* Farmers among clients for brokerage based in farm belt
* Customers unable to access money in frozen accounts
* Confidence erodes in safety of futures markets
By Tom Polansek
CHICAGO, July 10 Farmers on Tuesday fumed at the
prospect of financial losses, or at a minimum a lengthy wait for
the return of frozen funds, due to alleged mismanagement at
brokerage PFGBest, and some said they had been burned for the
The U.S. futures industry reeled as regulators accused
Iowa-based PFGBest of misappropriating more than $200 million in
customer funds for more than two years, a new blow to trader
trust just months after MF Global's collapse.
Centered in the heart of farm belt, the firm handled
agricultural futures accounts for a number of clients who grow
corn, soybeans and cotton.
"For the farmers who are directly affected it can be a very
severe financial blow," said Dave Miller, director of research
for the Iowa Farm Bureau.
PFGBest revealed to clients on Monday that their money had
been frozen and that they would be allowed to liquidate open
trading positions but not withdraw funds or make new trades
until further notice.
Doug McClelland, who runs Plains Commodities, a one-man
brokerage in Lincoln, Nebraska, with about $500,000 in accounts
at PFGBest, said three of his farmer customers had already sworn
off futures trading after first losing money to MF Global.
Initially, the customers said, "We'll give it one more
shot," McClelland said. Traders and exchange officials have said
the collapse of MF Global does not seem to cast a lasting chill
over market activity. Now, says McClelland, they feel that
"somehow the public's money is becoming a depository for a CEO."
The total shortfall at PFGBest represents more than half of
its client funds but is modest relative to the estimated $1.6
billion missing from MF Global's accounts.
Unlike MF Global, which is believed to have misused customer
funds in a mad scramble to meet margin calls on proprietary
trades in its waning days, PFGBest's abuse seems to have
extended back years, according to regulators. There is no
indication yet of how or why the missing money was used.
Senator Debbie Stabenow, chairwoman of the U.S. Senate
Committee on Agriculture, Nutrition and Forestry, said it was
"absolutely imperative" to have accountability in futures
"We are working closely with regulators to find out what
happened because farmers and small businesses need assurances
that their funds are safe from reckless or criminal activity,"
Tad Everett, who farms cotton, corn and soybeans on about
2,000 acres in North Carolina, was worried he would never again
see the $50,000 he had in accounts at the firm.
He narrowly escaped losing money in MF Global's collapse,
having transferred his accounts to PFGBest shortly before the
larger firm failed.
Everett was stunned when he learned his money was frozen at
"You never think it's going to happen to you but the dog
will bite anybody," he said.