Brokerage chief left note in suicide try

WASHINGTON – Employees of an Iowa-based brokerage firm that has been unable to account for $220 million in customer money found their boss in his car at company headquarters, with a tube connecting the vehicle’s tailpipe to the interior, authorities said Tuesday.

Russell Wasendorf Sr., founder and chairman of Peregrine Financial Group in Cedar Falls, Iowa, was discovered Monday with a suicide note that prompted investigators to notify the FBI, which is conducting a preliminary inquiry.

Black Hawk County Sheriff Tony Thompson declined to discuss the contents of the note, except to say it was “a form of documentation that caused alarm, at least concern for us to get federal authorities involved.”

Emergency crews were not sure how long Wasendorf had been in the running car. A police report said he was breathing but incoherent when rescuers took him to an Iowa City hospital, where he was reportedly in a coma.

A day after Wasendorf’s suicide attempt, the Commodity Futures Trading Commission, the company’s top federal regulator, filed fraud charges that accused him and his firm of misusing customer funds and failing to keep them separate from company money. The move is sure to bring more scrutiny to an industry still smarting from the implosion of MF Global, former New Jersey Gov. Jon Corzine’s futures firm, which was missing billions in customer cash when it collapsed in October.

Peregrine customer Kevin Davey said the allegations, if true, violate a bedrock principle of futures trading. Traders are confident in their brokerages because they believe that nobody will touch the money in customer accounts.

“The whole industry is based on that,” Davey said.

Peregrine helped customers buy, sell and trade foreign currency and futures and options – investments whose value changes based on the expected future price of food and energy commodities and other investments.

The commission said Peregrine falsely reported to the agency that it held $220 million in customer funds when it actually had only $5.1 million. The agency is asking the court to freeze the firm’s assets and appoint a receiver to take over Peregrine. Regulators forced Peregrine to freeze customer accounts on Monday.

In a statement to clients, the firm acknowledged Wasendorf’s suicide attempt but provided no information on his condition, saying only that his actions provoked investigation of “some accounting irregularities.”

Also in February, the company and its executives paid $700,000 to settle charges by the futures association, the regulator that shut it down this week. The association alleged that Peregrine had failed to supervise brokers that made deceptive sales pitches and sought big commissions at the expense of customers.