Related note, TDA seems to have something similar

Is Thinkorswim a good Platform for Futures Trading? Great to see this information in the wake of the PFGBest collapse. TDAmertrade due to it's implicit "umbrella" offering of all the various trading instruments would also seem to have a more reassuring watchdog policy over their futures and …

Mike

WSJ Video...

Video - Did Peregrine Insiders See the Storm Coming? - WSJ.com

shanmugs 

WSJ Video... Video - Did Peregrine Insiders See the Storm Coming? - WSJ.com

Embeded:

Mike

Bloomberg Video

Mike

CFTC Commissioner O'Malia on Peregrine, Industry

Bloomberg Video

Mike

shanmugs 

WSJ Video... Video - Did Peregrine Insiders See the Storm Coming? - WSJ.com

Put them all in jail. The son, the new wife, the entire Board of Directors. It is the Board of Directors job to know what is going on in company. If they knew they are criminals. If they did not know it should be criminal negligence. This probably will not happen but need to strike fear into hearts across industry that if you do this your family, entire board and anyone close to inside will go to jail.

I think Wasendorf Sr will be hung out to dry, without a doubt. The CFO too. Who else is unclear at this point.

Corzine had a get out of jail free card, but this guy won't. His NFA buddies won't be able to protect him, the NFA itself will be under tremendous pressure to demonstrate how elaborate his deception was which explains why they were fooled, so they will crucify this guy.

Mike

Source: Exclusive: U.S. probing failed broker PFGBest's use of small auditor | Reuters

Quoting 

(Reuters) - U.S. futures industry investigators are looking into why Iowa-based collapsed brokerage PFGBest used a tiny accounting firm that appears to be operating from inside a suburban Chicago home to audit its books, according to a person familiar with the matter. Experts said the use of such an auditor should have been a red flag to regulators of a futures brokerage with more than $500 million in assets and several hundred employees across the United States as well as in Shanghai and Canada. There are comparisons with the way convicted Ponzi schemer Bernard Madoff used an auditor operating out of a strip mall in suburban New York and convicted swindler Allen Stanford's investment firm retained a little-known auditor on the Caribbean island of Antigua. PFGBest's financial statement ended December 31, 2010, shows that a firm called Veraja-Snelling Company, based in Glendale Heights, Illinois, certified that the futures broker was in compliance with federal commodities regulations governing the segregation of customer money. On Tuesday, the U.S. Commodity Futures Trading Commission accused the now-bankrupt brokerage and its founder Russell Wasendorf Sr. of misappropriating roughly $200 million of customer money in a fraud it said dates back to at least February 2010, and then lying to cover it up. The alleged fraud came to light after Wasendorf's apparent suicide attempt on Monday morning outside the firm's Cedar Falls, Iowa, offices. The CFTC is looking into the role of the auditor as it continues to investigate PFGBest, said the person familiar with the matter, who was not authorized to speak publicly. When reached at her Glendale Heights home on Tuesday night, Jeannie Veraja-Snelling, who listed herself an officer of the firm when she registered with the Public Company Accounting Oversight Board in February 2010, said she could not talk about PFGBest. "I don't know what's going on. I just found about it all an hour ago so I can't talk about it," said Veraja-Snelling, appearing distraught. A PFGBest spokeswoman did not return a call seeking comment. Another source told Reuters on Tuesday that Wasendorf went to great lengths to fabricate PFGBest's financials, saying he intercepted confidential regulatory documents that were mailed by the National Futures Association to what the industry self-regulatory group believed was U.S. Bank, the bank used by PFGBest. Instead, the NFA was sending the documents, used to independently verify a broker's bank balances, to a post office box that Wasendorf had set up, the source said. In the 2010 report, Veraja-Snelling & Co wrote that there were no material weaknesses involving internal controls and that the "corporation's practices and procedures were adequate." The NFA confirmed that the accounting firm, which has no disciplinary history with Illinois financial regulators and has not been accused of any wrongdoing, also audited PFGBest's 2011 financial statements. It was not clear if it was still PFGBest's auditor at the time of its bankruptcy filing on Tuesday. An NFA representative declined to comment further. A CFTC spokesman did not have an immediate comment. HOME BUSINESS Veraja-Snelling & Co is located on a busy, four-lane street inside a modest house, that is a faded-pink color, in Glendale Heights, some 30 minutes outside of Chicago. Jeannie Veraja-Snelling has been certified in the state of Illinois since 1999. However, she does not list having any public company clients in her 2011 annual filing with the PCAOB. On Tuesday night, she came to the door wearing a green sleeveless shirt and blue denim shorts. A stack of cardboard filing boxes was sitting just inside the door. She declined to answer questions about how she came to be retained by PFGBest. She did not respond to a follow-up e-mail and voice mails asking questions. Little information appears to be publicly available about Veraja-Snelling. According to online records submitted to the U.S. Securities and Exchange Commission, the firm audited some broker-dealers, including Best Direct Securities, LLC, which is owned by PFGBest, for the year ending December 31, 2009. The online records also indicate Veraja-Snelling has audited other small-sized securities brokers, such as Chicago-based Arclight Securities LLC for its 2007 financial statement, and Corporate Investments Group over several years, including 2011. Audit experts say that just because PFGBest hired a small auditor to do its books does not necessarily say anything about the auditor's competence. Instead, they said, it speaks more to the management of PFGBest and why the firm did not pick a larger auditor with a more established reputation. "Typically if you are in a business like this, you want to have people have confidence in your numbers and feel like you have got a big name behind them," said Lynn Turner, a former chief accountant for the SEC. The failure of regulators at the NFA to notice some of the red flags, they added, is also troubling. "You would think that a regulator would notice this and that should trigger much higher scrutiny," said Tom Selling, who writes an accounting blog called the Accounting Onion. "There's no question that the regulator's protocol should take that into account, especially a sole practitioner." INVESTIGATION CONTINUES Experts say it is not common for the CFTC to bring actions against auditors, but it is not unprecedented. In September of last year, the CFTC charged the national accounting firm McGladrey & Pullen and its partner David Shane with issuing an unqualified audit opinion on futures brokerage One World Capital Group. At the time the case was filed, David Meister, the head of CFTC enforcement, stated that "the commission will not hesitate to impose significant sanctions on auditing firms and hold individuals personally responsible when they fail to adhere to their professional obligations." The company and the audit partner settled the CFTC's case without admitting or denying the charges. The firm agreed to pay $900,000, and Shane paid $100,000. Another potential regulatory body that could look into the situation is the PCAOB, which gained new authority under the 2010 Dodd-Frank Wall Street reform law to inspect auditors of broker-dealers. A PCAOB spokeswoman declined to say if Veraja-Snelling had been inspected under the new program, or whether the PCAOB will investigate the firm in light of the alleged fraud at PFGBest. Joseph Carcello, a professor at the University of Tennessee, said the PCAOB has limited resources but may look into PFGBest's audits because of the publicity around the case. "It has some echoes of Madoff ... I'd be shocked if they don't think about it," he said. (Reporting By Sarah N. Lynch, Emily Stephenson and Nick Carey; Editing by Karey Wutkowski, Martin Howell and Chris Gallagher)

