CFTC History in the 2010s
January 14, 2010—The CFTC votes at an open meeting to publish in the Federal Register a proposal to set position limits for futures and option contracts in the major energy markets. (CFTC Press Release 5771-10, January 7, 2010).
March 25, 2010—The CFTC holds an open meeting to examine the trading of futures and options in the precious and base metals markets. (CFTC Press Release 5782-10, February 23, 2010).
April 3, 2010—The CFTC Launches a new web site along with supporting web 2.0 components. (CFTC Press Release 5804-10, April 3, 2010).
April 29, 2010—The CFTC issues an order filing and simultaneously settling (for a civil monetary penalty of $25 million among other things) charges that Moore Capital Management, LP, and various affiliated companies attempted to manipulate the settlement prices of platinum and palladium futures contracts on the New York Mercantile Exchange. (CFTC Press Release 5815-10, April 29, 2010). The CFTC settles similar charges with Moore trader Christopher L. Pia on July 25, 2011 (CFTC Press Release 6079-11, July 25, 2011).
May 6, 2010—Major stock indexes and stock index futures experience a brief but severe drop in prices, falling more than 5% in a matter of minutes, only to recover a short time later. Some individual securities experience more volatility than the stock indexes. (Statement by SEC and CFTC, May 6, 2010)
May 24, 2010—The newly formed Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues holds its first meeting. (CFTC Press Release 5823-10, May 17, 2010).
June 14, 2010—The CFTC approves the first futures contracts based on motion picture box office receipts after finding that the terms and conditions of Media Derivatives, Inc.’s proposed Weekend Motion Picture Revenue futures and options contracts do not violate the Commodity Exchange Act or CFTC regulations. However, the Dodd-Frank Act contains provisions that ban futures contracts based on motion picture box office receipts. (CFTC Press Release 5834-10, June 14, 2010).
July 21, 2010— President Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Title VII of the Dodd-Frank Act amends the Commodity Exchange Act to establish a comprehensive new regulatory framework for swaps and security-based swaps. The legislation is enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: 1) providing for the registration and comprehensive regulation of swap dealers and major swap participants; 2) imposing clearing and trade execution requirements on standardized derivative products; 3) creating robust recordkeeping and real-time reporting regimes; and 4) enhancing the Commission’s rulemaking and enforcement authorities with respect to, among others, all registered entities and intermediaries subject to the Commission’s oversight. On the same day, the CFTC releases a list of 30 areas of rulemaking to implement the Dodd-Frank Act. (CFTC Press Releases 5855-10 and 5856-10, July 21, 2010).
August 16, 2010—The CFTC sanctions ConAgra Trade Group, Inc. (CTG) $12 Million for causing a non-bona fide price to be reported in the NYMEX Crude Oil futures contract. On January 2, 2008, CTG was the first to purchase NYMEX crude oil futures contracts at the then-historic price of $100. As a result of CTG’s effort to be the first to trade at the $100 level, CTG caused a non-bona fide price to be reported, according to the CFTC order. (CFTC Press Release 5873-10, August 16, 2010).
