I just got an email from a retired – I’ll not call her elderly – lady who has had $50,000 of her meager retirement savings stolen in the PFG rape. She wants to enjoin a class action suit and go after not just PFG but also the NFA. I’ll quote her now, and you can extrapolate her emotional state:
I want roasted balls on a plate at this point. Preferably roasted while still on a living person… Without anesthesia.
I wouldn’t recommend focusing on castrations. I’d recommend focusing on suing the NFA. The PFG estate is almost certainly dry, and as with MF Global, JP Morgan isn’t going to turn loose of anything.
But the NFA? Oh, that’s a fat hog just begging to be stuck. Did you know that the NFA charges one cent per side on every futures and options contract traded in the United States? Stop and think about that for a moment. That is a heck of a lot of money. As a purely private organization that basically operates as the gestapo of the CFTC and of the industry cronies who sit on the boards and committees, the NFA is free to make as much money as they please – and they do. They have a massive war chest. I also would bet that the individual board members, executives and committee members probably have some pretty hefty net worths as well.
Would some attorney please form a class and sue? I have one little old lady who is ready to rumble in the style of the old-school. Let’s give these people a focused outlet for their ire.
PFG ISN’T THE FIRST HUGE NFA AUDITING “OVERSIGHT”
So you think that PFGBest is the first time that the NFA has inexplicably “missed” hundreds of millions of dollars from a non-clearing FCM that they had under their auditing auspices?
Oh, you would be very, very wrong. Let me tell you the tale of Sentinel Management Group, a non-clearing FCM that operated as a hedge fund for other FCMs, that was a Ponzi scheme which when it finally collapsed in 2007, was “missing” $500 million.
The NFA’s own report on Sentinel, for which the NFA was the auditing body, found:
“Sentinel failed to maintain adequate books and records, including records to demonstrate the location” of some accounts.
Huh. How is that possible, given that the NFA auditors had signed off on every audit ever performed of Sentinel, since the NFA was itself the auditing body?
Apparently, just as with PFGBest, the NFA was grossly, grossly negligent in its due diligence – almost certainly intentionally – and then mid-level robosigners who were neither competent nor possessing any real knowledge of Sentinel’s books were told to sign off on the Sentinel audits.
Anecdotally, I have been told by someone familiar with the situation that when the investing FCMs who had their money stolen by Sentinel pressed the NFA to explain how they could have possibly missed half a billion dollars in missing funds, the NFA’s reply was that they didn’t really understand the complexities of the documentation and investments that they were shown, and thus just signed off on the audit trusting that everything was okay.
Uh-huh. Maybe like how no one really understood all of those “complex” reverse repos that Corzine had over at MF Global? Because rule number one in forensic accounting and auditing is: If you don’t understand something, just sign off on it anyway. Especially if the CEO of the firm is either a crony of the ruling political regime, ex-Goldman CEO and next in line to SECTREAS or sits on the board of the self-regulatory body itself.
The NFA is a criminal organization. It is a mafia. And it is powerful. How do you think they managed to completely hush-up the Sentinel fiasco? Let me remind you that back in 2007, $500 million was an ENORMOUS amount of money. And yet I’m betting this is the first many of you have heard about this.
The NFA needs to be shut down, disbanded, and many of the upper management need to be tried under the RICO statutes. These people have willfully destroyed people’s lives and businesses in service to their cosa nostra / political cadre, and many times have done it for sport.
I can promise you that PFGBest is not the only instance of the NFA overlooking grossly underfunded FCMs that are under their auditing auspices. There is NEVER just one cockroach.
My advice? The PFGBest customers need to form a class, and quickly. Sue the NFA and NFA management personally for fraud. There is a provable history of GROSS NEGLIGENCE by the NFA with regards to their auditing oversight.
A few citation URLs for you to cut and paste into your browser. Happy reading:
http://en.wikipedia.org/wiki/Sentinel_Management_Group#cite_note-globe-3
http://www.fbi.gov/chicago/press-releases/2012/ceo-and-head-trader-of-bankrupt-sentinel-management-indicted-in-alleged-500-million-fraud-scheme-prior-to-firms-2007-collapse
http://seekingalpha.com/article/45105-nfa-drops-sentinel-ball-sec-picks-up-sentinel-ball
http://online.barrons.com/article/SB118860706640815325.html
