A. asking it to review Peregrine’s bank account information for accuracy, according to people briefed on the matter who spoke on the condition of anonymity because the investigation was private. The tip was anonymous, and it is unclear how serious the N.F.A. took it.
The auditor for Peregrine was a one-person shop run out of the accountant’s home in Glendale Heights, Ill., a Chicago suburb. As part of its investigation, the C.F.T.C. is looking into the role that the individual played, according to a person with knowledge of the case.
After the collapse of MF Global, the C.F.T.C. ordered a review of all futures firms to ensure the safety of customer money. The N.F.A. gave Peregrine a clean bill of health in January.
Government regulators are examining whether Mr. Wasendorf doctored bank statements provided to the N.F.A., according to people briefed on the matter who were not authorized to speak publicly because of the investigation. Authorities are also expected to question officials at U.S. Bank, which held the client’s money.
“The entire industry is outraged that it happened the first time, let alone a second time,” said Michael V. Dunn, a former commission of the C.F.T.C., referring to the collapse of two brokerages. “We need to do something about this.”
The N.F.A. declined to comment. Calls to Peregrine’s auditor were not immediately returned...
Read the entire article here.