October 1, 2010—The CFTC holds the first of many open meetings to consider the issuance of proposed rules to implement the Dodd-Frank Act. (CFTC Press Release 5901-10, September 21, 2010)
October 1, 2010—The staffs of the CFTC and SEC release a joint report presenting their findings regarding the market events of May 6, 2010. (CFTC Press Release 5912-10, October 1, 2010)
May 24, 2011—The CFTC charges Parnon Energy Inc., Arcadia Petroleum Ltd. and Arcadia Energy (Suisse) SA, along with two traders, with price manipulation in the crude oil market. The complaint alleges cross-market trading scheme in 2008 involving accumulation and sell-off of a substantial position in physical crude oil to manipulate futures prices, yielding in excess of $50 million in unlawful profits for defendants. (CFTC Press Release 6041-11, May 24, 2011)
July 7, 2011—The CFTC holds the first of many open meetings to finalize rules to implement the Dodd-Frank Act, including new rules regarding the prohibition on manipulative trading and the definition of agricultural commodity. (CFTC Press Release 6064-11, June 30, 2011)
July 19, 2011—The CFTC files and simultaneously settles charges that Ecoval Dairy Trade, Inc. attempted to manipulate the daily settlement prices of non-fat dry milk cash-settled futures contracts on the Chicago Mercantile Exchange. The CFTC order requires Ecoval to pay a $1,425,000 civil monetary penalty. (CFTC Press Release 6075-11, July 19, 2011)
August 4, 2011—The CFTC holds an open meeting to, among other things, issue final rules regarding registration and core principles for swap data repositories, a new type of registered entity created by the Dodd-Frank Act. (CFTC Press Release 6085-11, July 28, 2011)
October 18, 2011—The CFTC holds an open meeting where it issues a final rule implementing position limits for futures and swaps in a variety of agricultural, metal, and energy commodities. (CFTC Press Release 6124-11, October 11, 2011)
October 31, 2011—MF Global, a futures commission merchant and broker-dealer, declares bankruptcy and reports deficiencies in customer futures segregated accounts held at the firm. The bankruptcy trustee later reports that up to $1.6 billion in customer funds were missing. (CFTC-SEC Statement on MF Global, October 31, 2011).
December 20, 2011—The CFTC holds an open meeting to, among other things, issue final rules on real-time reporting of swap transaction data and swap data recordkeeping and reporting requirements as part of the implementation of the Dodd-Frank Act. (CFTC Press Release 6157-11, December 13, 2011)
March 14, 2012—The CFTC charges Joseph F. Welsh III in federal court with attempted manipulation of the prices of palladium and platinum futures contracts, including the settlement prices. According to the complaint, while working as a broker at MF Global Inc., Welsh employed a manipulative scheme commonly known as “banging the close.” Welsh is also charged with aiding and abetting Christopher L. Pia, who had settled similar charges with the CFTC on July 25, 2011. (CFTC Press Release 6210-12, March 14, 2012)
April 18, 2012—The CFTC holds an open meeting to, among other things, issue a final rule (joint with the SEC) to further define the terms “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant,” and “Eligible Contract Participant.” as part of the implementation of the Dodd-Frank Act. (CFTC Press Release 6228-12, April 11, 2012).
June 27, 2012—The CFTC orders Barclays Bank to pay a $200 million penalty for attempting to manipulate the LIBOR and Euribor benchmark interest rates and making related false reports to benefit its derivatives trading positions. The CFTC order also finds that Barclays made false LIBOR reports at the direction of members of senior management to protect its reputation during the global financial crisis of 2008. (CFTC Press Release 6289-12, June 27, 2012)
July 10, 2012—The CFTC holds an open meeting to, among other things, issue a final rule (joint with the SEC) to further define the terms “swap” and “security based swap” as part of the implementation of the Dodd-Frank Act. (CFTC Press Release 6295-12, July 3, 2012)
September 28, 2012—The U.S. district court for the District of Columbia vacates the CFTC’s rule implementing position limits for futures and swaps. On November 15, 2012, the CFTC appeals that ruling. (CFTC Press Release 6413-12, November 15, 2012)
November 28, 2012—The CFTC issues new rules to require certain credit default swaps and interest rate swaps to be cleared by derivatives clearing organizations (DCOs). The rules establish the first clearing determination by the Commission under the Dodd-Frank Act. Under the rules, market participants are required to submit a swap that is identified in the rule for clearing by a DCO as soon as technologically practicable and no later than the end of the day of execution. (CFTC Press Release 6429-12, November 28, 2012)