Mike

kevinkdog 

I'm confused. You brought up 5 issues with the Lloyd's policy in the first place...

My point was that whether or not there is a policy, or what it covers should not be the major concern ....

The main issue is ... do you feel it is prudent to continue trading or does the situation warrant standing aside until things become more clear .

I just hate seeing traders losing their hard earned money due to no fault of their own.

karoshiman 

Yes, I am not 100% happy with the phrasing as well as it obviously leaves room for interpretation as one can see from this discussion here. Mike's idea with the CFO is great. I've sent the following message to client services and posted this also in the aforementioned TS community thread which I've started over there: Hi, Contacted client services and received a link to that website: Safety of Funds for Futures Traders | TradeStation However, on that site as well as in the aforementioned paragraph which I've quoted initially from your website regarding Account Security, it is not clearly phrased that "futures accounts" are covered by that excess SIPC insurance as well. Given the current situation in the futures industry, it should be of high interest for TradeStation's future/futures business, to be clear in this regard or otherwise one can only suspect that futures accounts are not secure at TradeStation. Hence, I suggest to change such official statement and include a sentence that explicitly states that futures accounts are protected by the excess SIPC insurance, i.e. mention the words "futures account" in that sentence and do not use any wishy-washy phrasing which leave room for interpretation. Regards, k

Received the following reply on my post above in the TS community:


karoshiman,

All items listed under Securities pertains to equities accounts only which is where the Lloyd's coverage is included.

What is listed under the Futures account headline pertains to Futures accounts only and the same idea for Forex accounts.

Thank you,

Dean
TradeStation Technical Support


So, TMFT was right... the futures accounts are not covered by the Lloyd's insurance...