Ponzi Scheme at PFG in Cedar Falls
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I blame the regulators, they put stupid rules and phony required audits in place. they need to stop allowing firms and commodities firms to have self custody of client assets. require all client assets to be held with an appropriate 3rd party custodian, who have procedures in place to prevent fraud.
Madloff, Stanford, MF Global, and PFG all had a form of self custody which allowed them access to client funds without anyone asking a question. Stop the stupid regulation and just use common f;ing sense!
Madloff, Stanford, MF Global, and PFG all had a form of self custody which allowed them access to client funds without anyone asking a question. Stop the stupid regulation and just use common f;ing sense!
You can't eliminate the possibility of fraud. Arthur Anderson was going to prevent Enron from defrauding everyone and look how that worked out.
You can't eliminate the possibility of fraud, but there can be much better meaningful regulation in place to prevent it.
Such regulation will never happen however. I saw a great documentary a short while ago about this (Frontline perhaps). The financial lobbies are too strong in Washington. As such, we get many regulations that require mounds of paper shuffling for appearances, but few to none with any teeth that could meaningfully deter fraud and the other stupid risky behavior that plagues the financial industry.
The audit should have found that there really wasn't $220 million in customer funds. Verifying bank accounts is the most basic audit practice so there is no excuse for the audit to not find the discrepancy between $220 and $5 million.
Most regulations are designed not to regulate, but to force burdensome protocols onto smaller competition, thus forcing them out of business and leaving everything to the big boys. Don't throw me in that briar patch! The entire system is corrupt to the core.
You do realize that not allowing firms and commodities firms to have self custody of client assets would be a regulation, right? In 2 sentences you said that they need to eliminate regulations and put in regulations.
Apparently the owner provided the regulators with a bogus bank address that went to a PO box that he owned, then forged the confirmations when he received them. I think the majority of CPA firms (and probably other regulatory firms) rely on the address provided by their client as a valid address for confirmation - I'll bet we'll see some tightening of standards here.
Some regualtion is good and a lot of it is really bad.
Yes, they need to elminate majority of the Frank Dodd act that is going into place, majority it doesn't do any good and just costs a lot of $$$ which the end client pays for and is not any safer.
They do need to implement a regulation of banning self clearing firms. It cannot be policed and the result has been: Madloff, Stanford, MF Global, and now PFG.
Fraud will always exist, i understand that - but not allowing self clearing will elminate these massive ponzi and embelzement schemes.
Not saying that is not impossible, but it is very very unlikely. Clearing firms such as Pershing, Wells Fargo, Schwab, and Fidelity have intense monthly audits - their business model is all about clearing and custody, which they are compensated well for, why would they take down multi-billion dollar firms to committ fraud???
YES! Both you and JBH are 100% correct. And policy maker's are scratching their heads wondering why we have anemic GDP growth and little new job creation.
