* NFA "isn't doing all that it could," board member says
* Brokers told that regulator ignored members' complaints
* Procedures improved after 2012 broker collapse -chairman
By Tom Polansek
CHICAGO, Aug 29 (Reuters) - A U.S. futures industry regulator is falling short in its attempt to keep tabs on brokers and asset managers, more than a year after the collapse of one brokerage under its oversight that cost clients hundreds of millions of dollars, according to one of the regulator's directors.
Jeff Malec, who was elected to the National Futures Association (NFA) board of directors earlier this year, told brokers in an email this month that the regulator "isn't doing all that it could" to protect futures traders and urged them to complain about it. The email was obtained by Reuters.
The NFA, which is based in Chicago and funded by industry fees, has long operated in relative obscurity, overshadowed by better-known market regulators like the Commodity Futures Trading Commission.
That changed last year after brokerage Peregrine Financial Group, known as PFG, failed due to a 20-year fraud that the company's founder perpetrated despite yearly audits by the NFA.
Malec, chief executive of Chicago-based futures firm Attain Capital Management, said in the email that NFA leaders have ignored complaints about its performance this year.
He sent it to NFA members known as introducing brokers, or IBs, who accept orders to buy and sell futures contracts from customers but do not hold their money.
"If you feel (like I do) that the NFA isn't doing all that it could (that someone should be fired over PFG ... Review processes are a mess. That the teams that come in and audit your IB are dangerously inexperienced...) please let those thoughts be known," Malec wrote in an Aug. 5 email.
NFA President Dan Roth declined to comment on the email. NFA Chairman Chris Hehmeyer said the association had implemented a number of improvements since Peregrine's collapse.
Roth offered to resign after Peregrine failed, but the NFA board rejected his offer, Hehmeyer said.
"We have done a lot of work here to dig into what went wrong with PFG," Hehmeyer. "We always strive to do better."
Malec, whose firm had money at Peregrine when it failed, was one of the NFA's biggest critics after the collapse. He declined to comment on the email.
Peregrine's failure shook confidence in the futures industry less than a year after the collapse of larger brokerage MF Global. The NFA was Peregrine's front-line auditor, although the CFTC also oversaw the firm. Exchange operator CME Group Inc oversaw MF Global.
Peregrine's founder, Russell Wasendorf Sr., said in a note last year that he had duped "unquestioning" regulators from the NFA by falsifying bank statements. He began a 50-year prison sentence for fraud in February.
A study released in January, commissioned by the NFA and conducted by an outside consulting firm, found that auditors of Peregrine lacked the skepticism needed to assess the risk of fraud. The NFA said at the time that it would adopt an extensive list of recommendations in the report.
The board plans to file a report in November on its progress in implementing changes, Hehmeyer said. The NFA also is surveying members, he said.
Malec said in the email that he surveyed brokers following his election in January and that roughly half the respondents were unhappy with the NFA. The NFA's board and leadership "widely dismissed and ignored" the results, he said.
The NFA in 2007 charged Attain Capital with using misleading promotional materials, failing to properly maintain financial records, and failing to supervise employees. The firm paid a $25,000 fine, but Malec denied the charges.