The CFTC is very aggressive at enforcing commodity-related laws and regulations. The CFTC works closely with the US Attorney’s Office and the DOJ. If you are being investigated, it’s likely you might face criminal investigations as well. At Spodek Law Group, we are committed to providing quality representations, and pragmatic advice, to clients facing commodities trading offenses in the USA.
The CFTC, Commodity Futures Trading Commission, is a federal enforcement division that is charged with enforcing laws under the CEA – also known as the Commodity Exchange Act. The CFTC leads all investigations pertaining to illegal trades of commodities, futures, and swaps. It works off tips provided by the public, including individuals, and private businesses. What makes the CFTC dangerous to individuals and businesses is the fact it works VERY CLOSELY with federal, state, and foreign governments, in order to ensure the law is being enforced and illegal trades are punished.
What penalties can I face
If investigated by the CFTC, you could face a criminal investigation in addition to civil penalties. CFTC investigations can lead to both civil and criminal penalties. It means if you’re investigated, you need an experienced CFTC defense lawyer who can limit the scope of the investigation, and limit the effect of criminal charges. The administrative process in a commodities trading offense investigation can result in monetary penalties – such as: freezing your assets, order restitution, seizure of profits from illegal trades, and more. You could be suspended, restricted, or face complete revocation of your right to trade.
CFTC Subpoenas should not be ignored. Speak to a CFTC Subpoena Lawyer Today
Commodities trading offenses can result in criminal charges. If they are filed, and the case goes to trial, a conviction can result in fines and imprisonment. At Spodek Law Group, we work to help our clients get comprehensive representation when it comes to charges for commodities trading. We believe in providing personalized legal representation, and take the time to know the specifics of your exact case. We will work with you through the entire process, and help you understand what accusations you face – and how to build a credible case to defend yourself. We understand your freedom and livelihood are at stake – and will help you make the choices necessary to protect yourself. We understand how distressing an administrative investigation, in addition to criminal charges, can be.
We are committed to helping you pick the appropriate course of action that balances your needs, and takes into consideration your legal liabilities. We offer a risk-free consultation with our clients and are available 24/7. We can take over a case at any stage.
ARE YOU FACING A CFTC ENFORCEMENT ACTION? THE SPODEK LAW GROUP HAS OVER 40 YEARS OF EXPERIENCE, AND CAN HELP YOU WITH YOUR ENFORCEMENT ACTION, AND ANY QUESTIONS YOU MAY HAVE.
The CFTC is a powerful entity – especially when it comes to futures, options, or swaps. It regulates all actions on exchanges and OTC trades. Unlike similar organizations like FINRA, CFTC enforcement actions can be enacted against any operator, not just brokers — it means everyone in the industry has to comply. If you are unsure about CFTC compliance requirements it’s helpful to speak to our CFTC attorneys.
Basics about the CFTC
The CFTC is an entity which you need to be aware of, when it comes to futures, options, or swaps. This agency is responsible for virtually everything pertaining to futures and options markets, for derivates that are related to commodities and products which are subject to the Commodity Exchange Act.
The CFTC has power to inflict penalties for violations of the CFTC regulations. The sanctions can be fines, bans, or even criminal penalties. The United States Commodity Futures Trading Commission, known as the CFTC, Division of Enforcement investigates and furthermore – prosecutes, any alleged violations of the Commodity Exchange Act and CFTC Regulations. The Spodek Law Group has over 40 years of experience, and understands how to defend clients involved in CFTC inquiries, formal investigations, and CFTC enforcement actions. Our team of attorneys work with individual traders and large corporations alike. We can work with your in-house legal department and management teams in order to achieve your goal of avoiding prosecution. It’s critical that before any new commodities investigations occur – that you have a strategy and method of getting a favorable resolution. In some cases, it can be a good idea to work with the government cooperatively. In other cases, it’s better to have a defensive posture. Regardless of the strategy – rest assured it’s in your best efforts.
With the more recent Dodd-Frank amendment, there’s increased authority granted to the CFTC and it’s Division of Enforcement. As a result, the CFTC is very aggressive. Our CFTC enforcement lawyers can help you.
For over 100 years, the CFTC has been helping to make sure that the futures and options market remains honest and helpful to its participants. The CFTC, or the U.S. Commodities Futures and Trading Commission, is an agency within the U.S. government that’s independent and was created in 1974. This was when the Commodities Futures Trading Commission Act of 1974 was established.
