Does Not Compute: PFG Head Says Spent Stolen Client Money To Comply With Regulator Demands
The head of now bankrupt futures brokerage PFG may not have been very successful when it comes to executing succesful suicide attempts, but when it comes to spending stolen client money (at least $200 million) over a period of two decades he had few equals. From the WSJ: "Peregrine Financial Services Inc.'s founder said he spent most of the money allegedly embezzled from customers to cushion his futures brokerage's capital, fund a new corporate headquarters—and to pay regulatory fines and fees, according to previously undisclosed parts of a suicide note and signed statement." It also appears that it was all the regulators' fault: "The note and the statement, which a person familiar with the situation said were left by Peregrine Chief Executive Russell Wasendorf Sr., blames the fraud on "mean spirited" regulators that dogged his firm, saying they were looking to put firms out of business rather than protect commodities investors. The statement also said that deceiving the regulators was "relatively simple."" Here is where it goes from the bizzare to the surreal: '"Most of the misappropriated funds went to maintain the increasing levels of Regulatory Capital to keep [Peregrine] in business and to pay business [losses]," said the signed statement, which was reviewed by The Wall Street Journal. The statement says the misappropriated customer funds also were used to build Peregrine's headquarters in Cedar Falls, Iowa, and to "pay Fines and Fees charged by the regulators."
So... to summarize... the guy who stole money for twenty years, stole it only to comply with regulators requirements for compliance...
Now that does not compute.
Of course, once one gets beyond the shock at the sheer lunacy of what he said, it does imply that the CFTC may have been close to actually catch this criminal in the act, at least once in 20 years.
The note indicates a potentially closer involvement by the CFTC in overseeing Peregrine, commonly known as PFGBest, than previously known. The CFTC has said it left the day-to-day regulation of PFGBest to the NFA, a industry self-regulatory body. Thus, the note could put further pressure by investors and lawmakers on the CFTC for missing the scandal, particularly with the intense scrutiny alleged by Mr. Wasendorf.
Spokesmen for the CFTC declined immediate comment Tuesday. The NFA didn't immediately respond.
"I have to say I don't feel bad about deceiving the regulators," the note said. "They made the decision to be my enemy."
Ok, we get his hatred of the regulators: after all they were trying (unsuccessfully) to catch a criminal commiting a crime for 20 years. Now if only he can explain why he also deceived his customers, friends and clients.
Or do we have to wait until the psych evaluation?
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