Russell Wasendorf Sr is in critical condition in hospital after regulator issues emergency order to freeze broker’s operations
PFGBest is thought to be much smaller than MF Global, which collapsed last year sparking anxiety over the stability of the brokerage industry. Photograph: Justin Lane/EPA
The founder of the US broker PFGBest is said to have attempted suicide as it emerged that more than $200m (£130m) appeared to be missing from clients’ accounts.
Russell Wasendorf Sr, a 40-year veteran of futures markets, was found in his car near the company’s Iowa headquarters and is in a critical condition at the University of Iowa Hospitals, according to local news reports.
The apparent suicide attempt came hours before the National Futures Association (NFA), an industry group that also plays a regulatory role, said it had issued an emergency order to in effect freeze PFGBest’s operations after finding that a US bank account the broker said contained $225m in customer funds actually held only $5m. “It appears that PFG does not have sufficient assets to meet its obligations to its customers,” the NFA said.
One PFGBest broker told Reuters that Wasendorf’s son, Russ Wasendorf Jr, had informed employees about the events earlier in the day, saying a suicide note had been found alluding to financial troubles with the company. The younger Wasendorf “sounded like he was in another world”, he said.
“Everybody here is obviously in shock,” said the broker, adding that some employees had begun packing up shortly after the announcements. “Pretty much everybody around here said we’re doomed.”
The news is likely to renew anxiety over the stability of the brokerage industry less than a year after the collapse of the much larger MF Global. PFGBest, which has brokered trades in US commodity and forex futures and options for 20 years, told customers their funds had been frozen and clients would be allowed to close open trading positions, but would not be able to withdraw funds or make new trades until further notice.
The company told clients: “Some accounting irregularities are being investigated regarding company accounts … Until further notice, PFGBest is not authorised to release any funds.”
Local law enforcement officials said the investigation would be likely to pass soon to the US attorney’s office.
PFGBest is thought to be less than a 10th of the size of MF Global when it filed for bankruptcy last year, so the impact should be less severe. However, many traders are still missing money from that collapse, so the news will still be felt keenly in the industry.