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e8-27177

  • FR Doc E8-27177[Federal Register: November 20, 2008 (Volume 73, Number 225)]

    [Rules and Regulations]

    [Page 70274-70276]

    From the Federal Register Online via GPO Access [wais.access.gpo.gov]

    [DOCID:fr20no08-12]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 12

    RIN 3038-AC59

    Rules Relating to Reparation Proceedings

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final rule.

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    SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

    ``CFTC'') is amending its regulations to clarify that post-judgment

    interest shall run on reparation awards in voluntary decisional

    proceedings and to provide that in all reparation proceedings resulting

    in a judgment for complainant post-judgment interest shall run whether

    or not expressly awarded.

    DATES: December 22, 2008.

    FOR FURTHER INFORMATION CONTACT: Laura Richards, Office of General

    Counsel, U.S. Commodity Futures Trading Commission, Three Lafayette

    Centre, 1155 21st Street, NW., Washington, DC 20581. Telephone: (202)

    418-5126. E-mail: lrichards@cftc.gov.

    SUPPLEMENTARY INFORMATION:

    I. Background Information

    Currently, 17 CFR part 12 provides the following guidance regarding

    the award of interest to the prevailing party in reparation

    proceedings. Prejudgment interest ``may'' be awarded in summary

    decisional proceedings as part of a reparation order under Rule

    12.210(c), and in formal decisional proceedings under Rule 12.314(c),

    ``if warranted as a matter of law under the circumstances of a

    particular case.'' \1\ Judgment Officers and Administrative Law Judges

    routinely have awarded prejudgment interest. Prejudgment interest is

    prohibited, however, in voluntary decisional proceedings under Rule

    12.106(c).

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    \1\ See Ruddy v. FCCB, 1981 WL 21010 at *5 n.18 (CFTC Mar. 31,

    1981) (``regarding the award of prejudgment interest[,] [w]here such

    awards are clearly compensatory and * * * involve the breach of a

    fiduciary duty, prejudgment interest, while a matter of discretion,

    should hereafter been the rule, rather than the exception'').

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    Rule 12.407(d), which governs post-judgment interest, applies to

    all forms of reparation proceedings. It provides that interest shall

    run on an unpaid reparation award ``at the prevailing rate computed in

    accordance with 28 U.S.C. 1961 from the date directed in the final

    order to the date of payment, compounded annually.'' See Section 14(f)

    of the Commodity Exchange Act, 7 U.S.C. 18(f) (statutory authority for

    Rule 12.407(d)).

    To clarify existing authority, and to further just and equitable

    decision proceedings, the Commission hereby amends Rule 12.106(c) to

    state that post-judgment interest shall run on awards in voluntary

    proceedings. The Commission believes such a clarifying rule is

    appropriate to make clear that the Act intends to compensate a

    prevailing party for the loss of use of the party's money when a

    reparation judgment is not satisfied within the mandated deadline (for

    voluntary proceedings, within 45 days after service of the final

    decision, see Rule 12.106(e)).

    Amended Rule 12.407(d) provides that if an initial decision

    inadvertently omits an award of post-judgment interest such interest

    shall run at the applicable rate from the date that satisfaction of the

    reparation judgment is due.

    In furtherance of the Commission's efforts to fully inform parties

    and the public of practices regarding interest on reparation judgments,

    the Commission also is amending Form 30 (which is not included in the

    Code of Federal Regulations) to include details of which types of

    interest may be awarded in voluntary, summary and formal decisional

    proceedings.

    II. Related Matters

    A. No Notice Required Under 5 U.S.C. 553

    The Commission has determined that these amendments are exempt from

    the provisions of the Administrative Procedure Act, 5 U.S.C. 553, which

    generally requires notice of proposed rulemaking and provides other

    opportunities for public participation. According to the exemptive

    language of 5 U.S.C. 553, these amendments pertain to ``rules of agency

    organization, procedure or practice,'' as to which there exists agency

    discretion not to provide notice. In addition, notice and public

    comment are unnecessary in this case because the amendments are self-

    explanatory. If made effective immediately, they will promote

    [[Page 70275]]

    efficiency and facilitate the Commission's core mission without

    imposing a new burden. For the above reasons, the notice requirements

    under 5 U.S.C. 553 are inapplicable.

    B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,

    requires agencies with rulemaking authority to consider the impact

    those rules will have on small businesses. With respect to persons

    involved in reparation proceedings, the amendments impose no additional

    burden and in fact provide greater certainty and increased

    predictability concerning awards of post-judgment interest. Thus, the

    Acting Chairman, on behalf of the Commission, hereby certifies,

    pursuant to 5 U.S.C. 605(b), that the amendments will not have a

    significant economic impact on a substantial number of small

    businesses.

    C. Paperwork Reduction Act

    The amendments to Part 12 do not impose a burden within the meaning

    and intent of the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et

    seq.

    D. Cost-Benefit Analysis

    Section 15(a) of the Act, 7 U.S.C. 19(a), requires the Commission

    to consider the costs and benefits of its action before issuing a new

    regulation. The Commission understands that, by its terms, Section

    15(a) does not require the Commission to quantify the costs and

    benefits of a new regulation or to determine whether the benefits of

    the regulation outweigh its costs. Nor does it require that each rule

    be analyzed in isolation when that rule is a component of a larger

    package of rules or rule revisions. Rather, Section 15(a) simply

    requires the Commission to ``consider the costs and benefits'' of its

    action.

