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Mar 24, 2018

CFTC Investigations Enforcement Actions Lawyers

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.

Legislative History

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.

What Does CFTC Do?

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.

Who Runs the CFTC?

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.

Is the CFTC Really Necessary?

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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New York, NY 10005

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Queens

35-37 36th St,
Astoria, NY 11106

Phone

888-977-6335

Brooklyn

195 Montague St.
14th Floor,
Brooklyn, NY 11201

Phone

888-977-6335