December 4, 2012—The CFTC files a complaint in federal court that Eric Moncada, BES Capital LLC, and Serdika LLC attempted to manipulate wheat futures prices, and engaged in fictitious sales and non-competitive transactions. According to the complaint, Moncada’s scheme was to electronically enter and immediately cancel numerous large-lot orders for wheat futures that he did not intend to fill, but that he intended to use to create a misleading impression of increasing liquidity in the marketplace. Moncada would then allegedly seek to take advantage of any price movements that may have resulted from this manipulative scheme by placing smaller orders, which he hoped to fill at prices beneficial to him, on the opposite side of market from his large-lot cancelled orders. On October 1, 2014, a federal court orders Moncada to pay a civil monetary penalty of $1.56 million. (CFTC Press Release 6441-12, December 4, 2012 and CFTC Press Release 7026-14, October 1, 2014)
December 19, 2012—The CFTC orders UBS, a Swiss bank, to pay a $700 million penalty to settle charges of manipulation, attempted manipulation and false reporting of LIBOR and other benchmark interest rates. In summary, the CFTC’s Order finds that for at least six years UBS regularly tried to manipulate (and at times successfully manipulated) multiple benchmark interest rates for profit, and that there were more than 2,000 instances of unlawful conduct involving dozens of UBS employees, including colluding with other panel banks, inducing interdealer brokers to spread false information and influence other banks; and the making of false LIBOR submissions to protect its reputation during the global financial crisis. (CFTC Press Release 6472-12, December 19, 2012)
December 31, 2012—Swap dealer registration and real-time reporting of swaps transactions begin, pursuant to reforms enacted in the Dodd-Frank Act. (CFTC Press Release 6489-13, January 2, 2013)
February 6, 2013—In its third LIBOR-related action, the CFTC orders The Royal Bank of Scotland and RBS Securities Japan to pay a $325 million civil monetary penalty to settle charges of manipulation, attempted manipulation, and false reporting of yen and Swiss franc LIBOR. (CFTC Press Release 6510-13, February 6, 2013)
March 11, 2013—Pursuant to the Dodd-Frank Act, mandatory clearing of certain index credit default swaps and interest rate swaps begins for swap dealers, major swap participants and private funds active in the swaps market. Mandatory clearing subsequently begins for additional entities on June 10, 2013. (CFTC Press Release 6529-13, March 11, 2013 and (CFTC Press Release 6607-13, June 10, 2013)
May 16, 2013—The CFTC holds an open meeting where it finalizes rules to implement the “pre-trade” transparency module including: (1) Procedures to Establish Appropriate Minimum Block Sizes for Large Notional Off-Facility Swaps and Block Trades (Swaps Block Rule), (2) Process for a Designated Contract Market or Swap Execution Facility to Make a Swap Available to Trade under the trade execution requirement of the Commodity Exchange Act; (Made Available to Trade Rule); and (3) Core Principles and Other Requirements for Swap Execution Facilities (SEFs). (CFTC Press Release 6585-13, May 9, 2013)
June 25, 2013—The U.S. Court of Appeals for the District of Columbia upholds a CFTC rulemaking (CFTC Press Release 6176-12, February 9, 2012) revising CFTC rule 4.5 to require certain SEC-registered investment companies that also function as commodity pool operators to register with the CFTC as well as the SEC. See Investment Company Institute and U.S. Chamber Of Commerce v. Commodity Futures Trading Commission.
June 27, 2013—The CFTC files and simultaneously settles charges in U.S. District Court against MF Global and its former CEO Jon S. Corzine and former employee Edith O’Brien of , among other violations, MF Global’s unlawful use of customer funds that harmed thousands of customers and violated fundamental customer protection laws on an unprecedented scale. The settlement, subject to court approval, directs payment of all funds still owed to commodity customers and imposes a $100 million penalty against the company. (CFTC Press Release 6626-13, June 27, 2013)
July 12, 2013—The CFTC holds an open meeting where it finalizes cross-border interpretive guidance, a policy statement, and a cross-border phase-in exemptive order regarding compliance with certain swap regulations. (CFTC Press Release 6638-13, July 5, 2013)
July 22, 2013—The CFTC fines Panther Energy Trading LLC and its principal Michael J. Coscia $1.4 million for engaging in the disruptive practice of “spoofing,” that is, utilizing a computer algorithm that was designed to illegally place and quickly cancel bids and offers in futures contracts across a broad spectrum of commodities from August 8, 2011 through October 18, 2011 on CME Group’s Globex trading platform. On November 4, 2015, a U.S. district court jury finds Coscia guilty of commodities fraud and spoofing for this conduct. (CFTC Press Release 6649-13, July 22, 2013)
September 9, 2013—The CFTC approves for publication in the Federal Register a Concept Release on Risk Controls and System Safeguards for Automated Trading Environments. The Concept Release provides an overview of the automated trading environment and discusses and requests public comment on a series of (1) pre-trade risk controls; (2) post trade reports and other measures; (3) system safeguards related to the design, testing and supervision of automated trading systems; and (4) additional protections designed to promote safe and orderly markets. (CFTC Press Release 6683-13, September 9, 2013)
October 2, 2013—Trading begins on temporarily registered swap execution facilities as the SEF core principle rulemaking goes into effect.
