Accounts of futures brokerage PFGBest have been frozen by the National Futures Association, which says the firm has insufficient funds to carry out its trades.
The association, which regulates the futures industry, said it took an “emergency enforcement action” against PFGBest’s parent organizations, Peregrine Financial Group and Peregrine Asset Management, after the amount they reported on deposit at U.S. Bank was about $200 million more than was actually held by the bank.
The regulator said it blocked the companies from handling trades because the Peregrine companies have failed to demonstrate that they meet capital requirements and segregated funds requirements. The association also said it has reason to believe that Peregrine does not have sufficient assets to meet customer obligations.
The futures association said the Peregrine companies, based in Cedar Falls, Iowa, and Chicago, are prohibiting from accepting new clients and cannot accept or place trades “except for the liquidation of existing customer positions.”
In addition to lacking enough money to conduct trades, the association said that the chairman of the Peregrine companies might have falsified bank records.
On the PFGBest website, Russell Wasendorf, Sr., is listed as the chairman, CEO and founder of the company.
A company spokesman did not immediately respond to CNNMoney’s request for comment about the allegations, and about news reports that Wasendorf might have attempted suicide.
The PFGBest incident comes less than a year after a high-profile brokerage, MF Global, got into big trouble for allegedly misappropriating money.
Former MF Global customers have claims of about $1.6 billion against the commodities brokerage, which filed for bankruptcy last year. The trustee in charge of recovering the lost cash is targeting former chief executive officer Jon Corzine, the former governor and senator from New Jersey, in its efforts to recover lost funds.
