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.