CFTC Asks Congress for Higher Penalty Authority

CFTC Chairman Timothy Massad told Congress that the CFTC needs to be able to assess higher penalties for certain enforcement actions last week. The remarks came as part of a Senate Agricultural Committee hearing on regulatory issues impacting end-users and market liquidity.

The Commodity Exchange Act caps certain fines at $140,000 per violation. Massad expressed concern that this amount was not an adequate deterrent “given the size, scale, complexity of these markets.”

There are exceptions to the cap. Market manipulation and attempted manipulation carries a higher maximum charge per violation, around $1 million. Penalties can also be based on the monetary gain from the misconduct, assessed at amounts up to triple the wrongful gains.  Notably, the CFTC has reached settlements in the hundreds of millions of dollars over the past few years with financial institutions concerning misconduct related to LIBOR and FOREX.

The penalty discussions were coming in the context of other measures Congress is considering.  Congress is debating legislation to grant commercial end users relief from swaps rules required by Dodd-Frank. Congress is also considering a bill to reauthorize the CFTC for another five years. The previous authorization of the derivatives and commodities regulator ran out in September 2013.

The prepared remarks of Massad are available at http://www.cftc.gov/PressRoom/SpeechesTestimony/opamassad-22.

Our CFTC whistleblower attorneys can assist you with answers to questions about this information as well as assistance reporting violations of the Commodity Exchange Act to the U.S. Government. To speak to an attorney, fill out our contact form or call 1-800-590-4116.

Photo Credit: United Soybean Board.