via: WealthCycles
July 10, 2012
On March 28th we wrote MF Global Scandal Is Iceberg Tip of Vast Hidden Risk, and we meant it. MF Global was the tip of the iceberg, and vast, contiguous, hidden risk remained.
Part of the unfortunate base of the iceberg has now been revealed. The National Futures Association (NFA) has frozen all accounts at PFGBest, a commoditiesbrokerage based in the heart of farm country, Cedar Falls, Iowa. “Until further notice, PFGBest is not authorized to release any funds.” Over half of customer assets, some $200 million in client funds, has been stolen.
MFGlobal was the largest commodities brokerage in the U.S. The firm’s demise was the first big move that has limited the desire for speculation and participation in commodities markets. This move let people know that their segregated accounts did not mean their assets truly remained their own. After the scandal, 700 customer accounts were transferred in bulk to PFGBest.
