mf global and peregrine are no normal bankruptcies. then the unthinkable happened again with the news from niall regarding the peregrine financial group. diamond like to hear from the trustees of both of these bankruptcies about the efforts to return all of the segregated account funds to the customers of these two firms. stomers of these firms to the i appreciate the mf global trustee and the new peregrine trusty be here to update us on their effort. the trusty judge louis freeh couldn't be here but i think him for his submitted testimony. i am also looking for to hearing from key stakeholders in the futures industry and in the second panel here today. he's put a tremendous amount of thought into your recommendations to make the system stronger. i am eager to hear those recommendations. this input is critical and important to the committee as we consider the fundamental question of whether the self regulatory structure that has existed for decades is capable of regulating the industry or whether it is all grown it's time and means to

peregrine was subject to cftc and fma and repeated enforcement actions. none of those examinations and none of those enforcement reacts -- actions involve allegations of fraud regarding customer segregated funds. there was not an indication of that. >> he was the sole person in the company receiving tank statements and a chief compliance officer took his word for the fact that the documents were real, at least according to a report. so when we look at this, with this consolidation of functions have violated any standard of internal controls that would have been identified in audits or other reviews or should they have? >> our examination certainly would have covered internal controls as with the examinations by the outside cpa. we tried to make sure there was segregation of duty with the people comparing the computations on a daily basis have the expertise to do that function.

on a limited basis through september 13th, 2012 but as a certain employees at peregrine. i've also selected acre of professionals which i feel are necessary to assist me in this liquidation effort to revive the working cooperative with the cftc, the nsa, the fbi and the u.s. attorney's office in coordinating the liquidation of peregrine and providing access to all information under my control three years in the pending civil and criminal investigations on the other hand i've been getting cooperation from the other side in getting information that they already have control of and allowing me to see that information. i've also been working cooperative me with the receiver who was appointed in the cftc action. initially there was some concern over competing orders and who had jurisdiction over what has been straightened out in the receivership matter and an amended receivership order and an amended statutory restraining order have been entered making it clear that all assets of peregrine are under control of the bankruptcy trustee. in conclusion, with the destin sense of the

peregrine was subject to cftc and fma and repeated enforcement actions. none of those examinations and none of those enforcement reacts -- actions involve allegations of fraud regarding customer segregated funds. there was not an indication of that. >> he was the sole person in the company receiving tank statements and a chief compliance officer took his word for the fact that the documents were real, at least according to a report. so when we look at this, with this consolidation of functions have violated any standard of internal controls that would have been identified in audits or other reviews or should they have? >> our examination certainly would have covered internal controls as with the examinations by the outside cpa. we tried to make sure there was segregation of duty with the people comparing the computations on a daily basis have the expertise to do that function. so obviously there was a failure and i'm not suggesting otherwise, and i think we do need to develop more stringent standards for internal controls but there was during our examinat

the ceo of peregrine will be arraigned in iowa today. he asettled suicide last month has confessed to forging documents about how much money was in peregrine's customer accounts. >>> former head of morgan stanley investment in china has been sentenced to nine months in prison. garth peterson admitted to violating u.s. anti-corruption laws. prosecutors alleged he conspired with two other people including a chinese government official to misappropriate millions of dollars from a state shanghai parmt building. morgan stanley thought they were selling the stake but instead sold to it an entity run by peterson. >>> chinese court is due to deliver its verdict on the country's high-profile murder case on monday. that's when the wife of the former chinese politician will also receive her sentence. admitted to killing neal hayward saying the british man threatened to kill her son. she's expected to get a light sentence. >>> and still to come on the program, finland is standing by the euro but a government official tells cnbc more must to be done

concern that there needs to be more oversight, particularly of these futures commission merchants like peregrine and mf global, and regulators are doing more. doing more electronic audits and making extra sure the companys are not commingling their money with customer money. >> tom: that's a key point, the mf global collapse was a made that went wrong, and admit fraud. and mf global failure, you sat in the same loom with russell who is now at the center of the alleged fraud, and he said that it was sacred to keep customer money -- not to commingle, and now he's learned he was ripping off customers. >> yeah. that's what took a lot of people -- it really stunned a lot of people, particularly me. i interviewed him many times and he was a trusted member of the futures industry. i k it goes back to what we were talking about earlier. there needs to be more oversight, and hopefully that's what we'll be seeing. >> tom: looking at investor trust in the futures market tonight. it's diane eastabrook reporting for the cme group in chicago. thanks, diane. >> susie: when it comes to confidence in the markets

his company, peregrine financial group, cannot account for more than $200 million in customer funds.came to light after wasendorf attempted suicide. authorities say he left a detailed note in which he admitted to embezzling the funds. >>> and another sign that a new iphone might be on the way. target and best buy have reportedly cut the price on some models of its iphone 4 and 4s. last week, sprint cut prices by $50. now, in the past, retailers have reduced iphone's prices to clear inventory before the new model is released. and terrell, it's a new iphone for you! >> i wasn't -- for me? one for you! >> i'm keeping my blackberry. i'm not going there. >> we're not doing that, are we? >> no. >> ashley morrison here in new york. ashley, thank you so much. see you tomorrow. >>> helen gurley brown, longtime editor of "cosmopolitan" magazine, has died. in the 1960s, her best-selling book "sex and the single girl" started the sexual revolution for women. and when she took over "cosmo," became part of the american culture. she ran the magazine for 32 years, stepping down in 1997. her motto "g

