Reuters: Small Business News: Broker's funds frozen after founder's suicide attempt

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Broker's funds frozen after founder's suicide attempt Jul 9th 2012, 21:50 Mon Jul 9, 2012 5:50pm EDT (Reuters) - Small U.S. futures broker PFGBest said its accounts had been effectively frozen on Monday after a suicide attempt by the firm's founder set off an investigation into possible "accounting irregulaties." In a dramatic turn that seems likely to trigger a new round of anxiety over the stability of the brokerage industry less than a year after the collapse of much larger MF Global, the Cedar Falls, Iowa-based firm told customers that they would be limited to liquidating positions until further notice. The disclosure came hours after founder and owner Russell R. Wasendorf, Sr., was found in his car near the company's headquarters having apparently attempted to commit suicide, according to the local WCF Courier news website. He is in critical condition at the University of Iowa Hospitals. PFGBest told clients that the National Futures Association (NFA) and other officials had put its funds on hold, and that it was in liquidation-only status with its futures commission merchant (FCM), which is responsible for clearing trades. "What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds," the note said. One broker at the firm said that Wasendorf's son, Russ Wasendorf, Jr, told employees about the events earlier in the day, saying that a suicide note had been found alluding to some kind of financial troubles with the company. "Everybody here is obviously in shock," said the broker, adding that some employees had begun packing up their desks shortly after the announcements. "Pretty much everybody around here said we're doomed." With about $400 million in so-called "segregated accounts", less than a tenth as much as MF Global at the time of its bankruptcy, the fallout will likely be more contained. But news of more financial troubles in the brokerage industry still threatens to further erode confidence in the sector. There was no indication that segregated funds had been breached, as is suspected with MF Global. PFGBest officials were not immediately available to comment. (Reporting By Jonathan Leff, Robert Gibbons, David Sheppard and Tom Polansek in Chicago; Editing by Phil Berlowitz) Link this Share this Digg this Email Reprints

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