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Outcome Objective 2.3

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Outcome Objective 2.3: Customer complaints against persons or firms registered under the Act are handled effectively and expeditiously.

Performance Measure 2.3.1(a)


Performance Measure 2.3.1(a): Percentage of filed complaints resolved within one year of the filing date for Voluntary Proceedings.
Status: Moderately Effective
Data Source: Reparations case tracking system and Judgment Officer Disposition report.
Verification: Weekly and monthly reports and statistics submitted by Judgment Officer.
ACTUAL
FY 2006
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
PLAN
FY 2009
71% 100% 67% 83% 100%

Lead Program Office

Office of Proceedings

Performance Analysis & Review

A claim of any size can be adjudicated through the voluntary proceeding if all complainants and respondents consent to use this approach, and if the complainant submits the required $50 filing fee. All evidence is submitted in writing and there is no oral hearing. The decision issued by the Judgment Officer (JO) is final and is not appealable.

The voluntary proceedings tend to take less time because, given the non-appealable nature of the proceedings and the more informal nature of the resolution process, the parties are more inclined to settle, and the proceeding is completed through a review of written documentation.

The summary and formal proceedings take more time because of the evidentiary and hearing requirements of the proceedings; the summary tend to take slightly longer, in part, because more parties are pro se. A variety of other factors can affect the length of the proceeding, including motions for extensions of time, and stays pending payment of penalties agreed to in settlement.

Performance Highlights

In FY 2009, 83 percent of the voluntary proceedings complaints were decided in one year or less. The JO issued six decisions in voluntary cases. Of those, five were completed in less than one year, and the sixth case was completed in just over one year and two months (420 days). Therefore, the resolution of voluntary proceedings complaints is moderately effective, supporting the outcome measure, objective, and goal.

Performance Measure 2.3.1(b)


Performance Measure 2.3.1(b): Percentage of filed complaints resolved within one year and six months of the filing data for Summary Proceedings.
Status: Effective
Data Source: Reparations case tracking system and Judgment Officer Disposition report.
Verification: Weekly and monthly reports an statistics submitted by Judgment Officer.
ACTUAL
FY 2006
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
PLAN
FY 2009
66% 50% 57% 80% 60%

Lead Program Office

Office of Proceedings

Performance Analysis & Review

If the complainant does not select the voluntary proceeding and the claim amount is $30,000 or less, the complainant must select the summary proceeding and submit a $125 filing fee. In the summary proceeding process, evidence is submitted in writing, and an oral hearing may be held by telephone. The decision by the JO is appealable to the Commission and, ultimately, to the U.S. Court of Appeals.

In FY 2009, the Performance Measure goal was to dispose of 60 percent of the cases within one year and six months. The agency exceeded this goal, resolving 80 percent of the summary proceedings cases in less than one year and six months. The Office of Proceedings undertook a number of actions to improve the speed of resolution, including resolving deficiencies more quickly during the complaint phase and allowing electronic filing of documents, the factors affecting this outcome can vary from case to case. Often external factors, including complaint deficiencies, requests for extension of time, and discovery issues, may impact the ability to resolve the complaint in a speedy manner.

Performance Highlights

None to report.

Performance Measure 2.3.1(c)


Performance Measure 2.3.1(c): Percentage of filed complaints resolved within one year and six months of the filing date for Formal Proceedings.
Status: Effective
Data Source: Reparations case tracking system and Administrative Law Judge’s Disposition reports.
Verification: Weekly and monthly reports an statistics submitted by Administrative Law Judges.
ACTUAL
FY 2006
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
PLAN
FY 2009
78% 90% 73% 93% 90%

Lead Program Office

Office of Proceedings

Performance Analysis & Review

The formal proceeding can be selected if the complainant does not select the voluntary proceeding and if the claim amount is more than $30,000. The complainant must submit a $250 filing fee. In addition to the submission of documentary evidence, an oral hearing may be held in a location that is, to the extent possible, convenient to the parties. The decision is appealable to the Commission and ultimately to the U.S. Court of Appeals.

In FY 2009, the agency resolved 93 percent of the formal proceeding complaints in one year and six months, exceeding the goal of 90 percent. The Office of Proceedings undertook a number of actions to improve the speed of resolution, including resolving deficiencies more quickly during the complaint phase and allowing electronic filing of documents, the factors affecting this outcome can vary from case to case. Various external factors affect the timely processing and resolution of complaints, including: the facts and complexity of the case, whether the parties are cooperative in discovery and prepare and submit their evidence quickly, whether any procedural disputes arise, and whether an oral hearing is required (and, if so, when it can be scheduled.) Pro se complainants and inexperienced attorneys also impact the amount of time it takes to process this type of case.

