Broker PFGBest freezes funds after founder's suicide attempt CHICAGO/NEW YORK (Reuters) - Independent futures broker PFGBest said it had effectively frozen customer accounts on Monday after a suicide attempt by the company's founder set off an investigation into possible "accounting irregularities." In a dramatic turn that may trigger a new round of anxiety over the stability of the brokerage industry less than a year after the collapse of much larger MF Global, the Cedar Falls, Iowa-based firm told customers that they would be limited to liquidating open positions until further notice. The disclosure came hours after owner Russell R. Wasendorf Sr, a 40-year veteran of commodity markets, was found in his car near the company's new headquarters, having apparently attempted to commit suicide. He is in critical condition at the University of Iowa Hospitals, according to local news reports. PFGBest, which brokered trades in U.S. commodity and foreign exchange futures and options, told clients that the National Futures Association (NFA) and other officials had put its funds on hold, and that it was in "liquidation-only" status with its futures commission merchant (FCM), which clears its trades. What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds," the note said. PFGBest officials were not immediately available to comment. Messages and emails to NFA were not returned. With about $400 million in segregated customer accounts, less than a tenth the amount MF Global had when it filed for bankruptcy, the fallout will likely be less severe. But news of more financial troubles in the brokerage sector still threatens to further erode confidence. There was no indication that segregated funds had been breached, as is suspected with MF Global. One broker at the firm said that Wasendorf's son, Russ Wasendorf Jr, briefed employees about the events earlier in the day, saying that a suicide note had been found alluding to some kind of financial troubles with the company. The younger Wasendorf "sounded like he was in another world." "Everybody here is obviously in shock," said the broker, adding that some employees had begun packing up shortly after the announcements. Pretty much everybody around here said we're doomed. One former employee of the firm said he had grown concerned that Wasendorf didn't do more to distance the company from a massive $194 million forex-trading Ponzi scheme run by Trevor Cook in Minnesota, who admitted defrauding more than 700 investors. Cook is serving 25 years in prison. In February PFGBest, which had acted as Cook's broker, was fined $700,000 by the NFA for failing to notice the scheme. The company was subsequently sued for $48 million by the receiver rounding up the assets from Cook's scheme. PFGBest is far smaller than the big investment banks that dominate the brokerage business, but was among a dozen or so well-known independent firms that tended to cater to local traders, farmers or smaller market players. Russell R. Wasendorf Sr started as a commodities trader in the basement of his Cedar Falls home in 1972, offering seminars and educational programs to other traders. In 1990 he launched Peregrine Financial Group, which would become PFGBest, and was an early promoter of electronic trading systems. He expanded the business in the late 1980s after making a windfall profit for himself and customers by advising them to short the financial futures market 10 days before the "Black Monday" stock market crash of 1987, the firm's website says. The firm grew significantly over the past decade, opening offices in Canada and Shanghai, and buying smaller rival Alaron in 2009. It also moved its headquarters from Chicago back to Wasendorf's hometown of Cedar Falls. "It's obviously a lot cheaper to hire someone in Iowa than it is in Chicago," said the former employee. Reporting by Jonathan Leff, Robert Gibbons, David Sheppard, Tom Polansek and PJ Huffstutter in Chicago; Editing by Phil Berlowitz