Peregrine Financial Scam Roils Futures Market

BusinessWeek:

Peregrine Financial Group Inc. futures customers won’t have their losses covered by the Securities Investor Protection Corp. even if they were defrauded, the fund’s chief said.

The U.S. Securities Investor Protection Act provisions make customers of a futures commission merchant like Peregrine ineligible for payment, SIPC Chief Executive Officer Stephen P. Harbeck said today in a telephone interview.
Harbeck said his organization, an industry fund that covers losses from brokerage firm failures, has been told Peregrine’s futures business is in a company separate from the registered broker-dealer that’s covered by SIPC. Peregrine’s securities broker traded on a so-called fully disclosed basis where the accounts are held by a unit of Sterne Agee Group Inc., Harbeck said.
While securities customers can look to Sterne Agee, futures customers aren’t covered, he said. A representative of Sterne Agee declined to comment.
“SIPC has not been informed that it is appropriate to take action at this time,” Harbeck said.
If the information Harbeck said SIPC was given is borne out, the collapse of Peregrine won’t unfold like MF Global Inc. and Bernard L. Madoff Investment Securities Inc., where SIPC named trustees and paid the costs of the liquidation.
Peregrine filed for Chapter 7 bankruptcy liquidation in Chicago yesterday after being sued by the U.S. Commodity Futures Trading Commission, which accused the firm and its founder, Russell R. Wasendorf Sr., of misappropriating at least $200 million.

I've been meaning to post on this for several days.  When on earth is the CFTC going to actually do something about regulating commodity futures brokers?  How many customers have to have their money stolen before people actually go to jail?  This and MF Global are on the Goldman Sachs Trust level of fraud from the Roaring Twenties.  This is supposed to be segregated money, and it is fucking gone.  What in the hell is going on?  How can retail customers trust any broker, when these brokers are supposed to be watching one another?  Clearly, the system is broken, and with the amount of money that has poured into commodities in the past few years, expect a lot more money to go missing.