Point-by-Point Case Comparison Of MF Global, Sentinel and PFG Best
Sentinel | MF Global | PFGBest | |
Broker-dealer and FCM | Y-FCM of FCMs | Y | Y |
Bankruptcy? | Y | Y | Y |
Misused customer segregated funds for proprietary purposes | Y | Y | Y |
DSRO | NFA | CMEGroup | NFA |
Main banker | BONY – no CFTC sanction | JPM – no CFTC sanction (JPM also audited by MF Global auditor PwC.) | US Bank – CFTC filed suit. |
Executives charged, convicted by SEC or DOJ | Y – Trader plead guilty, cooperating, CEO going to trial. Five years until indictment.
Y-CEO Bloom On Trial seven years later. CONVICTED |
N – CFTC suit against execs | Y – CEO Wasendorf plead guilty, in jail. |
False customer account statements | Y | ? – Given that money was gone, some customer statements may have been false. Reports to regulators were falsified. | Y |
Lack of segregation of duties | Y | Y – CEO and Chairman was also head proprietary trader | Y – Wasendorf controlled bank accounts and falsified bank statements. |
Bank confirmation fraud | ? | ? – Edith O’Brien refused to sign request from JPM confirming transfers to proprietary accounts did not come from customers. | Y – Auditor did not confirm balances directly with bank. CEO redirected requests ot him and signed false confirmations. |
Auditor sanctioned by CFTC (All three auditors were PCAOB registered and PwC and RSM McGladrey regularly inspected although not known if these engagements ever inspected.) | CFTC sanctioned AMG and McGladrey and Pullen LLP. Audit partner banned (His second offense.) | PwC – no | Veraja-Snelling – Yes |
Audit partner | G. Victor Johnson | Linda McGowan – Also missed the Madoff fraud as PwC’s emissary on behalf of feeder fund audit client Fairfield Greenwich to check out back office. She was partner of Knight Capital audit 1995-2000. | Jeannie Veraja-Snelling sole practitioner, sanctioned by CFTC |
Risky securities lent under repo agreement to fund proprietary trading? | Y – CDOs | Y – Sovereign debt | N – Wasendorf embezzled customer funds and hid with false customer statements. Used proceeds to enrich himself and prop up company. |
What is the status of the case against U.S. Bank regarding PFGBest?
Can we plan on another distribution from the trustee?