The CEO of PFG Best has tried to kill himself. Supposedly, his firm, PFG Best may have had some accounting irregularities. They weren’t a full line clearing firm of the CME. So, at first blush, this looks a lot different than the MF Global scandal.
Clearing firms are under enormous pressure right now to make a profit. The way most of them are structured, they make a profit from earning interest on the float from accounts. In a 0% interest rate environment, it’s pretty tough to earn any money. Very few, if any, firms want to commit the capital necessary to become a full line clearing member these days. Most take the Introducing Broker (IB) route PFG did.
John Lothian tweeted the sad news first. I didn’t know Russell Wasendorf really well. He was on the retail side of things. He had built a pretty innovative firm in PFG, and I knew some people that worked there. They were all straight up people. As far as I know, PFG never traded their own account, unlike Jon Corzine at MF Global. Corzine had his own P+L line.
The futures industry is littered with people that have killed themselves. I have known a few. Off the top of my head, I can count at least ten people since 1986. It’s terrible when you are so depressed that it comes to that. Here is a place to get help.
Some of my fellow traders are sitting in dark rooms right now. The marketplace as they knew it has been ruined. They don’t know what to do. Once you are in a cycle of depression, it’s awfully hard to break. You can try James Altucher’s daily practice, but when you are in the cycle it probably won’t work. You will have to seek pro help.
Trading is very tough on your psyche. It wears you out. It’s easy to get depressed, especially when other things aren’t working in your life. It’s frustrating.
In PFG’s case, my gut says the embarrassment of the accounting problem would have caused the firm to go under. Wasendorf had poured his life into that firm and couldn’t live with the consequences. Too bad.
It’s another wart on the futures industry that has absorbed plenty in the past few years.