November 15, 2013—The CFTC re-proposes position limits in various physical commodities. (CFTC Press Release 6763-13, November 5, 2013).
December 10, 2013—Five federal agencies, including the CFTC, issue final rules developed jointly to implement section 619 of the Dodd-Frank Act (the “Volcker Rule”). The final rules prohibit insured depository institutions and their affiliates from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on these entities’ investments in, and other relationships with, hedge funds or private equity funds. (CFTC Press Release 6790-13, December 10, 2013).
February 15, 2014, February 21, 2014 and February 26, 2014—Made available-to-trade (MAT) determinations for certain interest rate swap and credit default swap contracts go into effect. Those swaps therefore become subject to the trade execution mandate and must, with certain exceptions, be traded on a SEF or DCM. (CFTC Press Release 6831-14, January 16, 2014, CFTC Press Release 6838-14, January 23, 2014, CFTC Press Release 6841-14, January 28, 2014, and CFTC Press Release 6843-14, January 30, 2014).
May 20, 2014—The CFTC issues its first whistleblower reward under the whistleblower program created by the Dodd-Frank Act. The reward is approximately $240,000 for providing valuable information about violations of the Commodity Exchange Act. (CFTC Press Release 6933-14, May 20, 2014).
July 28, 2014—The CFTC files and simultaneously settles charges against Lloyds Banking Group plc and Lloyds Bank plc (formerly Lloyds TSB), for acts of false reporting and attempted manipulation of the London Interbank Offered Rate (LIBOR) for sterling, U.S. dollar, and yen. The order finds that, in a few instances, Lloyds TSB was successful in its manipulation of sterling and yen LIBOR. The order imposes a civil monetary penalty of $105 million. (CFTC Press Release 6966-14, July 28, 2014).
September 15, 2014—The CFTC enters into a consent order settling charges brought against Brian Hunter, resident of Calgary, Alberta, for attempting to manipulate the price of natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX) during the expiry on February 24 and April 26, 2006. The consent order arises from a The consent Order arises from a CFTC complaint filed on July 25, 2007. (CFTC Press Release 7000-14, September 15, 2014).
September 16, 2014—A judge for the U.S. District Court for the District of Columbia dismisses a lawsuit by three Wall Street trade groups claiming that the CFTC overstepped its authority in issuing new rules and guidance related to overseas swaps transactions. The judge also directs the CFTC to reconsider the costs and benefits of certain previously implemented rules in a cross-border context, but those remain in effect while the CFTC does so.
November 12, 2014—The CFTC orders five banks, Citibank, HSBC, JPMorgan, Royal Bank of Scotland, and UBS, to pay over $1.4 billion in penalties for attempted manipulation of, and for aiding and abetting other banks’ attempts to manipulate, global foreign exchange benchmark rates to benefit the positions of certain traders. (CFTC Press Release 7056-14, November 12, 2014).
April 1, 2015—The CFTC charges Kraft Foods Group, Inc. and Mondelēz Global LLC, with manipulation and attempted manipulation of the prices of cash wheat and wheat futures. The complaint also alleges that Kraft and Mondelēz violated speculative position limits and engaged in numerous noncompetitive trades in CBOT wheat futures. (CFTC Press Release 7150-15, April 1, 2015).
