Klobuchar says financial scandals underscore need to strengthen consumer protection
Washington, D.C. – U.S. Sen. Amy Klobuchar today (Wednesday, Aug. 1) said that the MF Global and Peregrine Financial scandals underscore the need to strengthen consumer protections in the financial system.
At a Senate Agriculture Committee hearing, Klobuchar said that the Commodities and Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and other financial regulators should have been able to spot problems at MF Global and Peregrine Financial and that these agencies need to do more to stop financial fraud before it occurs so that farmers and small businesses in Minnesota and across the country can be able to trust the financial system.
“The blatant fraud committed at Peregrine Financial Group went undetected for so many years, even after the MF Global scandal highlighted the importance of safeguarding customer accounts. Once again, those the system was supposed to protect have been left holding the bag,” Klobuchar said. “It is clear that we must enforce the rules on the books and make the necessary reforms to ensure that consumers are protected and that people making investment decisions are able to trust the financial system.”
Last month it was discovered that Peregrine Financial Group’s owner, Russell Wasendorf, had defrauded his customers out of over $200 million of their funds. Regulators found that Peregrine had only $5.1 million held in customer segregated accounts, while it was reporting it had over $220 million. Segregation of customer accounts is the cornerstone of customer protection in the commodity futures and options markets, and where problems occurred less than 9 months ago at MF Global.
Klobuchar is a member of the Senate Agriculture Committee and has been a leader in the effort to stop financial fraud and abuse. Klobuchar recently successfully pressed finance watchdogs to pass a key rule reform to close loopholes in the financial system to help prevent Wall Street from gambling with customers’ money. Klobuchar has pushed for answers on what happened to Minnesota farmers’ and ranchers’ funds that were lost during the MF Global scandal. She invited Dean Tofteland, a Minnesota farmer affected by the MF Global failure, to testify at a hearing in December.