What are Futures and Options?
Before understanding what the CFTC does, it’s important to understand what they protect. Futures and options are contracts centered around the capability of buying or selling an asset at a particular time in the future. Whereas futures contracts obligate its owner to buy or sell, options contracts only grant its owner the right to do so. There is a market around trading futures and options contracts. Businesses are likely to be participants so as to help save money on commodities just in case the prices of those commodities go up in the future.
Futures commodities have been around since the 1860s. These markets play a big role in the economy. Ranchers, farmers, and other producers use this market for an established rate on price. While locking in on prices for commodities, businesses can focus on creating new jobs, innovating, and producing services and goods for their consumers.
CFTC Mission and Responsibilities
The mission of the CFTC is to encourage the growth and development of the futures and options trading market. They want to help make the market competitive, public, fair, and financially solid. The CFTC works to lower systemic risk and protect the users from fraudulent, abusive, and manipulative practices.
The responsibilities of the CFTC is to regulate this market and enforcing the Commodities Exchange Act, or CEA. The CEA was actually established long before the CFTC in 1936. This act was created to regulate the futures and options trading. It’s actually a revised version of the Grain Futures Act, established in 1922.
As a result, the Department of Agriculture no longer has these responsibilities as they previously had since the 1920s. The agency now overlooks a large number of organizations and individuals of many variances in the derivative market. Over time, the market has opened up to include many more commodities including gold, gas, and copper.
The History of the Futures Trading Industry and the CFTC
Before the CFTC, futures commodity trading started in the 1860s. The main commodities being traded were within the agriculture sector. Therefore, the Grain Futures Act in 1922 was then enforced by the Department of Agriculture. They also helped to regulate the young market. The Grain Futures Act was then modified and became the new Commodities Exchange Act in 1936. What changed was that it was no longer only certain futures commodities that were being traded was regulated, but now all futures commodities. This paved the way for newer commodities to enter the market, including crude oil and silver.
The CFTC was then established in 1974. They assumed the responsibilities of the Department of Agriculture in administering the futures trading industry. In recent times, then-president Obama increased the authority of regulation for the CFTC. This was to help govern the swap market which, due to lack of control, ended up being the major cause of the 2008 financial crisis.
The extra authority given to the CFTC was due to the Dodd-Frank Act. Also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Dodd-Frank Act allowed the CFTC to monitor over $400 trillion worth of the swaps markets. This act has helped to reduce the number of risks in the U.S. financial system. Recently, though, Donald Trump has launched the CHOICE Act. This act is meant to take away that authority and “give it back to the American people.” It was passed by the House, but many speculate that it won’t get passed by the Senate.
CFTC Organization Divisions and Offices
The organization itself is governed by five commissioners. They are chosen by the President and each of them has to serve for five years. The President also chooses which of the five commissioners will be the Chairman. There can be up to three commissioners at once that are in the same political party. The offices contain ten sections, including the chief economist, whistleblower office, office of minority and women inclusion, and the general counsel.
The divisions of the CFTC organization include Enforcement, Clearing and Risk, Marketing Oversight, and Swap Dealer and Intermediary Oversight (DSIO). Enforcement is in charge of investigating any potential violations of the Commodity Exchange Act. Individuals who violate the act will be tried in court. The Clearing and Risk Division focuses on clearing futures and swaps. Marketing Oversight is the division that helps the markets to stay secure, fair, and open. DSIO supervises futures organizations that are self-regulatory.
THE SPODEK LAW GROUP HANDLES CFTC INVESTIGATIONS AND CFTC ENFORCEMENT ACTIONS THROUGHOUT THE USA.
The United States Commodity Future Trading Commission(CFTC) Division of Enforcement investigates, and prosecutors, any violations it sees are against the spirit of the Commodity Exchange Act and CFTC regulations.
It’s essential that whenever a commodities investigation, or enforcement action, is initiated – that you have a sound strategy which is going to end in a favorable resolution. In some cases, it can make sense to work with the government. In other cases, it’s better to have a defensive posture.
DODD-FRANK AMENDEMENTS HAVE INCREASED CFTC AUTHORITY
It’s no secret, the Dodd-Frank bill increased the authority the CFTC has. The CFTC now has more authority, and more enforcement capabilities than ever before. As a result, the CFTC is showing unprecedented strength and aggressiveness when pursuing investigations and trading activity in the commodity markets. All commodities, ranging from bitcoins to precious metals, are being investigated. Prior to Dodd-Frank, the CFTC had no jurisdiction over leveraged precious metals anywhere in the USA.