of the bankrupt firm peregrine financial group was indicted on thirty one counts of making false statements to regulators will ask neil barofsky if sans suicide no confession there are legitimate criminal cases that could be built around executives at major firms too big to fail firms surrounding the financial crisis and its aftermath and i should mention for our futures and commodity trading viewers barofsky prosecuted the c.e.o. and president of russia that's a real hooker there and finally since we're talking being locked up we'll tell you about the apple of the u.s. prison systems turns out they found a captive audience let's get to today's capital account. all right it's been a few years but i'll tell you on any given day we can see the legacy of the financial crisis and its response from the government in the news it is the legacy taxpayers are still footing the bill for won't street seems to be paying less for its crimes and that is to put it lightly today for example the s.e.c. charged wells fargo's brokerage firm as well as a former v.p. for selling investments tied to mortgage bac

so with a tree your risk of a thousand can cure disease but not so much with you know with peregrine or with the right right right in a different kind of risky conservative kind of risk but or is it is not within the financial system it is outside of the financial system a very innovative alternative. which they see in the financial quarterly so uncorrelated risk correlated risk there you go in a world of so many correlated thank you so much that you were ever getting down on the action too and you need to talk to you it's you know i guess you could call that the mother nature risk now that is not all of my conversation with jim grant you can go online and catch a web extra at our you tube channel it'll be up shortly because i'm sure you saw that j.p. morgan reported a five point eight billion dollar london whale trading loss to date a lot more than they originally reported it would be and they will clawed back compensation for two years for the traders involved and their boss i know drew but did these clawbacks reinstate. realistic accountability you can find out what mr grant has t

global or peregrine or these other two houses that are being stolen from by the money center banks like j.p. morgan or as an e.t.f. that has no seniority at all for the claims owned by the shareholders of these exchange traded funds in these wealth trusts that's all paper and that's a huge mistake isn't it david morgan for people to own a silver e.t.f. at this point it really is you might as well just throw your money in the garbage right well that's. there's a big group that are lumped as e.t.l. fs and not all the ts are the same i mean s.l.c. is one i wouldn't touch unless i'm just doing is a hedge but the p.s.l. be like this broad physical silver trust i would i would think that once fine it's lumped as an e.t.f. really it's a holding company in my view and you could take the silver out of there so if you have an e.t.f. for all income the way you can get the silver or gold out in your own hands and i think that's a safe investment so there are ones that are much better than the paper ploy derivative up to kazoo re hypothecation to the moon and back those are ones i would stay away fr

global or peregrine this looks like it could get to some issues with high frequency trading which is a conversation for another day but is this when you combine it with other things just another failure in the list of recent ones that are causing people to lose faith prompts rightfully so in financial markets and firms. i mean it's tough after the flash crash m.f. global g. paul j.p. morgan shenanigans i mean how do you trust the financial system and i mean that's what we're really in d.c. to you know to try to help and help shore up investor confidence working on getting our interim work with the facility plan which will give commodity customers a former county insurance we're working on getting special prosecutors. appointed to to actually prosecute some of the fraud that have been committed and tighten up regulations in a smarter way where where there are simpler easier in our stand and more in forcible rather than just getting more pieces of legislation like dodd frank which just make things more complicated and create more and more loopholes for these guys to. get through so the

the commodities futures trading commission has filed a complaint against peregrine financial group or p.f.g. and its owner who you see there mr wasson dorf the c.r.t.c. alleges fraud by misappropriating customer funds violating customer segregation laws making false statements in financial statements does this all sound familiar we've been reporting on a lot of these same issues same themes for months in the wake of m.f. global's collapse so we'll get more into the big picture in a moment first we want to get up to speed with what customers are dealing with christopher olsen is one he's also president and c.e.o. of treasure island points and first i really appreciate you being on the show thank you so much mr olson thanks for having me on the arm absolutely so first just bring us up to speed what is your relationship to this firm and what's happened in your personal situation well we've been trading futures through p.s.u. best for nearly twenty years and we recently began trading for x. driven two cents fundamentals with them through those fundamentals division the early twenty ten we

bloomin brands, and peregrine. back over to you. >> jackie deangles for us, thank you.e're working on getting to a four and a half year high for the dow. stick around we're just getting started on this jam packed edition of "closing bell." >>> coming up, safe at home, demand is up, supply is down. could this mean the housing market is finally get k back on track? we crunch the numbers straight ahead. and losing their shirts, two retail organizations raising red flags. they're warning the president and mitt romney that the industry hangs in the balance unless the fiscal cliff is addressed. [ male announcer ] this is the at&t network. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪ olaf's pizza palace gets the most rewards of any small business credit card! pizza!!!!! [ garth ] ol

