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PFGBest Accounts Frozen (PFG scandal big thread)
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PFGBest Accounts Frozen (PFG scandal big thread)

  #151 (permalink)
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Source: Despite missing finds, PFG?s Canadian clients expected to be safe - The Globe and Mail


Quoting 
Canadians who have money in trading accounts with PFG Canada, the Canadian arm of brokerage Peregrine Financial Group where $200-million has gone missing, are expected to get their money back.

Although nothing can be said for sure because negotiations are still under way and an investigation into the firm is just starting, a senior employee in the Canadian operation said “there’s a 95-per-cent-plus probability that Canadian clients will remain whole” – industry slang for getting their money back. The employee requested anonymity because final details are still being hashed out.

“Things are well in hand for Canadian clients,” the source said. “There’s been [a] conversation between the Canadian firm and IIROC since yesterday afternoon.” IIROC, or the Investment Industry Regulatory Association of Canada, is the lead regulator looking into the matter.

IIROC has yet to formally comment on the talks, but that it is likely Canadian client funds will be transferred to another brokerage, and negotiations for that are under way. The same actions were taken after money went missing at brokerage MF Global last year, after which the firm’s Canadian funds were transferred to Royal Bank of Canada.

However, the decisions have been made much more quickly this time around. With the MF Global fiasco, clients were in limbo for two weeks as they waited to figure out where their money is going.

Much like the MF Global scenario, client funds held by PFG Canada are also covered by the Canadian Investor Protection Fund, which could put them at an advantage over U.S. clients. The U.S. equivalent to the CIPF, the Securities Investor Protection Corp. doesn’t cover futures accounts, while CIPF covers all investment accounts, from stock to futures to currencies.

CIPF was apprised of the situation late Monday afternoon but does not believe it will be called upon to cover any losses, said vice-president Barbara Love.

She confirmed that PGF’s Canadian operation is a member of the fund, and customers would be eligible for coverage, but “at this point we don’t anticipate being asked,” said Ms. Love, who confirmed that customer accounts are likely to be “transferred in full to another firm.”

The call came in at 5 p.m. (ET) on Monday about the developing situation and “we really just got updated on everything that was going on in Canada this morning,” she said.

Regulators are working “very quickly. There’s a lot more knowledge in Canada about the futures industry after MF Global.”

The National Futures Association (NFA) in the U.S., an industry group that also plays a regulatory role, said yesterday it had issued an emergency order to effectively freeze U.S. futures broker PFGBest’s operations after finding that a U.S. bank account the broker said contained $225-million in customer funds actually held only $5-million.

PFGBest told customers their funds had been frozen and clients would be allowed to liquidate open trading positions, but would not be able to withdraw funds or make new trades until further notice.

There is no word yet on how much Canadian money is held by PFG Canada, however, Ms. Love said that PGF’s operations in Canada are not as large as MF’s. “It’s a much smaller firm, [with] fewer clients.” When MF Global’s Canadian funds were frozen, about $400-million of invested money was affected.

A public statement from PFG Canada is expected later this afternoon.

Mike

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  #152 (permalink)
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That is exactly what I was thinking! Only keep the minimum in there to trade and make frequent withdrawals to keep the balance at the bare minimum.....or at least only what you can afford to lose in the event this happens with another broker. Better to be safe than sorry.



wldman View Post
I had some money set to go back to my broker. Now I'll go the other way pulling money right down to the minimum needed to trade.

What is next?


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  #153 (permalink)
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Source: CFTC Finally Gets The Memo: Regulator Sues PFG, Says Firm Has $200 Million Customer Fund Shortfall | ZeroHedge


Quoting 
MF Global 2 is now official. At least one can never accuse ex-Goldmanite, and current head of the CFTC Gary Gensler, as being behind the curve:

U.S. COMMODITIES REGULATOR SUES PEREGRINE FINANCIAL GROUP
FIRM HAS $200 MILLION CUSTOMER FUND `SHORTFALL', CFTC SAYS
CFTC LAWSUIT FILED ONE DAY AFTER FIRM ANNOUNCES NFA PROBE


Hopefully, the CFTC's now meaningless action will help all those farmers whose money has just vaporized. Luckily, they can make it all up on record corn profits.

Mike

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  #154 (permalink)
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I received no email and when I called them they said it was sent out at 3:00 yesterday. A friend of mine who also has an account with them called PFG and he said he was told to basically kiss his account good bye. I can't imagine their customer service rep would even say something like that but my friend wouldn't make up something like that.

I chatted with Gail Mercer at Traders Help Desk. She recommended AMP Futures, so I might contact them today.



