Tag Archives | PFGBest

PFGBest used one-person accounting firm. Regulators were comatose

PFGBest used a one person accounting firm to audit their books, this for a company that had $500 million in customer accounts.

Russell Wasendorf Sr., founder and CEO of PFGBest has admitted to stealing $100 million over 20 years. He was the only one who had access to the bank accounts and always had bank statements delivered to him unopened (so he could make phony versions.) He faces decades in prison.

An ethical and competent auditor would have not accepted bank statements coming from the CEO only. And using a one-person accounting firm should have been a huge red flag to anyone investigating the firm.

But as usual, our supposed watchdog agencies were curiously asleep and ignored the obvious.

The watchdog that missed for nearly two decades the blatant fraud at failed brokerage PFGBest has frequently sent out fresh college graduates to look over the books of complex financial firms, people familiar with its operations say.

“When they come in and do an audit, they’re not experienced enough,” said a former employee of PFGBest.

While the National Futures Association did finally uncover the fraud, it took them twenty years and they then perservely boasted about it.

“They are the ones that uncovered this whole thing,” Hehmeyer said of NFA auditors. “If they hadn’t caught him, it could have gotten a lot bigger.”

If NFA hadn’t been comatose for 20 years, the fraud might never have happened at all. NFA is industry-funded, an approach that obviously isn’t working too well considering they missed this huge fraud for two decades.

$220 million missing from futures broker PFGBest

Our Potemkin financial system continues to show the cracks in the edifice behind the pretend display of stability with the collapse of brokerage PFGBest.

More than $200 million in customer funds appears to be missing from the accounts of futures broker PFGBest, regulators said on Monday just hours after the firm’s founder attempted suicide outside the company’s Iowa headquarters.

Is it really missing? “Missing” implies that it somehow got lost. It could well be that it was “stolen. PFGBest may have used customer money to cover their own trading losses, just like MF Global did. ($1.6 billion is still missing from MF Global accounts.) In the chaos of a collapsing brokerage, it might be fairly easy for someone to fraudeluently transfer money elsewhere. Perhaps that was part of someone’s plan all along.

Of course our pretend regulators had no clue what was happening and are now ruushing to protect the building after it burned down.