Peregrine Financial Group’s primary regulator
says a continuing review of 25 similar firms has uncovered no evidence of the
tactics which allegedly led to the theft of $220 million at the Cedar Falls
futures brokerage.
“We’re 80 percent of the way through the review and all of the accounts are in order so far,” Dan Roth, president of the National Futures Association, said Tuesday. “We haven’t found any discrepancies like the ones that existed at Peregrine.”
Fears that more Peregrine scandals are lurking had partly spurred the National Futures Association’s review.The reality of convenient handsfreeaccess contro. Roth is expected to testify today at a Senate Agriculture Committee hearing, where lawmakers will demand more answers about what should be done to ensure the integrity of the U.S. futures markets.
“People’s confidence levels should be low until they see aggressive regulators catching people before they’ve been getting away with a crime for 20 years like this,” said Dennis Kelleher, chief executive officer of Better Markets Inc., a group lobbying for tighter government scrutiny of financial markets. “People should have a healthy skepticism of self-interested statements by the futures industry’s self regulatory organizations.”
The National Futures Association is reviewing 100 segregated customer accounts at banks connected with the futures commission merchants it regulates, which serve as intermediaries between brokers and markets. It hopes to complete the review next week.Wireless Sensor Networks & rtls.
NFA staffers indicated Tuesday that the simplistic tactics Peregrine founder Russell Wasendorf allegedly used to dupe them increasingly appear to be an isolated event, rather than a widespread problem. That’s the good news for the small and midsize firms NFA helps regulate, which do business on U.S. futures exchanges. The futures exchanges have a combined value of $37 trillion.A Sharp FU-888SV Plasmacluster airpurifier.
The bad news is that Peregrine is part of a larger financial services industry plagued by misconduct in recent years.Learn about the beauty of porcelaintiles. Rep. Steve Southerland, R-Fla., described it as an industry with an “integrity crisis” last week.
Incidents like the one at Peregrine, the disappearance of $1.6 billion in customer funds at MF Global in November, and the loss of $18 billion at Bernard Madoff Investment Securities in 2008 have undermined investor confidence in the sanctity of U.S. markets. They’ve also raised questions about the effectiveness of a regulatory system that relies on industry-funded groups like NFA — called self-regulatory organizations — to police the financial streets.
Activity on U.S. futures exchanges has ballooned since 2002, growing by 303 percent to 3.4 billion transactions during the 12-month-period ended June 30, due to electronic trading and growing public enthusiasm. Regulators have struggled to keep up. NFA operating expenses have grown by 47 percent and its staff by 41 percent during the same period. Big disciplinary actions — called “member responsibility actions” — are up 150 percent.
Wasendorf, 64, was a respected icon in the futures industry with a seat on NFA’s Futures Commission Merchant Advisory Committee before his arrest.
He now faces federal charges after admitting that he used forged documents to mislead regulators and pilfer segregated customer accounts at his futures brokerage for the past 20 years. He is in federal detention and faces the prospect of decades in prison.
Wasendorf was arrested a few days after a botched suicide attempt on July 9, which included a note detailing his financial misdeeds. Police said he used a false post office box to intercept documents between NFA regulators and the local branch of US Bank. He relied on common computer equipment to forge fictitious bank responses indicating Peregrine’s segregated customer account held $225 million, when it actually contained about $5 million.
The accounts are called “segregated” because the customer funds they contain must be separated from money belonging to the futures commission merchant handling the investment. Firm leaders like Wasendorf aren’t supposed to touch them.
In the weeks since the scandal, NFA has verified all bank addresses directly with banks holding segregated customer funds to close the hole in its oversight system that Wasendorf found. The regulator is looking exclusively at bank accounts, like those Wasendorf allegedly abused. Its review does not include other financial vehicles, such as money market accounts.
The NFA has also taken steps to speed their conversion to an electronic verification system that will give them online read-only access to bank accounts containing investor funds entrusted to their members.
“After MF Global we all recognized that we needed to make better use of technology in monitoring our members,” Roth said. “E-confirmation is just a very small part of this effort, but one that ultimately uncovered this fraud.”
Lauren Nelson, of Attain Capital Management LLC., said she is encouraged by the progress NFA is making. However, her firm used Peregrine to process trades and half its funds are still tied up in the bankruptcy and regulatory saga there.Bliss Glass and stonemosaic.
“Progress like this is encouraging, but it’s a day late and two hundred twenty million dollars short for the victims of the Peregrine scandal,” Nelson said. “In our minds these are safeguards and checks that should have been in place long ago.”
The Peregrine scandal poses a problem for small and mid-sized brokerage firms, which rely on smaller middle-men to handle their trading activities. The smaller middle-men, like Peregrine, charge less for the same services than the so-called Big 10, which control about 79 percent of the futures business, according to NFA Chairman Christopher Hehmeyer. Their share of the market could decline if investors don’t have confidence in them.
