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CFTC Investigation Enforcement Attorneys

May 15, 2018 Federal Criminal Attorneys

The United States Commodity Future Trading Commission (CFTC) Division of Enforcement is responsible for the investigation and prosecution of any violation that it sees violating the Commodity Exchange Act and CFTC regulations.

It’s important that when a commodities investigation, or enforcement action, gets initiated, you have a strong strategy that will help you achieve a favorable resolution. In some situations, working with the government makes sense. In others, you should take a more defensive position.

What is the Commodities Future Trading Commission (CFTC)

With a commodity futures contract, investors and buy or sell commodities at an agreed-upon number of units on a future date. What makes this ideal is the fact that the price is locked. Investors can sell the contract for a profit before acquiring the commodity. So, if the price of the commodity increases after the commodity is bought, investors can make a decent profit.

Of course, commodity prices are not known for their stability. The values of commodities can go through upward and downward swings. The ability for a big yield is what attracts people to commodity trading. Unfortunately, many people lose money due to receiving bad information. This environment creates the temptation for people to engage in deceptive practices. In response to this, the U.S. Congress created the Commodities Futures Trading Commission to protect consumers and investors from deceitful practices in the commodities market.

What Does the cftc Do?

The cftc promotes the openness, soundness, and transparency where commodity derivatives are traded. The Commission strives to protect participants from the risk posed by abuses and inequities that would increase the potential of risk. To do this, the commission monitors the parties involved in the trade.

The Dodd-Frank Amendments Gave the cftc More Authority

It’s widely known that the Dodd-Frank bill gave the cftc more authority. As a result of this, cftc has increased its level of aggressiveness in pursuing investigations and trading activity in the commodities market. All commodities, from precious metals to bitcoins, are being investigated. Before Dodd-Frank, the cftc did not have any jurisdiction over leveraged precious metal in the United States.

Is the cftc Necessary?

Unfortunately, it is. Futures trading depends on transparency. Is the cftc effective? That’s debatable. But at any rate, many people agree that having an independent commission to provide oversight is good for consumers and traders.

What Is The Nature Of CFTC?

The Commodity Futures Trading Commission is an agency of the U.S. government which was founded in 1974. Its primary job is the regulation of the futures and options market of the United States. It is the arm of the government that enforces the Commodities Exchange Act which prohibits unlawful practices in the country’s futures trading market. It is different from the SEC, which looks at things like reverse mergers, etc.

What Is CFTC’s Fundamental Mission?

CFTC’s fundamental mission, as given in its website, is to foster open, financially sound, competitive and transparent markets. It wants to protect market consumers and users as well as their money, and also the public from fraud, abusive practices and manipulation with regards to derivatives and similar related products which are under the rules and regulations prescribed by the Commodity Exchange Act. cftc endeavors to fulfill this primary mission by doing the best it could to prevent systemic risk.

The cftc is continuously transforming its operations since the financial crisis that affected the U.S. and the rest of the world in 2008. It has been initiating stricter regulations to improve the transparency of the swaps market worth $400 trillion. In order to accomplish its fundamental mission, cftc has been implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act since 2010.

What Are The Responsibilities Of cftc?

The cftc carries several responsibilities on its shoulder as it tries to accomplish its mandate. These include the promotion of the market’s integrity. In this particular responsibility, cftc controls and oversees the derivatives market to minimize the abuses and if possible to totally eliminate them. There are various individuals and organizations that cftc supervises in the performance of its responsibilities. They include derivative clearing organizations, swap dealers, swap execution facilities, designated contract markets, futures commission traders, commodity pool operators and other entities and groups.

How Important Is cftc?

The mission and responsibilities of the cftc show how important this agency is in running the economy of the United States. This agency regulates a vital financial sector of the U.S. economy. It is critical to the method by which investors, financial institutions and commercial enterprises are managing their risks in the country. All U.S. economy stakeholders including farmers, producers, ranchers, business enterprises, municipalities and manufacturers and other sectors of the U.S. economy are utilizing the market to determine a rate or a price. The cftc enables all the U.S. stakeholders to concentrate on the things that they do best like generating goods or services, creating jobs or innovating. This agency will always try its best to empower hedgers and market participants to enter the market with complete confidence.

CFTC’s History In A Nutshell

The contracts for futures of the country’s agricultural commodities have been continuously traded for more than 150 years. The responsibility of overseeing and regulating this sector of the country’s economy has always been given to and assumed by the federal government. The Grain Futures Act of 1922 was the first law in the United States that was enforced to regulate the activities of the futures and commodities market. This law was superseded by the Commodity Exchange Act when it was passed in 1936.

Coming down to our time, CFTC’s mandate was renewed and even increased in December 2000 when the Commodity Futures Modernization Act was passed by the U.S. Congress. The CFMA mandated the cftc along with the SEC to form a joint regulating body to take charge of the single-stock futures products which in November 2002 have already started trading. Starting in 2003, the values of swaps have significantly risen since they were introduced in the closing months of 1970. The agency’s clout further increased in 2010 when the Dodd-Frank Act was passed. This Act gave cftc the authority to supervise the swaps market and gave the agency the license to prohibit the reckless implementation of manipulative strategies that negates the need to assess the real intent of the accused to manipulate prices and the creation of artificial or false prices.

The trading of commodities is a great way for an investor or professional trading company to earn a good return on investment while also hedging against the risks of other types of Investments. Similar to one investing in other types of securities, those that are involved in the investment of commodities are subject to a wide range of rules and regulations. The organization that is responsible for the enforcement and regulation of these rules is the United States Commodity Future Trading Commission, which is commonly referred to as the CFTC.

Crimes Covered by cftc
Over the past few years, the rules and regulations that the cftc have created and are responsible for regulating have continued to increase. Today, the cftc is responsible for a wide range of rules and those that are in violation of these rules could face severe punishment.

Some of the most common laws that the cftc enforces are in regards to insider trading. Similar to when you are trading stocks for individual companies, there are many different rules in place that prevent you from trying to profit off of inside information. If you happen to have information that is beneficial to a trade and is not readily available in the common marketplace, you could be in violation of insider trading. The cftc is responsible for investigating these situations.

The cftc is also responsible for regulating and managing fraud in the commodities industry. If an organization or investment fund is thought to be defrauding investors, the CFT will complete a full investigation of the situation.

If you are under investigation from the cftc, there are a number of different ways that you could be penalized. For those that are under investigation and deemed to be in violation of a law, the most common penalty is a financial penalty. Those that are considered to have made a profit off of insider information will likely be penalized at least the amount of the profit plus a variety of other punitive penalties. It is also possible for someone to lose their right to trade commodities and securities in the future.

If you are being investigated for fraud by the cftc you could be in far more trouble and be facing far more severe penalties. Depending on the scope of the fraud and your involvement, you could be facing a long prison sentence if the cftc decides to bring your case to the criminal court system.

Legal Support
Due to the severity of the cases that the cftc can handle, it is always a good idea to hire an attorney if you are under investigation by the cftc. Ideally, you should find an attorney that specializes in criminal defense when it comes to financial crimes. These attorneys will have experience in negotiating with the cftc and could help you to negotiate a plea bargain or receive a reduced sentence if you are found guilty. The attorney will be able to handle all aspects of the case including defense preparation and negotiations.



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