futures broker peregrine financial will be arraigned in an iowa courtroom.endorf was charged with lying the regulators. he's attempted suicide recently in the last month. he's confessed to forging documents about how much money was in peregrine customer accounts. the firm's regulator passed new rules thursday to better protect customer money. a former morgan stanley investment banker faces nine months in prison. he helped build the firm's successful real estate business in china. he's been sentenced for what prosecutors called an elaborate scheme to rip off the bank and pay off a chinese government official but before he heads to prison garth peterson is talking exclusively to cnbc senior correspondent scott cohen who is with us now. andrew won't be interested unless there's a sexual angle to this. do you have anything at all? >> we'll do a little bit of this interview during the day. not in this segment. >> there's something for later? >> he was doing business in china, in the early part of the last decade when the property boom was going nuts and he told s

sally actually called me the peregrine falcon. >> i like that.ger. >> you look gait! [ cheers and applause ]. >> congratulations, sally, tell me how your life changed. >> it's like asking someone how does it feel to resurrect from the dead. in some ways the struggles i went through are exactly what makes it so sweet. because i got through the hard times. as a woman in my 40s. losing weight is much harder. i'm not going to lie. you're playing the long, slow game. you're not giving up hope when it seems like hope should be lost. that's a really hard thing to do. getting through that was great. it was fun to see my journey last night. i had never seen the show either. i was watching with heidi and chris. we were screaming at the tv. >> how do you feel getting up on the surfboard. you are able to do things nowta you weren't able to do before. >> i actually -- one of the people i work with in d.c. said you started off the show at a negative size fitness left. now he give he's a begrudging 6, 7. he's tough. >> on the way to a 10. >> i couldn't even wal

once your recommendations are any recommendations or place -- making place could and mf global or peregrine situations -- >> anyone who is bent on fraud or misappropriation of funds can try to con found the most sophisticated compliance system. however i think what we have recommended is going to make it significantly more difficult after the mf global situation including separation of duties as i mentioned. this idea of going to risk-based audits is an important one. this modernizing of how we audit away from a check the box system to morph an automated daily confirmation directly from the banks independently verified, those are really important steps and the good news is it that will free up auditors to ask more difficult questions and to see the red flags and go forward with their audits on a more risk-based -- and then the checkbox. these are important proven to and i will mention you talk about discussion between the groups, we independently huddled with their experts and we all came to roughly the same improvements including the idea of studying the insurance fund with some of the pan

if you get back to mortgage bank lending, peregrine in the uk trading above book value, that's really benefiting from the low funding, and quite -- >> more on this point. >> when i was watching the olympic diving i thought it's just like libor. the judgarks you take two highest and two lowest get taken away. the treasury secretary, should the fsa be investigating the way they judge the diving. surely there's an open way. open to manipulation. talking about banks, deutsche is the later lender to come under scrutiny. "new york times" claims deutsche is one of several other banks being investigated over dealings with nations such as iran. shares are lower. patricia has more for us from frankfurt. what are the details in this report? >> good to see you too, ross. no real comment from deutsche bank so far on this particular report. however we heard also from one of the spokes people something i would like to read out. deutsche bank decided in 2007 already it would not quote engaging new business with counterparts in countries such as iran, syria, sudan, north korea and to exit existing bus

and russell wasen dorve sr., founder and ceo of peregrine financial has been indicted on 31 kounds 3 31 counts of lying to regulators, this a little after a month when he attempted to commit suicide. he faces up to 155 years in prison, joe. i don't know what to say. lying is a bad thing. >> well, we will never run out of stuff for "american greed." good for us, but bad for people that get bilked. >> right. very bad. >> i'm excited -- we'll do home depot. excited to have you come over. >> i'm going to walk. walk and talk. >> one of your great strengths, i can talk to you about groupon and have you had experience with groupon, right? you have -- >> i have been on groupon, bought from groupon, written about groupon. >> but you've gotten stuff in your e-mail thing. >> yes, i have. >> and it says this is the deal, and you said like that deal. >> i like that deal. >> give me whatever it is you have at a discount and you've done it. >> i have done it. >> what i don't understand, how -- what i don't understand is the stock has dropped to $5 billion, market capital. >> i think it's lower than

appropriate government oversight and regulation, i suggest you reflect on three things -- libor, peregrine investments and the chase loss of $6 billion to say that we shouldn't have government oversight of our financial institutions that dragged us into this recession we're still trying to recover from, i would say it differently. we vote differently when it comes to that. but i think there is a continuing need for government oversight of these institutions. mr. mccain: these institutions are not averse to government oversight. they are averse to legislation which harms their ability to share that information because if they face the threat of being taken into court for that, then obviously that -- there is some reluctance. they also know how much has been lost because of the lack of cybersecurity to china and other countries. they're the ones the most directly affected. so they are intelligent people. they are smart people, and they want this legislation to pass in a way that is the most effective way to enact legislation on this very serious issue. i look forward to continuing the conver