The Farm CPA
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
Peregrine Financial Group Files For Bankruptcy
Jul 11, 2012
Peregrine Financial Group of Cedar Falls, Iowa filed for bankruptcy protection yesterday. The National Futures Association had received information that the company's founder had, for many years, falsified bank confirmations indicating over $225 million in the bank account when in fact, the account may have contained only $5 million or less.
The founder, Russell Wasendorf, SR. attempted suicide on July 9 and is currently in a coma. It appears that he had created a PO Box for all confirmations of the bank account to be sent to and then simply created false bank statements and mailed them onto the futures regulators.
After being pressured to start allowing the regulators to obtain the information electronically, the shortfall was much easier to be determined.
The actual amount of the shortfall of customer funds may take several months to determine and in the meantime, these customer funds are frozen and most positions are in the process of being liquidated.
After the MF Global debacle and this episode, it is extremely important for farmers to know who their commodity broker is and their actual financial strength. However, as in this case, if somebody wants to fool a regulator, it can happen for many years before they are caught and it can be very expensive to the account holder.