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.
1 reply
  1. Chip Langston
    Chip Langston says:

    What is the status of the case against U.S. Bank regarding PFGBest?
    Can we plan on another distribution from the trustee?

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