PFGBest Missing Customer Funds Held In JPMorgan Chase Account
The unfolding PFGBest debacle looks like the MF Global debacle in a lot of ways, including missing customer funds held in a JPMorgan Chase account.
JPMorgan has not been accused of any wrongdoing in the case — and probably won’t be. But this is another problem to add to the biggest U.S. bank’s long and growing list of problems, from its London Whale losses to its involvement in the Libor scandal.
PFGBest, a brokerage firm based in Cedar Rapids, Iowa, on Monday froze its client accounts and disclosed that its founder had been hospitalized following a suicide attempt. The National Futures Association and the Commodity Futures Trading Commission have filed enforcement actions against the firm, accusing it of irregularities in its accounting of customer money.
The amount of client money missing is smaller in this case than in that of MF Global: about $200 million missing, compared with more than $1 billion at MF Global. But, as with MF Global, PFGBest’s customer money was held in a JPMorgan Chase account.
JPMorgan was not accused of wrongdoing in the MF Global case. But it did have to answer questions about the handling of MF Global customer funds. It may now have to answer questions along similar lines.
A JPMorgan spokesman declined to comment.
JPMorgan spokespeople have earned their keep in the past few months, starting with the bank’s revelation that it had lost $2 billion and counting on bad credit-derivatives trades by a London trader known as “the London Whale.” The bank is expected to reveal details of its losses on Friday, when it’s due to report quarterly earnings.
Then last week brought a New York Times story that the bank had pushed mutual fund customers into its own high-fee funds. Meanwhile, the Federal Energy Regulatory Commission is investigating charges that the bank manipulated power markets in California and the Midwest.
And JPMorgan is one of the many banks reportedly under investigation in the ever-growing Libor scandal.