April 21, 2015—The CFTC unseals a complaint against Navinder Singh Sarao and his proprietary trading firm Nav Sarao Futures Limited. The complaint charges Sarao with unlawfully manipulating, attempting to manipulate, and spoofing (placing orders with the intent to cancel before execution) in the E-mini S&P 500 near month futures contract (E-mini S&P). Sarao is arrested in the U.K. and the Department of Justice unseals its own criminal complaint charging Sarao with the same misconduct. According to the Complaint, for over five years, Sarao engaged in a massive effort to manipulate the price of the E-mini S&P by utilizing a variety of exceptionally large, aggressive, and persistent spoofing tactics on over 400 trading days. (CFTC Press Release 7156-15, April 21, 2015).
April 23, 2015—The CFTC orders Deutsche Bank to pay an $800 million penalty to settle charges of manipulation, attempted manipulation, and false reporting of the LIBOR and Euribor interest rate benchmarks. This is the largest fine in CFTC history to date. (CFTC Press Release 7159-15, April 23, 2015).
May 20, 2015—The CFTC orders Barclays Bank to pay a $400 million fine to settle CFTC charges of attempted manipulation and false reporting of foreign exchange benchmark rates and separately orders Barclays to pay a $115 million fine to settle charges of attempted manipulation and false reporting of U.S. dollar ISDAFIX benchmark swap rates. This is in addition to the $200 million fine previously imposed on Barclays on June 27, 2012 attempting to manipulate the LIBOR and Euribor benchmark interest rates. (CFTC Press Release 7180-15 and CFTC Press Release 7181-15, May 20, 2015).
July 13, 2015— Staff from the Department of Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the Securities and Exchange Commission, and the CFTC issue a joint report analyzing the significant volatility in the U.S. Treasury market on October 15, 2014. Using non-public data from the U.S. Treasury cash and futures markets, the joint report provides detailed analysis of the market conditions and record trading volumes that day, including an unusually rapid round trip in prices and deterioration in liquidity during a narrow window. (CFTC Press Release 7197-15, July 13, 2015).
August 18, 2015—The CFTC issues an order of exemption from registration as a derivatives clearing organization (DCO) to ASX Clear (Futures) Pty Limited (ASX). The order is the first issued by the Commission based on its authority under Section 5b(h) of the Commodity Exchange Act. (CFTC Press Release 7214-15, August 18, 2015) .
September 17, 2015—The CFTC orders bitcoin options trading platform operator Coinflip, Inc. and its CEO to cease illegally offering bitcoin options and to cease operating a facility for trading or processing of swaps without registering. In this first action against an unregistered bitcoin options trading platform, the CFTC holds that bitcoin and other virtual currencies are a commodity covered by the Commodity Exchange Act. (CFTC Press Release 7231-15, September 17, 2015).
October 19, 2015—The CFTC charges Chicago Trader Igor B. Oystacher and his proprietary trading company, 3 Red Trading LLC, with intentionally and repeatedly engaging in a manipulative and deceptive spoofing scheme on at least 51 trading days between December 2011 and January 2014, while trading E-mini S&P 500, copper, crude oil, natural gas, and VIX futures contracts. (CFTC Press Release 7264-15, October 19, 2015).
November 3, 2015—In the first criminal prosecution of the Dodd-Frank Act’s prohibition on spoofing, a federal jury finds Michael Coscia, owner of Panther Energy Trading, guilty of six counts of commodities fraud and six counts of spoofing. The CFTC had fined Coscia and Panther Energy Trading $1.4 million for this conduct on July 22, 2013.
December 7, 2015—The CFTC files and settles charges against natural gas trading and marketing firm Total Gas & Power North America, Inc. and one of its traders for attempted manipulation of natural gas monthly index settlement prices at four major trading hubs in Texas and elsewhere in the southwest during monthly settlement periods known as “bid-week.” (CFTC Press Release 7289-15, December 7, 2015).
