Iowa senator calls for congressional scrutiny of PFGBest

* Ag Committee should look into collapse of PFG-Grassley

* Also wants CFTC to explain its regulation of PFG

* Republicans point to regulator failures in recent scandals

By Emily Stephenson

July 12 (Reuters) - A U.S. senator from Iowa wants the Senate Agriculture Committee to look into the scandal surrounding now-bankrupt futures broker PFGBest during a hearing scheduled for next month.

The committee already plans to meet on Aug. 1 to discuss the fallout from the failure last fall of a larger futures broker, MF Global.

That hearing's focus should be expanded to consider how regulators oversaw Iowa-based PFGBest, Republican Senator Chuck Grassley said in a letter to Agriculture Committee Chairwoman Debbie Stabenow, a Democrat, and the panel's top Republican Pat Roberts.

PFGBest, which had a state-of-the-art headquarters in Cedar Falls, Iowa, collapsed this week after revelations it was missing more than $200 million in customer funds.

"It's important the Senate Agriculture Committee look into the PFGBest matter in the same manner as what we have done regarding MF Global," Grassley, a member of the agriculture committee, said in the letter.

"We have to make sure regulators are doing their job."

Grassley has a professional acquaintance with PFGBest's founder Russell Wasendorf Sr., who appears to have tried to commit suicide on Monday morning outside the firm's offices.

Grassley attended the opening of PFGBest's Iowa headquarters in September 2009 and the program portion of a Waterloo, Iowa, triathlon sponsored by Wasendorf's Peregrine Charities, according to a spokeswoman for Grassley.

Grassley has been quick, however, to call for lawmakers to concentrate on regulators' supervision of the firm.

The Commodity Futures Trading Commission has accused the firm's regulated unit, Peregrine Financial Group (PFG), and its owner of misappropriating customer funds for more than two years.

Some experts have compared the broker's actions to a Bernard Madoff-style Ponzi scheme. A source has told Reuters that Wasendorf used a post office box to intercept and fabricate documents meant to be filed by PFGBest's bank with the National Futures Association.

Investigators now are looking into questions such as why PFGBest used a tiny accounting firm that appeared to operate out of a Chicago-area home to audit its books.

Grassley also asked the CFTC for information on how the agency responded to signs of trouble at PFGBest, such as accounting irregularities, going back as far as February 2010.

"With the failure of MF Global and now PFG, the CFTC must be open and transparent with Congress and the American people to prevent the continued erosion of customer confidence in the integrity of the commodities markets," Grassley said in a letter to CFTC Chairman Gary Gensler.

Some Republican lawmakers have blasted regulators for failing to prevent recent scandals, including PFGBest and allegations that major banks sought to manipulate an inter-bank lending index that is the benchmark for many consumer interest rates.

Senator Jerry Moran, a Republican from Kansas, on Thursday called for Gensler to resign, saying the collapse of MF Global and PFG shows that the CFTC under his watch failed to protect consumers.

The missing funds represent more than half of PFGBest's client accounts. That pales in comparison to the $1.6 billion estimated to be missing from accounts at MF Global.

Lawmakers questioned former MF Global head Jon Corzine but have left new rules to prevent similar blow-ups to regulators. The CFTC has been considering new rules to hold futures executives accountable for customer funds.