“We’re 80 percent of the way through the review and all of the accounts are in order so far,” Dan Roth, president of the National Futures Association, said Tuesday. “We haven’t found any discrepancies like the ones that existed at Peregrine.”
Fears that more Peregrine scandals are lurking had partly spurred the National Futures Association’s review.The reality of convenient handsfreeaccess contro. Roth is expected to testify today at a Senate Agriculture Committee hearing, where lawmakers will demand more answers about what should be done to ensure the integrity of the U.S. futures markets.
“People’s confidence levels should be low until they see aggressive regulators catching people before they’ve been getting away with a crime for 20 years like this,” said Dennis Kelleher, chief executive officer of Better Markets Inc., a group lobbying for tighter government scrutiny of financial markets. “People should have a healthy skepticism of self-interested statements by the futures industry’s self regulatory organizations.”
The National Futures Association is reviewing 100 segregated customer accounts at banks connected with the futures commission merchants it regulates, which serve as intermediaries between brokers and markets. It hopes to complete the review next week.Wireless Sensor Networks & rtls.
NFA staffers indicated Tuesday that the simplistic tactics Peregrine founder Russell Wasendorf allegedly used to dupe them increasingly appear to be an isolated event, rather than a widespread problem. That’s the good news for the small and midsize firms NFA helps regulate, which do business on U.S. futures exchanges. The futures exchanges have a combined value of $37 trillion.A Sharp FU-888SV Plasmacluster airpurifier.
The bad news is that Peregrine is part of a larger financial services industry plagued by misconduct in recent years.Learn about the beauty of porcelaintiles. Rep. Steve Southerland, R-Fla., described it as an industry with an “integrity crisis” last week.
Incidents like the one at Peregrine, the disappearance of $1.6 billion in customer funds at MF Global in November, and the loss of $18 billion at Bernard Madoff Investment Securities in 2008 have undermined investor confidence in the sanctity of U.S. markets. They’ve also raised questions about the effectiveness of a regulatory system that relies on industry-funded groups like NFA — called self-regulatory organizations — to police the financial streets.
Activity on U.S. futures exchanges has ballooned since 2002, growing by 303 percent to 3.4 billion transactions during the 12-month-period ended June 30, due to electronic trading and growing public enthusiasm. Regulators have struggled to keep up. NFA operating expenses have grown by 47 percent and its staff by 41 percent during the same period. Big disciplinary actions — called “member responsibility actions” — are up 150 percent.
Wasendorf, 64, was a respected icon in the futures industry with a seat on NFA’s Futures Commission Merchant Advisory Committee before his arrest.
He now faces federal charges after admitting that he used forged documents to mislead regulators and pilfer segregated customer accounts at his futures brokerage for the past 20 years. He is in federal detention and faces the prospect of decades in prison.
Wasendorf was arrested a few days after a botched suicide attempt on July 9, which included a note detailing his financial misdeeds. Police said he used a false post office box to intercept documents between NFA regulators and the local branch of US Bank. He relied on common computer equipment to forge fictitious bank responses indicating Peregrine’s segregated customer account held $225 million, when it actually contained about $5 million.
The accounts are called “segregated” because the customer funds they contain must be separated from money belonging to the futures commission merchant handling the investment. Firm leaders like Wasendorf aren’t supposed to touch them.
In the weeks since the scandal, NFA has verified all bank addresses directly with banks holding segregated customer funds to close the hole in its oversight system that Wasendorf found. The regulator is looking exclusively at bank accounts, like those Wasendorf allegedly abused. Its review does not include other financial vehicles, such as money market accounts.
The NFA has also taken steps to speed their conversion to an electronic verification system that will give them online read-only access to bank accounts containing investor funds entrusted to their members.
“After MF Global we all recognized that we needed to make better use of technology in monitoring our members,” Roth said. “E-confirmation is just a very small part of this effort, but one that ultimately uncovered this fraud.”
Lauren Nelson, of Attain Capital Management LLC., said she is encouraged by the progress NFA is making. However, her firm used Peregrine to process trades and half its funds are still tied up in the bankruptcy and regulatory saga there.Bliss Glass and stonemosaic.
“Progress like this is encouraging, but it’s a day late and two hundred twenty million dollars short for the victims of the Peregrine scandal,” Nelson said. “In our minds these are safeguards and checks that should have been in place long ago.”
The Peregrine scandal poses a problem for small and mid-sized brokerage firms, which rely on smaller middle-men to handle their trading activities. The smaller middle-men, like Peregrine, charge less for the same services than the so-called Big 10, which control about 79 percent of the futures business, according to NFA Chairman Christopher Hehmeyer. Their share of the market could decline if investors don’t have confidence in them.
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