Russ Wasendorf Sr., the CEO and founder of PFG Best attempted suicide this morning in his car and failed. He is in critical condition at a local university hospital
PFG Best identified “accounting irregularities” in the banking records.
The NFA (National Futures Association) has effectively shut down PFG Best, enabling liquidations only. Accounts are frozen and withdrawals are not possible at this time.
The NFA inquired to the segregated funds held at a U.S. bank (JP Morgan) as there was a ~$220mil discrepancy (PFG Best has approximately $400 mil in client funds). PFG stated that about $225mil was held at their U.S. Bank, when in reality only $5mil was held in the customer segregated account.
What did we know before today that enabled Atlas Ratings to identify PFG Best in the BOTTOM 5% of all FCMs (only 4 FCMs ranked below PFG Best on our proprietary rating scale).
Almost across the board, PFG Best lagged dramatically in most categories. The only category where they did not have low marks was in regard to exchange penalties. The commodity exchanges had not penalized PFG very often for their clearing procedures or floor recordkeeping, that much was done adequately within the company.
Everything else we monitor showed weakness within the company:
Their net capital ratio and the trend of that ratio was extremely weak.
Their business is not diversified, they rely on minimal interest revenue, commissions and any proprietary trading.
Customer assets growth has been weak, healthy companies attract and retain new accounts.
PFG Best has had many CFTC & NFA penalties, these are major red flags. They failed to ID a massive ponzi scheme to the tune of $195mil that was “trading” through PFG Best.
Customers have engaged in arbitration with PFG Best and won. The NFA has sided with customers in numerous occasions in regard to disputes. In all of these situation, PFG Best was required to reimburse or pay their past customers for damages.