If you are under investigation, consider speaking to the Spodek Law Group attorneys. We understand what’s at stake, and can help handle all enforcement actions. Our only goal is to get you a favorable result. We will do a complete review of your case and give you legal options. Our law firm works to ensure that you make a sound decision.
What Is the Commodities Furures Trading Commission (CFTC)?
You think about investing in corn by year end, but remember last year’s arid summer when prices soared. What will happen this year? How can you buy the corn at today’s price and bypass another bad crop? Enter the commodity futures contract, an instrument that allows investors to buy or sell an agreed-upon number of units on a specified date yet to come. Even better, the price is locked in, whatever happens between contract execution and fulfillment. Best of all, you can sell the contract for a profit before ever taking possession of the commodity. So, if the price of corn skyrockets after you buy, you stand to make a nice profit.
Of course commodity prices are notoriously volatile. Whether corn and soybeans, lean hogs and pork bellies, gold and silver, or domestic and international currencies, the respective values often undergo violent swings. The potential for big yields attracts speculators while newbie investors are frequently burned by bad information. Such an environment poses temptations to engage in fraud and deception. In response, the U.S. Congress formed the Commodities Futures Trading Commission in 1974 to protect investors, consumers and the general public from unethical and deceitful practices in commodities markets.
As the introductory example indicates, commodities trading was originally an agricultural endeavor. In the middle of the 19th century, as farmers were relying on traders to sell their grain, the Chicago Board of Trade (CBOT) was established as a centralized point of exchange. Soon after, the Kansas City Board of Trade opened its doors. Before these institutions, grain was traded privately by means of forward contracts. With the advent of exchanges, the agreements were standardized, giving rise to the futures contract.
As the 1800s rolled on, the exchanges regulated themselves. For instance, some purchasers were manipulating contracts so sellers were unable meet their obligations. Once the seller was found in breach, the buyer would then wrest money from the trader through blackmail. In 1868, CBOT banned these types of schemes known as “corners.” As exchanges popped up in Minneapolis and New York, among other places, Congress introduced legislation to regulate commodities trading. Some laws exacted taxes on futures transactions while others imposed monitoring and reporting requirements.
Perhaps the most comprehensive of these legislative acts was the Commodity Exchange Act of 1936. Wide in scope, this law banned dummy trades known as “wash trading” and anti-competitive deals dubbed “accommodation trading.” For all of its remedies, non-transparent transactions and unfair practices continued. Having enough by 1974, Congress amended the Act and charged the Commodities Futures Trading Corporation with enforcing it.
Per its mission statement, the CFTC promotes openness, competition, soundness and transparency where commodity derivatives (futures contracts) are traded. In so doing, the Commission strives to protect participants from “systemic risk.” While commodities futures are inherently risky, CFTC aims at built-in inequities and abuses that magnify the exposure. This entails monitoring the activities of all parties to a trade, including merchants, dealers, swap facilities and data storage repositories. Although its initial jurisdictions were outlined in the Commodity Exchange Act, other authority comes from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Included in its more recent oversight responsibilities are the swap markets. Swaps differ from futures in thst the latter are contractually conveyed based on the price of the underlying asset (crude oil or silver, e.g.). Swaps, on the other hand, trade in cash flows as opposed to ownership. Merchants can trade interest payments on a debt, for example. In taking on this regulatory authority, the CFTC assumes responsibility for a market 12 times as large as the futures market.
The U.S. Commodity Futures Trading Commission is overseen by five commissioners appointed by the president of the United States and conformed by the Senate. One Commissioner is designated as the chairman. Aiming for political balance, the law creating the CFTC mandates that no more than three commissioners at any given time can be from the same political party. The four major divisions of CFTC are Clearing and Risk, Enforcement, Market Oversight and–as indicated above–Swap Dealer and Intermediary Oversight.
In addition, the Commission communicates to the markets through its constituent committees. These boards specialize in agriculture, energy, global markets, risk and Securities and Exchange Committee liason.
Without delving into the philosophical arguments of more or less government, all can agree that the ins and outs of futures trading benefit from more transparency and greater integrity. How well the CFTC provides these can be argued both ways. The history of futures trading, at any rate, demonstrates that independent oversight is better for traders and consumers.
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