Ex-PFGBest Employee: Several Red Flags Raised From January
FOX contributor Phil Flynn weighs in on his time as an employee at PFGBest.
- Duration 11:23
- Date Jul 10, 2012
FOX contributor Phil Flynn weighs in on his time as an employee at PFGBest.
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Breaking down that story force Phil Flynn is a Fox Business contributor -- -- of former employees.
At he had G -- he is now with price futures group you -- every day at this time and he agreed to join as -- sure but he knows about this situation bill.
I think we want to make it clear that -- you normally join us with a floor report today you're here because your former firm is in the news -- -- to treat you more as a news interviewer okay.
Absolutely I'm here for yes so filled so you laughed PFG -- Back on May 31 is that right why why did you leave did you -- yeah something's coming our are what made you wait.
Yeah well basically because of the things -- we're public knowledge.
It would really disturbed me was there was -- 700000.
By the national futures association for the lack of supervision.
Of one -- introducing brokers now -- find either way.
Obviously raise some red concerns with me.
But and it's not unlike other finds that other funds have not you know that would not necessarily been the death blow for me though it's not a good thing.
In other funds have been hit with that same type of regulation what really bothered me.
With somewhat suit that was filed.
By the state of Minnesota.
That PF -- turned of wind -- to potential Ponzi scheme.
In -- in that lawsuit they -- alleged.
To have commingled funds and allow this customer.
She'd meet margin calls with money from another account.
And for me that was the final straw I didn't know if that was true I have no way to know if it's true but it would it raised -- took me.
And -- want to wait around to find out I decided to look for another firm that point.
You don't fill act you -- I'm looking at the -- -- in front of me complaints and of fines customer who remains from the NFA.
And it goes back years there are things going back to 1996.
And I would ask you why he would go and be a broker for plays that have this kind of track record.
Whether -- a lot of firms that have -- you know complaints in in just because -- have a complaint -- refine it doesn't necessarily mean.
We have done things bad all the time and what happened to me instead I work for Alaron Trading -- I have an independent division.
In Alaron Trading in 2000.
Nine -- the legal analysis to 2000 don't -- 2000.
I think it was 2009.
PST actually purchase the assets Alaron Trading at that time.
And I didn't have some concerns and I met with rust -- -- junior at that time to express my concerns.
And he assured me at that time that that PSG was taking it -- steps to being very very compliant with all regulations.
Any assured me at that time that that they that they were gonna be one of the most compliant firms in the industry.
In you know it was at that point that I decided.
-- would bring my valuable name to that firm at that time in my reputation.
I think they let us -- and I mean obviously when the find came that was a major concern in my point.
And obviously the concerns about the Los announced -- -- really bothered me Melissa.
When when we had defined PST -- -- fine of 700000 from lack of supervision for one of their introducing brokers.
And when they have the allegation of the -- which I found out about in the paper and the F Ponzi scheme in the paper.
-- they never really did address -- with the employees to say hey you know this is you know wrong.
You know we're gonna figure move vigorously defend herself.
You know we really never heard something from the firm and that's when I decided to you know that other firms and to make a good move yet -- with price futures curve now.
Yeah I played I don't -- -- minutes -- calls it's not affiliated here.
I had no nothing no affiliation whatsoever that -- call in -- T I'll get in travel there the other the price futures here.
-- Tom price they've been in business since the 1980s.
And they're very well position in this business right now I'll tell you why because they are a large independent introducing broker.
And but a lot of the problems with the firm CF -- right now that are losing money.
RR because of the interest rates to narrow the way it is now -- these firms were built on a business model making money on interest yes.
Yeah let me take you back to the straight -- though you talked about meeting Russell Watson -- junior.
Romance that senior debt -- right it is who is the owner of the for a founder of the firm who attended Suzanne yesterday cracked.
-- that is correct am what is your -- when he and having worked with their forehand.
You know I'll tell you he -- some very interesting man in you know people that knew him -- news industry all I'll say -- -- -- Right he had a a you know people in the industry thought highly of him you know I didn't really know the -- -- and I met him you know and -- probably all the time as -- PST.
-- probably some and three or four occasions relate.
You know kids who is based out of violated it really comes he turned over the reins to his his the of the company to his son actually.
Ross Ross and or junior at the time the hour right you know before -- was in -- -- really -- -- -- senior.
Had stepped down you know from the day to day operations at that point that's -- I'm very shocked yeah and and that's another thing you know.
You -- when I was you know -- this thing was unfolding here over the last couple of months you know since the lost everything that I knew.
Was public information the NFA find anybody could look at the you know the lawsuit it was in the newspapers -- a -- you.
