Strategic Goal Three
Strategic Goal Three Protect the public and market participants through a robust enforcement program. |
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Net Cost: $61.1 Million Staffing: 217 FTE |
An increasing segment of the population has money invested in the derivatives markets, either directly or indirectly through pension funds or ownership of shares in publicly held companies that participate in the markets. Commission staff works to protect market users and the public by promoting compliance with and deterring violations of the CEA and Commission regulations. The range of available enforcement actions (including manipulation, disruptive trading practices and anti-fraud for example) will broaden beginning July 2011 when relevant provisions of the Dodd-Frank Act become effective. By providing a formalized structure and government oversight, the commodity laws carefully balance the desire for open, accessible and competitive markets with the need to protect market users.
This third strategic goal is to ensure that firms and individuals who come to the marketplace to fulfill their business and trading needs are in compliance with laws and regulations. In addition, market users and others must be protected from possible wrongdoing that may affect or tend to affect the integrity of the markets. The derivatives markets provide a great benefit to the U.S. economy; preserving the integrity of the markets ensures their continued vibrancy and promotes public confidence. Continuing IT investment in the eLaw program will support all Goal Three objectives by improving staff productivity, providing staff with a level IT playing field with those it investigates and effective tools to collaborate internally with oversight and clearing staff as well as with other regulators, and facilitating the use of information to identify high impact enforcement actions.
Goal Three Key Results
- The Commission filed 99 enforcement actions in FY 2011, the highest yearly tally in the agency's history and a 74 percent increase over the prior fiscal year. The CFTC charged individuals and companies in these cases for manipulating commodity prices, perpetrating Ponzi schemes and other fraud, supervision and accounting failures, trading abuses, registration deficiencies, and committing other violations of the CEA and regulations.
- The Commission also opened more than 450 investigations in FY 2011, another program high.
- Overall, the performance target for concluding enforcement investigations within 1 year was exceeded by 16 percent (81 percent completed vs. a target of 65 percent).
- Fighting Fraud and Other Regulatory Violations: The Commission's mission to protect market participants from fraud is reflected by the 55 fraud actions filed in fiscal year 2011 alone, and by the numerous Federal court orders obtained by the Commission against more than 75 defendants, imposing civil monetary penalties and restitution and disgorgement obligations. In one notable fraud case, CFTC vs. Walsh, et al, the Court ordered an initial distribution and return of approximately $792 million to commodity pool investors stemming from an alleged $1.3 billion Ponzi scheme that was the subject of CFTC and SEC charges in a prior fiscal year.
- The Commission also took action against so-called gatekeepers, charging an accounting firm and two of its partners in two separate cases, for failing to apply generally accepted auditing standards (GAAS) when conducting audits of FCMs that had produced misstated financial statements. See In the Matter of G. Victor Johnson II, McGladrey & Pullen, LLP and Altshuler, Melvoin & Glasser, LLP, CFTC Docket No. 11-01 (October 4, 2010 ) and In the Matter of David Shane and McGladrey & Pullen, LLP, CFTC Docket No. 11-23 (September 22, 2011).
- Foreign Exchange Currency (Forex) Enforcement: The Commission filed 23 actions enforcing new regulations that resulted from the Dodd-Frank Act and that require foreign exchange dealers and introducing brokers to register with the Commission. Separately, and as part of the Commission's prosecution of retail forex fraud, the Commission prevailed in a Federal jury trial in the United States District Court for the Middle District of Florida, which imposed more than $17 million in sanctions and other relief against Capital Blu Management, LLC and several other defendants.
- Cooperating with Law Enforcement Partners: The Commission continues to actively engage in cooperative enforcement with Federal and state criminal and civil law enforcement authorities. During FY 2011, more than 70 indictments and convictions were obtained in criminal cases related to CFTC enforcement actions.