A small futures brokerage is freezing client funds after its owner attempted suicide, according to a press release on the brokerage’s website. PFGBest, a Cedar
Rapids Falls, Iowa-based broker with about $400 million in client-segregated funds at the end of April, moved customer accounts into liquidation status while the company investigates “accounting irregularities.” Per the release:
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.
Word around the internet is that PFGBest is a mini–MF Global, though that appears to be premature. Mr. Wasendorf founded the first predecessor to PFGBest in 1980, according to the company website, and expanded after successfully shorting futures markets ahead of the Black Monday stock market crash of 1987. The firm opened a Canadian subsidiary in 2002, and a Shanghai office in 2006.
UPDATE: According to the local news website WCF Courier, Mr. Wasendorf was found in his car outside the company’s headquarters this morning and taken to a local hospital. According to Reuters, Mr. Wasendorf’s son Russ Jr. told employees that a suicide note alluded to financial problems at the firm. “Everybody here is obviously in shock,” a broker told the outlet. “Pretty much everybody around here said we’re doomed.”
UPDATE 2: So maybe this is another MF Global. According to the National Futures Association, the self-regulatory body for the U.S. futures industry, a bank account in which PFGBest deposited client funds held some $220 million less than the firm claimed (and had been about $200 million short as early as February 2010):