For example, the Administrative Law Judges (ALJ) resolved a total of 14 formal complaints during FY 2009. All of these were resolved within one year and six months, except on one case that took a total of 666 days to resolve due to numerous orders and notices involving the default of some of the respondents.

Performance Highlights

None to report.

Performance Measure 2.3.2


Performance Measure 2.3.2: Percentage of appeals resolved within six months.
Status: Effective
Data Source: Opinions and orders issued by the Commission.
Verification: Final opinions and orders are posted on the Commission’s Web site. Pending cases are maintained by the Secretariat, status reports are issued monthly.
ACTUAL
FY 2006
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
PLAN
FY 2009
46% 66% 56% 40% 10%

Lead Program Office

Office of General Counsel (OGC)

Performance Analysis & Review

The effectiveness goal for this OGC program is 50 percent of appeals resolved within six months and OGC began FY 2009 planning to meet or exceed that goal. Mid-year, OGC lowered its expectations based on a dearth of new reparation appeals filed in FY 2009, coupled with the age of the cases on the Commission’s docket at the beginning of the year. At the start of FY 2009, the Commission had 12 reparations appeals on its docket,1 many of which were then more than six months old. At the end of the first two quarters, two new appeals had been filed and six appeals had been resolved (one within the six month goal, a dismissal by delegated authority). In these circumstances, OGC submitted a revised plan figure. During the last two quarters, seven new appeals and miscellaneous post-judgment matters came before the Commission, a number of which were resolved within six months. At year end, 40 percent of matters completed during FY 2009 were closed within six months, bringing the program substantially closer to its effectiveness target.

Performance Highlights

During FY 2009, the Commission issued its decision in a case involving manipulation, In re DiPlacido, CFTC Docket No. 01-23 (Nov. 5, 2008). The Commission held that respondent Anthony J. DiPlacido (DiPlacido) manipulated the settlement prices of electricity futures contracts traded on NYMEX on four occasions in 1998. Significantly, the case alleged manipulation based on trading floor practices rather than a classic corner or squeeze. Applying its customary four-part test for manipulation, the Commission found that DiPlacido had the ability to influence prices because his trading activity accounted for 28 percent to 52 percent of the trading volume during the closes at issue and that he had the intent to do so in order to enhance the value of over-the-counter positions held by his customer. Third, the Commission found that an artificial price was in fact established and that DiPlacido caused it by bidding through offers and otherwise engaging in disruptive trading practices, paying more than he had to, or selling for less, depending on which way his customer wanted to move the market. The Commission applied the manipulation theory adopted by the JO of the U.S. Department of Agriculture in In re Henner, 30 Agric. Dec. 1151 (1971), a case brought by the CFTC’s predecessor agency, the Commodity Exchange Authority. In that case, the JO, whose decision was the final decision of the agency, concluded that the respondent, through his trading activity on the trading floor of the CME, paid more than he had to in order to raise the closing price.

The Commission imposed a cease and desist order, a $1 million civil monetary penalty, a 20-year trading ban, and revoked DiPlacido’s registration. The case was appealed to the U.S. Court of Appeals for the Second Circuit. The Court issued its decision on October 16, 2009, reducing the civil monetary penalties by $320,000 and otherwise affirming the Commission’s decision and sanctions. DiPlacido v. CFTC, No.08-5559-ag, 2009 WL 3226624 (2nd Cir.) (Oct. 16, 2009).

In Rubini Vargas v. FX Solutions, LLC, CFTC Docket No. 07-R025 (Feb. 24, 2009), the Commission modified the showing required for a non-U.S. resident complainant to file a reparations claim without posting the bond required by CEA Section 14(c). Under that provision, a non-resident claimant in the reparations forum must post a bond in double the amount of the claim, but may obtain a waiver if the complainant’s country of residence permits U.S. residents to file in that country’s courts without a bond. Complainants, residents of Peru, sought a waiver, relying on the absence of a bond requirement for U.S. residents in Peru’s constitution, various procedural statutes and Peru’s Administrative Code. In proceedings before the ALJ, their showing was deemed insufficient under Commission precedent requiring an affirmative statement that no bond was required of nonresident litigants and the complaint was dismissed without prejudice. On appeal, the Commission addressed the showing required by Section 14(c) ”in light of the principle that our legal system rarely requires a party to prove a negative.” Recognizing “the inherent difficulty that may attend establishing a waiver claim,” the Commission held that if a diligent search revealed no relevant authority, it would treat “the absence of authority as compelling proof that no bond is required.” The Commission vacated the order of dismissal and remanded the case. On remand, the complaint was dismissed on unrelated grounds.

1 This includes 15 related, identical petitions for interlocutory review counted as one case. (back to text)