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Looks like we have another MF Global on our hands. Peregrine Financial Group, a one-man operation run by Russell Wasendorf, ripped off its clients to the tune of hundreds of millions of dollars, as reported by Reuters. While smaller than the MF Global or the Bernie Madoff scams, on all other levels it’s pretty similar.
Russell Wasendorf Sr., the sole owner and chairman of stricken futures broker Peregrine Financial Group, Inc., intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation told Reuters.
The National Futures Association on Monday froze the funds of the Iowa-based brokerage, which does business as PFGBest, after discovering an estimated $220 million shortfall in PFGBest’s customer accounts. The NFA had said in an affidavit that Wasendorf “may have falsified bank records.”
Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud.
Wasendorf would intercept the documents as they traveled between the National Futures Association and US Bank. The NFA for some reason agreed to mail these documents to a post office box in Cedar Falls, Iowa, rather than to the bank itself. Wasendorf would then make it look like the accounts at the broker were flush, but it turned out they held only $5 million. More than half of the customer money had vanished. Years into the scheme, the NFA finally caught on, requesting that they confirm balances directly with the bank. Wasendorf eventually authorized this, and days later tried to kill himself.
Naked Capitalism has more. This happens with far too much regularity these days. Ordinary investors have a better chance of “beating the market” by going to an actual casino rather than putting their faith in this band of jackals. At least at the casino you know going in that the odds are stacked against you.
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There’s no such thing.
What do you expect when you’ve got a friggin _industry association_ acting as regulator? Foxes watching the chicken coop.
DDay, I’m surprised you did not include an answer to the most important question!
With respect, I disagree. It may be much harder for your generation, Kris, but for those of us of a certain age (at least), there were and are still “ordinary investors.” And it’s damned difficult, to say the least, where one should stash one’s cash these days.
I’m fortunate enough to have a little something (yes, very lucky, but then again, I did live frugally). There are others out there like me. To say that we’re all being royally screwed is putting it mildly.
But unless or until us “ordinary investors” in the 99% start getting a fire in our belly about this daylight robbery… well, the beat will go on.
How many times have we witnessed here commenters whining about regulations as if they were the scourge of Satan? Yet if some 99%er loses their money, these same commenters will diss them and say that they’re lazy, stupid, got what they deserved, yadda yadda. Galt’s Gulch is alive and well with some people who truly should know better. Maybe some of those libertarians were Peregrine investors… and maybe they’ll start waking up and smelling some coffee…
I won’t hold my breath, however.
The failure of Holder to investigate / charge the MOTU / his masters is impeachable IMO. It’s a disgrace. The GOP should have impeached him for W$ and Corzine. But not to worry, I’m sure Tim Johnson is gonna get on that Libor thingy “asap.”
How utterly Randian.
I’m not a libertarian, but I am a Paulista. I actually think his approach would safeguard investor value. It’s simple:
1) end the fed
2) end fiat money
3) end fractional reserve banking
4) prosecute fraud
There would be significant pain. But my view is pain now or pain later. I simply prefer to take all the pain at once and then see the improvement begin. I caveat my preference noting that I *think* our economic problems are a zero sum game. Either a lot of immediate pain or less acute pain that’s dragged out over many years and has total cumulative pain that is equal to the immediate pain.
Regardless, I do prefer the basic Paul platform as I explained it because there are two main benefits:
1) government’s role in choosing winners and losers is reduced
2) moral hazard is reduced
It’s not perfect. But on balance I think it makes more sense than our current situation that allows the powerful (i.e. Corzine & Goldman) to act as they please.
In reading this story about Peregrine, it appeared that it was mainly 99%er investors who were robbed. Hence: no worries. Nothing of any consequence will happen to the perps, nor will there be any regulations proposed by a bought off US Congress.
Witness that Willard Mitt Rmoney, who pretty much engaged in similar types of robbery, is running for the highest office in the land, and there’s no end to his supporters who say what Rmoney did was “job creation.” In other words: night is day, light is dark, etc.
Or as George Orwell’s Napoleon said in Animal Farm: four legs good, two legs BETTER!
Or as Rmoney & his ilk no doubt think: get stuffed, ya LOSERS!
Btw, I realize it would be a massive undertaking. So a thoughtful, well-planned transition is critical. But his bill Competing Currencies (repealing legal tender laws) would be a good start IMO.
It’s one to go. However, your 4th suggestion ain’t never gonna happen. And therein lies the rub.
Agree with you about the pain, though. Now or later, it’s not avoidable.
The main issue I have with some libertarians is that they wish to *blame* the small fry in the 99%, when, in fact, it’s damned difficult to know what to do these days with one’s money. Let’s get real. That’s certainly not MY fault just because I happen to have socialistic tendencies. I’m not ripping anyone off.
and therein lies, perhaps, the single biggest issue facing America. It won’t happen and that has resulted in the breakdown of trust. Without trust, the USG cannot and will not function. Doesn’t matter which MOTU servant wins. The USG is a mess and it’s only going to get uglier as the MSM will probably focus on the “fiscal cliff,” while the Political Class sneak thru the TPP during the lame duck.
Doesn’t he know that something like that makes one appear guilty. /s
Tim, HOlder was busy yesterday giving a speech here in Houston at the NAACP batiuobnal convention. They gave him an award as being “The Best Attorney General EVER.”
(For those of you who think the voting was rigged, candidates inclluded all black AG who served since 2009.)
Holder is too busy sending his stormtroopers out to bust medical marijuana dispensaries to trifle himself with something like bank fraud. Moral hazard indeed
It really is a casino out there. I’m an ordinary investor in the sense that my Canadian equivalent of a 401K is managed by one of Canada’s most successful investment managers — the local equivalent of Warren Buffett. Thanks to close to zero returns on government bonds (necessary in a retirement account for obvious reasons), and the unhappy experience of British Petroleum (a retirement account favorite because of its high dividend) and Banco di Santander (held for the same reason), I’m down about 10 percent over the past two years, and will be down when I start to draw on it at the end of the year.
And you know what? I consider myself lucky. I will be happy to have 90 percent of what I started out with at this point. That looks like good management to me, when you consider the alternatives.