Still reeling from the debacle of MF Global, the futures industry now is dealing with potential fallout after learning that PFGBest Chairman and CEO Russell Wasendorf Sr. may have falsified bank records to hide PFG's failure to maintain customer segregated funds.
One insider noted, “Why would you ever have faith in this industry.”
Shock and dismay has been a common reaction and several people expressed serious concern that PFG, on the heels of the MF Global, could cause end-users to lose faith and exit the industry en masse.
Attain Capital Management noted in a blog that swift, decisive action is necessary to keep this travesty from becoming the final nail in the coffin of a marketplace that serves as a heartbeat of our global economy.
To combat a potential exodus of customers, several futures commission merchants have posted letters to customers trying to reassure them that their money is safe in futures.
Dennis Dorman, president and CEO of Dorman trading, wrote, “The MF Global situation shocked all of us, and now we have what appears to be a similar situation with PFG. The damage to our industry may take years to repair. I want to assure you that what transpired at these firms will not happen at Dorman Trading.”
R.J. O’Brien Chairman and CEO Gerry Corcoran wrote, “We at R.J. O’Brien (RJO) recognize that you may have questions about how we safeguard your assets and ensure the financial stability of our firm. I assure you that we remain committed to earning your business and confidence day after day.”
The letter includes a list of bullet points detailing due diligence procedures and distinguishes RJO from some of the policies that led to problems at MF Global and PFG.