    Section 15(a) further specifies that costs and benefits shall be

    evaluated in light of five broad areas of market and public concern:

    (1) Protection of market participants and the public; (2) efficiency,

    competitiveness and financial integrity of futures markets; (3) price

    discovery; (4) sound risk management practices; and (5) other public

    interest considerations. Accordingly, the Commission can, in its

    discretion, give greater weight to any one of the five enumerated areas

    of concern and can, in its discretion, determine that notwithstanding

    its costs, a particular rule is necessary or appropriate to protect the

    public interest or to effectuate any of the provisions, or accomplish

    any of the purposes, of the Commodity Exchange Act.

    The amendments to Parts 12 will not create any significant change

    in the Commission's reparation proceedings. The amendments will enhance

    the protection of market participants and the public by taking

    uncertainty out of the awarding of post-judgment interest in certain

    instances and helping to ensure that reparation awards are satisfied in

    a timely manner. The cost-benefit factors are not influenced by the

    amendments, which simply articulate and clarify applicable law and

    precedent in reparation proceedings.

    List of Subjects in 17 CFR Part 12

    Administrative practice and procedure, Commodity exchange,

    Commodity futures, Reparations.

    0

    After considering these factors, the Commission has determined to amend

    Part 12 as set forth below:

    PART 12--RULES PERTAINING TO REPARATION PROCEEDINGS

    0

    1. The authority citation for part 12 continues read as follows:

    Authority: 7 U.S.C. 2a(12), 12a(5) and 18.

    0

    2. In Sec. 12.106, revise paragraph (c) to read as follows:

    Sec. 12.106 Final decision and order.

    * * * * *

    (c) No assessment of prejudgment interest or costs; assessment of

    post-judgment interest. A party found liable for damages in a voluntary

    decisional proceeding shall not be assessed prejudgment interest,

    attorney's fees, or costs (other than the filing fee and costs assessed

    as a sanction for abuse of discovery). Post-judgment interest shall be

    awarded at a rate determined in accordance with 28 U.S.C. 1961(a).

    * * * * *

    0

    3. In Sec. 12.407, revise paragraph (d) to read as follows:

    Sec. 12.407 Satisfaction of reparation award; enforcement; sanctions.

    * * * * *

    (d) Reinstatement. The sanctions imposed in accordance with

    paragraph (c) of this section shall remain in effect until the person

    required to pay the reparation award demonstrates to the satisfaction

    of the Commission that he has paid the amount required in full

    including prejudgment interest if awarded and post-judgment interest at

    the prevailing rate computed in accordance with 28 U.S.C. 1961 from the

    date directed in the final order to the date of payment, compounded

    annually. In the event an award of post-judgment interest is

    inadvertently omitted, such interest nevertheless shall run as

    calculated in accordance with 28 U.S.C. 1961 and the Part 12 Rules.

    * * * * *

    Note: The following text will not appear in the Code of Federal

    Regulations.

    Reparations Complaint Form (Form 30)

    Portions of the Commission's Reparations Complaint Form, available

    on the Commission's Web site at http://www.cftc.gov, are revised to

    read as follows:

    * * * * *

    ----$50 Voluntary Decisional Procedure. This procedure enables you,

    if the respondents agree, to present your case in written form before a

    CFTC judgment officer. A final decision will be issued without

    explanation of the reasons. By electing the voluntary procedure, you

    will waive your right to appeal as well as prejudgment interest and

    costs. You do not waive your right to post-judgment interest in the

    event that reparation awards, if any, are not satisfied within the

    timeframe provided in the final decision. In the event an award of

    post-judgment interest is inadvertently omitted, such interest

    nevertheless shall run according to the term of 28 U.S.C. 1961 and the

    Part 12 Rules.

    ----$125 Summary Decisional Procedure. If your claim is $30,000 or

    less, it can be heard by a CFTC Judgment Officer. You may present your

    case in written form, and if deemed necessary by the judgment officer,

    orally, in Washington, or by telephone under this procedure. The

    judgment officer will issue brief statements of factual findings and

    conclusions based on law, and may order a reparation award including

    prejudgment interest pursuant to Rule 12.210(c) and post-judgment

    interest. The judgment officer's decision is appealable first to the

    Commission and from there to a U.S. Court of appeals. In the event an

    award of post-judgment interest is inadvertently omitted, such interest

    nevertheless shall run according to the terms of 28 U.S.C. 1961 and the

    Part 12 Rules.

    ----$250 Formal Decisional Procedure. If your claim is over

    $30,000, it can be assigned to an Administrative Law Judge (ALJ) for a

    formal hearing. You may present your case in written form. If oral

    testimony is deemed necessary by the ALJ, you may be required to travel

    up to 300 miles to attend the hearing. The ALJ will issue findings of

    fact and conclusions of law, and may order a reparation award including

    prejudgment interest pursuant to Rule 12.314(c) and post-judgment

    interest. The Administrative Law

    [[Page 70276]]

    Judge's decision is appealable first to the Commission and from there

    to a U.S. Court of appeals. In the event an award of post-judgment

    interest is inadvertently omitted, such interest nevertheless shall run

    according to the terms of 28 U.S.C. 1961 and the Part 12 Rules.

    * * * * *

    Issued in Washington, DC, on October 20, 2008 by the Commission.

    David A. Stawick,

    Secretary of the Commission.

    [FR Doc. E8-27177 Filed 11-19-08; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: April 16, 2009



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