December 16, 2015—The CFTC approves a final rule on margin requirements for uncleared swaps for swap dealers and major swap participants that are not subject to regulation by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration or the Federal Housing Finance Agency. (CFTC Press Release 7294-15, December 16, 2015).
January 22, 2016—The CFTC grants registration to 18 swap execution facilities (SEFs) that previously were operating under temporary registration status. SEFs are trading facilities for trading and processing swaps created pursuant to the Dodd-Frank Act of 2010. (CFTC Press Release 7313-16, January 22, 2016).
February 10, 2016—The European Commissioner for Financial Stability, Financial Services and Capital Markets Union and the CFTC Chairman announce a common approach regarding requirements for central clearing counterparties(CCPs). Under the approach, the European Commission will adopt an equivalence determination that will enable US CCPs that are registered with the CFTC as Derivatives Clearing Organizations to continue to provide services in the EU whilst complying with CFTC requirements. Similarly, CFTC staff will propose a determination of comparability with respect to EU requirements, which will permit EU CCPs to provide services to US clearing members and clients whilst complying with certain corresponding EU requirements. (The U.S. Commodity Futures Trading Commission and the European Commission: Common Approach for Transatlantic CCPS, February 10, 2016).
April 4, 2016—The CFTC announces its third whistleblower award of more than $10 million to a whistleblower who provided key original information that led to a successful CFTC enforcement action. The award is the largest made by the CFTC’s Whistleblower Program to date. (CFTC Press Release 7351-16, April 4, 2016).
May 25, 2016—The CFTC orders Citibank to pay a civil monetary penalty $250 million for attempted manipulation and false reporting of U.S. dollar ISDAFIX benchmark swap rates and in a separate civil monetary penalty, orders Citibank and Japanese affiliates to pay $175 million for attempted manipulation of yen LIBOR and Euroyen TIBOR, and false reporting of Euroyen TIBOR and U.S. dollar LIBOR. (CFTC Press Release 7371-16 and CFTC Press Release 7372-16, May 25, 2016).
June 6, 2016—The CFTC signs a Memorandum of Understanding (MOU) with the European Securities and Markets Authority (ESMA) regarding cooperation with respect to derivatives clearing organizations (DCOs) established in the United States that have applied or that may apply to ESMA for recognition as central counterparties (Recognized CCPs). Through the MOU, the CFTC and ESMA express their willingness to cooperate with respect to Recognized CCPs. (CFTC Press Release 7384-16, June 6, 2016).
September 28, 2016—The CFTC expands the existing clearing requirement for interest rate swaps to include certain interest rate swaps denominated in the Australian dollar, Canadian dollar, Hong Kong dollar, Mexican peso, Norwegian krone, Polish zloty, Singapore dollar, Swedish krona, and Swiss franc as well as U.S. dollar-, euro-, and sterling-denominated overnight interest rate swaps (OIS). The implementation schedule is based on when analogous clearing requirements take effect in non-U.S. jurisdictions. (CFTC Press Release 7457-16, September 28, 2016).
November 9, 2016—Following his extradition to the United States, U.K. Resident Navinder Singh Sarao pleads guilty in federal court to one count of spoofing and one count of wire fraud. (CFTC Press Release 7480-16, November 9, 2016).
November 17, 2016—A federal court in Chicago orders U.K. Resident Navinder Singh Sarao to pay more than $38 million in monetary sanctions for price Manipulation and spoofing. This arises from a CFTC enforcement action filed against Sarao, along with his company Nav Sarao Futures Limited PLC that was unsealed on April 21, 2015. (CFTC Press Release 7486-16, November 17, 2016).
December 20, 2016—A federal court orders Chicago trader Igor B. Oystacher and 3Red Trading LLC to pay a $2.5 million penalty for spoofing and employment of a manipulative and deceptive device, while trading futures contracts on multiple futures exchanges. This order stems from a CFTC complaint filed on October 19, 2015. (CFTC Press Release 7504-16, December 20, 2016).
