Farmers keep showing up in the middle of financial scandals – through no fault of their own.

First there was the MF Global debacle last year.

Now comes the latest brouhaha in the form of Peregrine Financial Group. The futures brokerage, with offices in Chicago and Cedar Falls, Iowa, filed for Chapter 7 bankruptcy protection this week after regulators said more than $200 million had gone missing at the commodities brokerage. The Commodities Futures Trading Commission is accusing the firm and its owner, Russell Wasendorf, Sr., of committing fraud by misappropriating funds and falsifying bank records. Adding to the scandal, Wasendorf attempted suicide.

American Public Media’s Marketplace radio program did a great job explaining the farm connection, and why these jolts to the futures system are so significant.  Click here to read the entire conversation, but here are some key points:

• Peregrine Financial helps customers - mostly farmers - hedge the prices of crops, like corn or wheat. The farmers give their money to Peregrine and ask the brokerage for advice and help in betting that the future price of corn, or wheat, or pork bellies, will go up or down.
• Details are still coming out, but it looks like the company lied about how much money it had on its books. It told  the National Futures Association, a self-regulator, that just three weeks ago that it had $225 million in the bank - but it actually had only $5 million. Authorities think Peregrine may have been lying about its finances for two years.
• The missing money belongs to the firm's customers. So those farmers have no access to their money any more, if it even exists.
• Now there are real questions about how well the futures market is regulated, especially when we're so obsessed with financial reform. It was one thing when it looked like MF Global was an anomaly. But if other customers in the futures market can't trust that their money isn't just going to go poof, that would be bonkers.

Harvest Public Media's Jeremy Bernfeld has been reporting on these trust issues in connection with the futures market.  Check out:

"After MF Global crisis, farmers may hedge on hedging"

"MF Global crisis leaves rural brokers stuck in the middle"

And we're still trying to understand the true impact on farmers and how this will play out in the markets.

Farmers and ranchers: Do you use the commodities market to manage your risk? What's been your experience? Please share your story through the Harvest Network by clicking here.