Commodity Futures Regulator Moves to Mandate Use of Service for All Regulated Brokerages
NASHVILLE, TN – July 23, 2012 – Within 24 hours of a regulatory mandate to use electronic audit-confirmation service Confirmation, PFGBest, a commodity brokerage unit of Peregrine Financial Group, Inc., was exposed as a multi-year $215 million fraud.
"PFGBest is a sadly common example of how easily bank and account information can be falsified to evade detection of accounting frauds," said Brian Fox, founder and president of Confirmation. "CEO Russell Wasendorf resisted using our service for months, presumably because he knew that as soon as electronic confirmation went into effect, he would be exposed. We have seen this pattern several times since launching the service in 2000 - resistance to our system is a red flag indicating fraud."
In this case, thousands of commodity futures investors had their accounts frozen while regulators attempt to identify the actual location of the funds.
Press reports indicate that the NFA is moving to mandate use of Confirmation by all of their regulated brokerages.
"This is a textbook case of how easy it is to use false mailing addresses and fax machines to conceal massive theft and fraud," Fox added, referring to the way Wasendorf faxed forged confirmation documents and provided auditors with what they presumed was a bank's address but has now been reported as being controlled by Wasendorf to avoid detection. "Universal use of our system will deter frauds of this scale in the future."
Auditors and financial institutions in more than 160 countries use Confirmation to help avoid the growing global propensity for fraud and the magnitude of those frauds. By verifying the authenticity of each user, the company's cloud-based solution not only improves the quality of audits, it brings greater investor confidence into the financial statements.
"This event, while tragic for its victims, is a tremendous validation of our service and an indictment on the outdated paper confirmation process," said Chris Schellhorn, CEO of Confirmation. "Numerous companies and financial institutions have already called us to get established on our system and reassure their investors and customers that their accounts are secure and transparent."
Schellhorn and Fox added that they have seen a significant surge in business inquiries, which happened concurrently with a planned expansion of the service to overseas markets including Turkey, Australia, and South Africa.
Confirmation is the digital platform and global network trusted by audit firms, banks, law firms, and credit managers to quickly and securely verify financial data. As the inventor of electronic confirmations in 2000, we reshaped and modernized the audit confirmation process. Today, Confirmation helps nearly a million clients across 160 countries confirm more than $1 trillion in financial data every year. Learn more at Confirmation.com.