Devil Man View Post
I got this from PFG earlier today:

Monday, July 9, 2012

Due to a recent emergency involving Russell R. Wasendorf, Sr., a suicide attempt, some accounting irregularities are being investigated regarding company accounts. PFGBEST is wholly owned by Mr. Wasendorf. Therefore, the NFA and other officials have put all funds on hold, and PFGBEST is in liquidation-only status with our clearing FCM. What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds. We will update you as any new procedures are stipulated and with any further information as it becomes available.


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  #155 (permalink)
Identify Evaluate Execute
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kevinkdog View Post
He actually did get it in writing from a TS rep on 6/5/2012. Here is what the rep said (bolding is mine):

karoshiman,

SIPC protection applies only to equities accounts. Futures and forex accounts would be covered by the excess SIPC insurance policy described above. We have not made any changes to our policies regarding customer funds since being acquired by Monex. If you have further questions regarding these issues, please send an email to ClientService@tradestation.com.

Thank you,

Greg
TradeStation Technical Support


I am asking TS the same question, just to confirm.

Hi, good idea. I would take this answer at face value though. In any case the ultimate decision to honor a claim is nothing to do with tradestation but the insurer who will have to prioritize customer accounts in the event of a shortfall.

It is semi-clear on the website that the intent of the excess coverage only applies to equities accounts:

"London provides coverage for loss of securities and/or cash in excess of primary SIPC protection, up to $300 million in the aggregate". SIPC does not apply in any manner to FCMs, RFEDs or FDMs or to futures or forex accounts.

Both IB and TD Ameritrade provide exactly the same additional coverage. How they treat the sweep is the key.

IB allows you to elect whether to sweep excess funds into the IB securities account (SIPC covered) or the commodities account (I'm assuming no coverage but will find out for sure). By default it is swept to the securities account. Tradestation may have the same policy so it is worth finding out.

In any case even if it is swept to the securities account, if you only trade futures and no equities the equities customers would likely be first in line as that is the primary intent of the insurance. Next would be equities/futures and third the futures guys. The equities customers would likely suck up the entire $300 million in insurance though.

Cheers
DJ

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  #156 (permalink)
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Good job CFTC sue company that has no money because your regulators failed to see a $195 million short fall in accounts. Maybe CFTC needs to be sued.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #157 (permalink)
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@Big Mike,

So let's forget about it, its water under the bridge, this is my third brokers' bust in 34 years of trading. I have yet to get a penny back. The next one is social Security going bust.

If you still have funds and enough motivation to continue trading you need to think forward.

So here is my suggestion: Start a poll to see which brokers your 30,000 members are using or recommending, so that we can all deposit our nest egg into another segregated future account. (I have the list of winning brokers from TASC, but we know that that is not worth a bean).

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  #158 (permalink)
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djkiwi View Post
Hi, this is not true. It only covers stocks. I looked into this awhile ago as well when looking at tradestation as a potential broker. Never take reps assurances on the phone, always get it in writing.

You have ZERO coverage with Tradestation if you only trade futures unless they sweep the cash into an insured sweep account. If you trade stocks AND futures at trade station you will probably be ok if the cash is swept to the insured equities sweep account. If you only trade futures it is possibly swept to an uninsured account. You should contact trade station and get it in writing.

At least Tradestation is high up on the list Mike posted.

Cheers
DJ


No, read the security statement carefully. It's a third party insurance with Loyds of London. And I've got it in writing... as I said, it's in the TS community. You can look it up there by searching for my user name, which is the same in the TS community as over here.

Yeah, I am glad I saw TS relatively high up in that Atlas Rating list

EDIT: Sorry, did not see the later posts by Kevin and you.


Last edited by karoshiman; July 10th, 2012 at 12:44 PM. Reason: Did not see the later posts by Kevin and DJ.
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  #159 (permalink)
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Dang... Canadians get good health care and now their futures accounts are insured... but they stopped issuing or renewing work visas for foreign strippers... so I guess it evens out....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #160 (permalink)
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aligator View Post
@Big Mike,

So let's forget about it, its water under the bridge, this is my third brokers' bust in 34 years of trading. I have yet to get a penny back. The next one is social Security going bust.

If you still have funds and enough motivation to continue trading you need to think forward.

So here is my suggestion: Start a poll to see which brokers your 30,000 members are using or recommending, so that we can all deposit our nest egg into another segregated future account. (I have the list of winning brokers from TASC, but we know that that is not worth a bean).

The problem is we can all recommend brokers but have no reference point to know if any are truly safe. The regulators seem to never know there is a problem until it is to late. Until segregated account means segregated account that can't be tapped unless an outside third party gives permission in some fashion none of us are safe. We can look at all kinds of ratings and try and see how much capital a firm has but none of it really matters. When the falsify account balances we have no way to know anything the way the system is currently operating. Even if the account balances are not falsified it seems to be as easy for company insiders to steal $400 million as it is to steal $5. So one day there is $400 mil in account next day it is $0. Industry better wake up and police itself or there will not be an industry.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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