Let's crack in the floor near Phil Flynn and you've got your -- to the ground -- -- you must know why -- you know and I got more than aren't I.
Now what I've heard what was public record and that was enough to raise concerns with me.
So looked around and I it puts me in in interest in situation because I'm out in Chicago they're out and Iowa.
And in what I -- you know my sense that there were problems but I can't come out and say hey.
You know I think these guys are cramped space off what -- read in the newspapers.
You know I -- I can have concerns.
My clients came to meet with concern tonight you know and Nancy France and -- -- -- have concerns too about what I'm reading in the paper.
And I did the best that I could -- protect my clients.
But at the same time I'm really had no knowledge of what was going on in Iowa or in the falsification -- record.
But I didn't have a good feeling about it but that puts -- in a situation I will say.
That I was talking off the -- hurt.
To Wall Street Journal reporter that it was reporting on this story and I think he was ready to break the story before it wrong.
About you know I was I was not at liberty to really come on the record.
In give my concerns.
-- on Fox Business because it wouldn't put in a bad situation especially if I was wrong with my suspensions.
Let me ask you the 220 million dollar question what do you think captain of the money out.
You know it's I have no idea I mean night I am I I I knew there were problems I had no idea what -- -- of this magnitude.
I know -- swaps in north senior had these grand visions of going back to Iowa making this great.
Compound -- you know they have the daycare center they had us a monastery school in their offices.
Any have this grandiose vision of you know what.
PF she should be and you know and right now that's come down in flames and so maybe it was his desire to fulfill this vision of yes I don't know what it was.
You know the from -- -- I always thought it was a little bit strange you know the wave that.
That they acted.
You know when you met him face to face he could never have a regular conversation with them as always.
You know kind of a standoff -- type of the conversations have.
It it was kind of interesting to see where wet and in my -- that I mean.
It's far is the magnitude of Osama I have no idea what's it's bad I do know what I read in the papers.
Did lead to me to some concerns in and that's -- made the move that I death.
On about June 20 ninth that mean this is from a court affidavit.
400 million in segregated funds -- -- -- -- five million.
On deposit in the bank as of July ninth the -- -- they received information.
-- that the chairman may have falsified those records that approximately there was only about five million there.
I I mean that is shocking crime in itself and that rent go how does that have on the regulators that's what I don't I was I am yeah.
I mean yeah really because you know the regulators are not only supposed to protect the customers but.
You may have a fiduciary responsibility to my clients in.
You know we -- -- are in Washington we're talking about new regulations on the futures industry and position limits and stuff that absolutely makes no sense.
But yet you have a situation like this is going on with PST and regulators didn't do this and I'll tell you right after MF global.
They were audited by the CFTC.
And the NF that you know they were looking for this specific type of fraud.
You know we -- why didn't they find it then you know why are we finding about out about this.
You know weeks later yeah and that's my concern promising -- -- become more angry.
Than a lot of people because you know my reputation is on the -- here you know and you know I mean I was swept in the PSG they bought us out I think huge customer base dried -- Disrupt my customers once again move -- -- you know customer base or just try to work with PST that assured me that they were going to be the most compliant firm in the industry.
And apparently they did a pretty good job -- commencing not only -- that the regulators themselves because of regulators obviously messed.
A very very big situation -- let me.
My question is where -- -- yeah.
Before we go I mean you Citi left on May 31 did you still have any money there have you lost any money as a result of what's going on.
Yeah I have clients and -- and in deep trouble right now and it's the very sad day for the industry and a lot of my clients.
I was able to move -- a lot of business out of there before the accounts got frozen that.
You know I had people that you know they have transfer letters into pfc they got frozen on the last day.
I've got you know -- I was supposed to be on vacation this week I came back in.
On vacation when this story grow and -- You know I'm trying to help my clients and other clients and -- that's the best I -- tend to do whatever I can't you know that's you know that's all I can do at this point.
I did try to warn you know customers of my concerns.
Him leave and it here's the public knowledge here's a lawsuit here's the fine.
And even even I'll tell -- this -- even clients that I told hey listen.
You know this is you know this is public knowledge this is -- in the -- -- -- even man -- -- clients who don't wanna move.
But yeah I'm sorry -- drop we have to -- we're coming up against -- break we appreciate you like moving on and talking to -- about this in we have still a lot of questions that you -- for parks so that's coming up tonight at 5 PM on money we're gonna ask how this could happen.
Where the regulators watching or is the business model broken I mean maybe that is the problem here on the heels of MF global in the meantime such.
Fantastic read on the industry his experience from -- we really preach.