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The OIG conducts and supervises audits and investigations of programs and operations of the CFTC and recommends policies to promote economy, efficiency, and effectiveness in CFTC programs and operations and to prevent and detect fraud and abuse. The OIG conducted a FY 2012 assessment addressing the Commission's most serious management issues. The OIG's assessment is located in the Other Accompanying Information section of the FY 2012 Agency Financial Report (AFR) and on the Commission website at http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/oigmgmtchall2012.pdf.
In FY 2012, two external evaluations relating to the mission of the CFTC were conducted by the U.S. Government Accountability Office (GAO), one of them resulting in general recommendations for all financial regulators. They are as follows:
Dodd-Frank Act Regulations: Implementation Could Benefit from Additional Analyses and Coordination, GAO-12-151, November 10, 2011.
The Dodd-Frank Act requires or authorizes various Federal financial regulators to issue hundreds of rules to implement reforms intended to strengthen the financial services industry. Federal financial regulators are required to conduct a variety of regulatory analyses, but the requirements vary and none of the regulators are required to conduct benefit-cost analysis. All financial regulators must analyze the paperwork burden imposed by their rules and consider the impact of their rules on small entities as part of their rulemaking process. The CFTC and SEC are also required under their authorizing statutes to consider certain benefits and costs of their rules.
While the Federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act, the CFTC is making four recommendations aimed at improving the efficiency and effectiveness of these efforts.
- To strengthen the rigor and transparency of their regulatory analyses, the CFTC recommends that the Federal financial regulators take steps to better ensure that the specific practices in OMB's regulatory analysis guidance are more fully incorporated into their rulemaking policies and consistently applied.
- To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the CFTC recommends that FSOC work with the Federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.
- To maximize the usefulness of the required retrospective reviews, the CFTC recommends that the Federal financial regulatory agencies develop plans that determine how they will measure the impact of Dodd-Frank Act regulations—for example, determining how and when to collect, analyze, and report needed data.
- To effectively carry out its statutory responsibilities, the CFTC recommends that FSOC direct OFR to work with its members to identify and collect the data necessary to assess the impact of the Dodd-Frank Act regulations on, among other things, the stability, efficiency, and competitiveness of the U.S. financial markets.
Financial Literacy: Overlap of Programs Suggests There May Be Opportunities for Consolidation, GAO-12-588, July 23, 2012.
Financial literacy—the ability to use knowledge and skills to manage financial resources effectively—plays an important role in helping to ensure the financial health and stability of individuals and families. Federal agencies promote financial literacy through activities including print and online materials, broadcast media, individual counseling, and classroom instruction.
To help ensure effective and efficient use of Federal financial literacy resources, the CFTC also recommends that the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, in their capacity as Chair and Vice Chair of the Financial Literacy and Education Commission, and in concert with other agency representatives of the commission:
- Identify for Federal agencies and Congress options for consolidating Federal financial literacy efforts into the activities and agencies that are best suited or most effective.
- Revise the commission's national strategy to incorporate clear recommendations on the allocation of Federal financial literacy resources across programs and agencies.
GAO's findings and conclusion are available on its website at http://www.gao.gov.
In FY 2012, two reports relating to the programs supporting the CFTC mission were produced by the CFTC OIG. They are as follows:
A Preliminary Investigation Regarding Position Limits Rulemaking Efforts Undertaken by the Commodity Futures Trading Commission Pursuant to the Dodd-Frank Act, CFTC OIG, February 15, 2012 [Redacted].
The OIG conducted a preliminary investigation of the process by which the CFTC proposed and adopted rules governing position limits under the Dodd-Frank Act. The OIG undertook this preliminary investigation upon the receipt of two anonymous communications alleging misconduct in connection with the rulemaking.
After conducting several interviews, the OIG found no evidence to sustain a preliminary finding of wrongdoing by any individual connected with the position limits and large swaps trader reporting rulemakings. No witness presented evidence of corruption or violations of law in connection with the drafting of the position limits rule by the team lead or any other person who worked on the rule.
Inspection – Division of Enforcement Disposition of Preliminary Investigations Records, CFTC OIG, September 4, 2012.
The OIG initiated an inspection of DOE's policies and practice for handling the disposition of Preliminary Investigation matters. Preliminary Investigation matters are documents and artifacts received by DOE which allege a potential violation of the CEA. The objective of this inspection was to ascertain whether DOE had adhered to the CFTC records disposition schedule approved by the National Archives and Records Administration (NARA).
The OIG was able to confirm with NARA that the CFTC's records retention schedule was approved by NARA and is currently applicable to DOE documents. The OIG was also able to confirm that DOE does inform staff of the NARA-approved records retention policies. The inspection primarily focused on the disposition of matters classified as Preliminary Investigations (covered under Section 405 of the CFTC records retention policies) which must be retained for three years. Consequently, the OIG sought to identify any Preliminary Investigative matters that were closed and disposed prior to the three-year NARA-approved retention deadline. The OIG found none, zero. According to NARA-approved records retention schedule, matters under a full Investigation must be retained for five years and so were beyond the scope (time frame) of this inspection.
Furthermore, DOE utilizes an electronic database for capturing, storing, and managing all matters received by the division from all sources. In the electronic database the team examined a sample of all matters received during the review period by DOE. The inspection team visually inspected 174 randomly selected closed cases out of a total of 1,722 closed cases in Practice Manager (database). In the sample, the OIG team found no evidence of any matter excluded from the database during the review period.
Current management controls in place restrict the ability of staff attorneys to alter and/or purge data captured by the system. The division locked down Practice Manager on September 21, 2011, so that the Inspection team could examine Practice Manager's contents.
During this OIG inspection a communication error at the contracted records storage firm led to the accidental destruction of 58 cartons of material that should have been retained (in case the OIG requested specific information). This accidental destruction did not impact any ongoing or potential investigation. The physical documents in the 58 cartons exceeded their designated retention date. However, to accommodate this inspection the scheduled destruction was delayed by the CFTC Records Officer in case the OIG needed to examine the documents. This accidental destruction did not impact the inspection results.
CFTC OIG reports are available on the CFTC website at http://www.cftc.gov.
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