Wasendorf's greatest legacy

July 15, 2012 08:15 PM

The news of Russ Wasendorf's suicide attempt and what apparently prompted it is a shocker and another black eye for the futures industry.

Russ Wasendorf Sr. was not some obscure head of a midsized future commission merchant but a seriously engaged member of the futures world. I never had a problem getting a comment from Russ. And Russ wasn’t one of those guys who grew multiple hands during an interview. He typically had strong opinions and liked to express them. Ironically many of them were on the failings of regulators, which perhaps is appropriate as he was able to maintain a fraud for more than two decades without being discovered.  

While there are a lot of details yet to unfold, many of us feel a little foolish now for not seeing the red flags earlier. Peregrine Financial Group or PFGBest as Wasendorf relabeled it a few years ago was a small player yet Russ liked to sit at the big boy table.

When most futures commission merchants—and exchanges for that matter—were cutting back their marketing budgets at various industry events, PFG was sponsoring lavish luncheons with speakers who commanded six-figure level fees. This was his American Heroes series luncheon at the Futures Industry Association’s annual conference in Boca Raton featuring General Tommy Franks, Barbara Bush and Ted Koppel among others. When the FIA angered him he chose to express his largesse at the CME’s Global Leadership Conference and feature sports heroes. There was Terry Bradshaw, Mike Ditka and Dan Moreno, and Joe Torre and Johnny Bench. Most of us assumed his ego was bigger than his common sense but didn’t think to ask the tough question. Where is the money coming from? Most of us believed he was simply indulging his ego, but figured he had the money.  The food was good and it was cool to meet Mike Ditka and Joe Torre. In fact the series was not officially put on by his brokerage business but by SFO Magazine. While the magazine may have served as lead generation for the brokerage business, a perusal of it showed that it was mostly sponsored by PFG and Wasendorf’s various charitable endeavors.

He was never happy with FIA and the institutional brokers it served. He seemed to want to be in that elite club and never could quite measure up. He appropriately spoke up for the independent brokers whose interests were not being strongly represented by the FIA but you never got the feeling that he was their leader. While he built a solid business, he was not one of the big boys even among the independent retail brokers. 

Wasendorf may have achieved the prominence he has long craved but not in the manner he had hoped. That this fraud was carried out over 20 years and the pure weirdness of the sordid affair with the dramatic way it was discovered has altered the PFG saga from a fraud induced failure of a midsized futures broker to front page news covered beyond the futures world.  Unfortunately for Wasendorf, it most likely will be his greatest legacy.


About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange.