How Does the CFTC Work?
The CFTC is charged with investigations and taking action in cases where illegal trading activities appear to be taking place. The investigation may have to do with any type of domestic or international trading. Swaps, futures, and commodities trading are a few examples that fall under the eye of the CFTC. Another example is when firms do reverse mergers, or take advantage of reverse merger shells, and then conduct illegal/unethical transactions.
The process of investigating and bringing charges involves working closely with the public and a number of government organizations. The Department of Justice and the US Attorney’s Office are prime examples. State governmental agencies may also be involved in the investigations. International governments may also be consulted if the activity involves trades other than domestic ones. Private businesses and even individuals may be sources of information about the alleged fraudulent activity. Along with action taken by the CFTC, the results may also open the defendant to the possibility of criminal and civil action.
Possible Penalties to the Defendant
Being the target of an investigation by the CFTC is nothing to take lightly. That investigation may lead to substantial fines, a full criminal investigation, or a multiplicity of civil actions, up to and including stiff penalties. In terms of operation, the firm or financial professional who is under investigation may be unable to continue conducting business until the matter is resolved. That means facing possible restriction or suspension. Depending on the severity of the charges and the outcome, a permanent loss of the right to trade may occur.
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The status of the defendant’s assets may also be in question. It’s not unusual for assets to be frozen until the matter is resolved. While those assets are frozen, it may be difficult to continue operating your firm, or to manage your personal finances responsibly. Never assume that some of your assets are out of reach. Many people find out too late that money and other financial assets they thought were exempt could in fact be seized.
If found guilty, those assets may be used to fulfill the terms of an order restitution. A prison sentence for convicted defendants is not out of the question.
Why a CFTC Subpoena Should Not Be Ignored
Should you receive a subpoena from the CFTC, the last thing you want to do is ignore it. The best move is to hire a lawyer immediately. You have the right to have legal counsel present at any time when you are questioned. A commodity trading charge defense lawyer will be aware of what CFTC actions are in compliance with current laws and will ensure your rights are protected.
CFTC Attorney Proffer
The CFTC proffer is essentially known as "queen for a day." This is an agreement between attorneys and individuals under investigation. It allows you to tell the CFTC what you know, with protection in later proceedings. Attorney proffers are different and occur when an attorney talks to the government without the client being present.
It is common for an attorney proffer to occur before a client proffer occurs. This allows the government to learn about what the client knows, and will say, without having to negotiate immunity and other information. Attorney proffers are good because they give the attorney an opportunity to influence what the government thinks about the client, and increases the value of the client in the eyes of the prosecutor. CFTC attorney proffers have risks, and the biggest is that what you tell the government - can cause the government to expand the investigation. Government investigations are confidential, and if you over-inform and expand the investigation - you may not even know until it's too late.
If you're facing an investigation by the CFTC - we encourage contacting our law firm. During an investigation, prosecutors like using proffer letters to get info from people under investigation, or who are witnesses to crimes. An attorney proffer is something which can help you get preferential treatment if done correctly. Over 95% of people who get charged with a crime get convicted. 90% of people resolve their case with a plea agreement. The government wins most trials, and that's why many people who are charged with a crime make a deal. Sometimes, the person who makes the deal the fastest - gets the best deal. As a result, engaging in an attorney proffer agreement can be helpful - if you're the first person to do it.
One of the drawbacks of an attorney proffer is that you're telling the government things that aren't necessarily true. You're exposing yourself to pressure because if the government doesn't believe you - they can charge you with false statements. Engaging in an unsuccessful interview can create additional crimes if you are giving false statements.
When you engage in a CFTC proffer agreement, it means you can't be prosecuted for the "item," you are providing information for. It doesn't prohibit the government from charging you with OTHER ADDITIONAL crimes it discovers that you committed.