A regulatory group ordered accounts frozen at Iowa-based brokerage Peregrine Financial Group late Monday, saying it hasn’t been able to account for $220 million in customer funds, following what the company said was a suicide attempt by its founder and chairman.
A PGF spokeswoman didn’t return phone messages and emails, and several messages left at PFG’s offices in Cedar Falls, Iowa, and Chicago were not returned.
But in a statement to its clients, the company said its founder and chairman, Russell R. Wasendorf Sr., attempted suicide earlier Monday, though it provided no information on his condition. The company said the attempt prompted investigation of “some accounting irregularities.”
Lauren Nelson, spokeswoman for PFG customer Attain Capital, said her company has a “substantial amount” of business with PFG and is still assessing how badly its accounts were affected.
The futures association’s action bars PFG from most trading, except as needed to liquidate customer accounts. The company also can’t accept any new customer money except to cover existing accounts.
It was unclear late Monday if the government would get involved. Pete Deegan, spokesman for the U.S. Attorney for the Northern District of Iowa, said he could neither confirm nor deny any investigations handled by the office.
But the move is likely to increase scrutiny on an industry still smarting from the implosion of futures firm MF Global last October.
MF Global, a brokerage headed by former New Jersey Gov. Jon Corzine, filed for bankruptcy protection, crippled by disastrous bets on European debt, less than two years after Corzine became CEO.
A bankruptcy trustee is still trying to recover $1.6 billion in money missing from MF Global’s client accounts. That case prompted calls for increased regulation of the futures industry.
A message left at a phone listing in Cedar Falls for Wasendorf wasn’t returned Monday. The local sheriff’s office said it had no information on the suicide attempt, and the local hospital said it didn’t have a patient listed under his name.
Canadian clients of Peregrine Financial Group Canada, a subsidiary of PFG, need not worry. The Canadian leg of the company is not affected by the regulatory actions of the NFA, and all client monies and assets have been accounted for.
Further, IIROC has approved the transfer of client futures accounts to RJ O’Brien & Associates Canada. In the meantime, clients can liquidate their contract positions directly through PFG.