Peregrine chief arrested for lying to regulators. Raw Story. Excerpts:
The head of collapsed US futures broker Peregrine Financial Group was arrested Friday on criminal charges, days after he apparently attempted suicide and confessed to fraud in a signed statement.
Russell Wasendorf, the sole owner and chief executive of Iowa-based PFG, admitted in the suicide note that he had embezzled millions of dollars from clients over 20 years.
The company’s accounts have a shortfall of about $200 million, according to a US regulator who sued the company Tuesday.
A US federal court in Cedar Rapids, Iowa said Friday that Wasendorf, 64, was charged with making false statements about customer funds.
He was due to appear in court later Friday.
“The complaint alleges that, from 2010 through July of 2012, Wasendorf made false statements to the United States Commodity Futures Trading Commission (CFTC) regarding the value of customer segregated funds held by Wasendorf’s company, Peregrine Financial Group, Inc.,” the court said in a statement.
According to the complaint, filed by the FBI, emergency personnel responding Monday to a 911 emergency call found Wasendorf “unresponsive” in his automobile, along with an apparent suicide note to his wife.
In addition, a signed statement was found inside the vehicle detailing fraud committed by Wasendorf through PFG over the past 20 years.
“I have committed fraud. For this I feel constant and intense guilt,” Wasendorf wrote.
“Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts.”
The forgeries went undetected for nearly 20 years, he said, because he had sole access to the company’s accounts at US Bank.
Wasendorf said he used a combination of Photo Shop, Excel, scanners and printers to make “very convincing forgeries.”
“With careful concealment and blunt authority I was able to hide my fraud from others at PFG.”
When online banking became prevalent, he said he learned how to falsify online bank statements.
“The regulators accepted them without question.”
The Iowa court said that Wasendorf was interviewed by law enforcement personnel at the University of Iowa Hospital on Monday, and Wasendorf acknowledged he had written the statement and that the information it contained was true.
PFG, also known as PFG Best, filed Tuesday for Chapter 7 bankruptcy, which involves the sale of assets to pay off creditors.
The action came hours after the CFTC sued PFG and Wasendorf, alleging they had falsified information in filings and overstated the company’s bank deposits.
The CFTC said the firm had a shortfall that currently exceeds $200 million.
“The whereabouts of the funds is currently unknown,” the CFTC said.
On Monday the National Futures Association, responsible for monitoring PFG for compliance with reporting requirements, took an emergency enforcement action against PFG and Peregrine Asset Management.
The NFA blocked new or additional customer accounts or funds, alleging PFG had failed to prove it had met capital and segregated funds requirements.
On Friday, other regulators indicated they were looking into the situation.
The US Securities and Exchange Commission is reviewing records to determine where there are securities customer funds missing, SEC spokesman John Nester said.
A spokeswoman for the Financial Industry Regulatory Authority, told AFP that “FINRA reps have been on-site at Peregrine’s Cedar Falls offices to look into the firm.”
Suicide note and FBI affidavit here:
The Real Libor Scandal Paul Craig Roberts. From Activist Post. Excerpts:
The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.
Why isn’t this happening?
PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.
What was pushing the interest rates lower?
The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.
Secondly, fixing Libor at lower rates has the same effect. Lower UK interest rates on government bonds drive up their prices.
In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.
Libor: They all knew – and no one acted
"Trade-Off": A Study In Global Systemic Collapse Zero Hedge. Excerpts:
The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a largescale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.
Why Don’t the Corrupt Players On Wall Street and In D.C. Show Remorse for Their Destructive Actions…And Why Don’t We Stop Them? Washington's Blog, via Zero Hedge. Excerpts:
(From Bloomberg)
The “corporate psychopaths” at the helm of our financial institutions are to blame [for the financial crisis].
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”
***
They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”
***
He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk awayeconomic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”
They continue to lie. We continue to let them.
The head of collapsed US futures broker Peregrine Financial Group was arrested Friday on criminal charges, days after he apparently attempted suicide and confessed to fraud in a signed statement.
Russell Wasendorf, the sole owner and chief executive of Iowa-based PFG, admitted in the suicide note that he had embezzled millions of dollars from clients over 20 years.
The company’s accounts have a shortfall of about $200 million, according to a US regulator who sued the company Tuesday.
A US federal court in Cedar Rapids, Iowa said Friday that Wasendorf, 64, was charged with making false statements about customer funds.
He was due to appear in court later Friday.
“The complaint alleges that, from 2010 through July of 2012, Wasendorf made false statements to the United States Commodity Futures Trading Commission (CFTC) regarding the value of customer segregated funds held by Wasendorf’s company, Peregrine Financial Group, Inc.,” the court said in a statement.
According to the complaint, filed by the FBI, emergency personnel responding Monday to a 911 emergency call found Wasendorf “unresponsive” in his automobile, along with an apparent suicide note to his wife.
In addition, a signed statement was found inside the vehicle detailing fraud committed by Wasendorf through PFG over the past 20 years.
“I have committed fraud. For this I feel constant and intense guilt,” Wasendorf wrote.
“Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts.”
The forgeries went undetected for nearly 20 years, he said, because he had sole access to the company’s accounts at US Bank.
Wasendorf said he used a combination of Photo Shop, Excel, scanners and printers to make “very convincing forgeries.”
“With careful concealment and blunt authority I was able to hide my fraud from others at PFG.”
When online banking became prevalent, he said he learned how to falsify online bank statements.
“The regulators accepted them without question.”
The Iowa court said that Wasendorf was interviewed by law enforcement personnel at the University of Iowa Hospital on Monday, and Wasendorf acknowledged he had written the statement and that the information it contained was true.
PFG, also known as PFG Best, filed Tuesday for Chapter 7 bankruptcy, which involves the sale of assets to pay off creditors.
The action came hours after the CFTC sued PFG and Wasendorf, alleging they had falsified information in filings and overstated the company’s bank deposits.
The CFTC said the firm had a shortfall that currently exceeds $200 million.
“The whereabouts of the funds is currently unknown,” the CFTC said.
On Monday the National Futures Association, responsible for monitoring PFG for compliance with reporting requirements, took an emergency enforcement action against PFG and Peregrine Asset Management.
The NFA blocked new or additional customer accounts or funds, alleging PFG had failed to prove it had met capital and segregated funds requirements.
On Friday, other regulators indicated they were looking into the situation.
The US Securities and Exchange Commission is reviewing records to determine where there are securities customer funds missing, SEC spokesman John Nester said.
A spokeswoman for the Financial Industry Regulatory Authority, told AFP that “FINRA reps have been on-site at Peregrine’s Cedar Falls offices to look into the firm.”
Suicide note and FBI affidavit here:
The Real Libor Scandal Paul Craig Roberts. From Activist Post. Excerpts:
The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.
Why isn’t this happening?
PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.
What was pushing the interest rates lower?
The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.
Secondly, fixing Libor at lower rates has the same effect. Lower UK interest rates on government bonds drive up their prices.
In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.
Libor: They all knew – and no one acted
"Trade-Off": A Study In Global Systemic Collapse Zero Hedge. Excerpts:
The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a largescale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.
Why Don’t the Corrupt Players On Wall Street and In D.C. Show Remorse for Their Destructive Actions…And Why Don’t We Stop Them? Washington's Blog, via Zero Hedge. Excerpts:
(From Bloomberg)
The “corporate psychopaths” at the helm of our financial institutions are to blame [for the financial crisis].
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”
***
They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”
***
He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk awayeconomic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”
They continue to lie. We continue to let them.
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