Friday, July 13, 2012

In Letters to CFTC and Agriculture Committee, Senator Grassley Seeks Answers on Regulation of Commodity Brokerage Firms

In a letter to CFTC Chair Gary Gensler, Senator Charles Grassley (R-Iowa) said that recent developments involving Peregrine Financial Group raise serious concerns over whether the CFTC is properly overseeing the activities of commodity brokerage firms. The Senator is troubled that there apparently was no ongoing CFTC investigation that precipitated the events at PFG even though the press had been reporting red flags for some time. For example, it was reported that PFG was short of funds and/or had accounting irregularities as far back as early 2010. Senator Grassley asked the CFTC to inform Congress of what steps the agency took to oversee PFG from the beginning of 2010 to the present. In responding, the CFTC should include all information related to previous violations of PFG, suspicious activity by PFG and what steps the CFTC took to respond to these red flags. The Senator emphasized that it is critical for Congress to know what the CFTC did to look into these red flags.

In a separate letter to Senate Agriculture Committee Chair Debbie Stabenow (D-MI), Senator Grassley asked that the scheduled August 1 committee hearing on MF Global be broadened to include a look into PFG. He also requested that the committee ensure the attendance of a witness from the CFTC who can answer questions about PFG. He emphasized that Congress must ensure that regulators are doing their job in order to prevent the erosion of investor confidence in the integrity of the commodities markets.