Concern for lack of oversight by regulatory authorities is emerging from the embezzlement case of Peregrine Financial Group Inc. (PFG). Letters left by Peregrine’s CEO Russ Wasserman were uncovered during a failed suicide attempt last week when regulators along with the FBI discovered during the ensuing investigation that $215 million of client funds were missing.
This Website Is For Financial Professionals Only
Regulators examined PFG as early as 1993. But Wasserman stated in one of the letters that throwing the regulators off his track was an easy task. Wasserman was arrested on Friday, July 15, for lying to regulators.
The letters further disclosed how the stolen funds were used. Some were used to pay regulatory fines and fees. More of the funds were used to bolster PFG’s capital and to build a new corporate headquarters.
Most of the funds were used to restore losses of capital so the firm could stay in business. Accusations are that PFG created false statements to show regulators. The fraud continued for nearly two decades. Other executives at the firm are now being investigated.
A statement signed by Wasserman said that in 1993, he was forced to embezzle the funds or go out of business. The firm became known as PFGBest. The Commodities Futures Trading Commission (CFTC) said it basically handed day-to-day monitoring of the firm over to the National Futures Association (NFA).
But the letters uncovered recently may indicate that the CFTC was monitoring the firm more closely than previously thought. The fact that the fraud continued for such a long period is leading the CFTC to reexamine the way it monitors firms. Wasserman states that he was continually harassed by regulators and has no remorse
for his actions.