December 21, 2016—The CFTC orders Goldman Sachs to pay a $120 million Penalty for attempted manipulation of and false reporting of U.S. Dollar ISDAFIX benchmark swap rates, a global benchmark for interest rate products over a five-year period from 2007 to 2012. (CFTC Press Release 7505-16, December 21, 2016).
January 19, 2017—The CFTC orders Citigroup Global Markets Inc. to pay $25 million for spoofing in U.S. Treasury futures markets and for failing to diligently supervise the activities of its employees and agents in conjunction with the spoofing orders. Citigroup’s unlawful conduct occurred between July 16, 2011 and December 31, 2012. (CFTC Press Release 7516-17, January 19, 2017).
February 3, 2017—The CFTC Orders the Royal Bank of Scotland to pay an $85 million penalty for attempted manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates over a five-year period from 2007 to 2012. As of this date, the CFTC has imposed a total of $570 million in penalties for attempted manipulation of the ISDAFIX Benchmark and a total of $5.29 billion penalties in its investigation of manipulation of global benchmark rates in general. (CFTC Press Release 7527-17, February 3, 2017).
February 6, 2017—The CFTC orders Forex Capital Markets, LLC (FXCM) and its parent company and founding partners to pay a $7 million penalty for FXCM’s defrauding of retail foreign exchange (forex) customers. The order finds that, between September 4, 2009 though at least 2014, FXCM engaged in false and misleading solicitations of its retail forex customers by concealing its relationship with its most important market maker and by misrepresenting that its “No Dealing Desk” platform had no conflicts of interest with its customers. (CFTC Press Release 7528-17, February 6, 2017).
March 15, 2017—In a speech before a futures industry conference, Acting Chairman J. Christopher Giancarlo announces the launch of Project KISS which stands for “Keep It Simple, Stupid,” an agency-wide internal review of CFTC rules, regulations and practices to identify those areas that can be simplified to make them less burdensome and less costly. In the same speech, the Acting Chairman also announces a financial technology (fintech) initiative and steps to improve market intelligence, including a reorganization of the market surveillance section and the appointment of a Chief Market Intelligence Officer. (“CFTC: A New Direction Forward,” Remarks of Acting Chairman J. Christopher Giancarlo before the 42nd Annual International Futures Industry Conference in Boca Raton, FL, March 15, 2017).
May 3, 2017—CFTC votes to seek public input on simplifying and modernizing the Commission’s rules pursuant to Project KISS. (CFTC Press Release 7555-17, May 3, 2017).
May 17, 2017—The CFTC votes to launch of LabCFTC, a new initiative aimed at promoting responsible fintech innovation to improve the quality, resiliency, and competitiveness of the markets the CFTC oversees. Located in New York, LabCFTC also looks to accelerate CFTC engagement with fintech and RegTech solutions that may enable the CFTC to carry out its mission responsibilities more effectively and efficiently. (CFTC Press Release 7558-17, May 17, 2017).
June 29, 2017—The CFTC enters into non-prosecution agreements with former Citigroup Global Markets Inc. (Citigroup) traders Jeremy Lao, Daniel Liao, and Shlomo Salant. In their non-prosecution agreements, Lao, Liao, and Salant each admits that he engaged in the unlawful disruptive trade practice of “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) in U.S. Treasury futures markets while trading for Citigroup in 2011 and 2012. These are the first non-prosecution agreements entered into by the CFTC. (CFTC Press Release 7581-17, June 29, 2017)
August 4, 2017—The CFTC launches a new podcast, “CFTC Talks” that is geared towards providing information about the commodity markets, futures trading and other information about conditions in the U.S. and abroad affecting the markets. (CFTC Press Release 7597-17, August 4, 2017).
October 10, 2017—The CFTC issues an Order filing and settling charges against Arab Global Commodities DMCC, a proprietary trading firm headquartered in Dubai, with several trading offices in India, for engaging in the disruptive trading practice of “spoofing” in the copper futures contract traded on the Commodity Exchange, Inc. (COMEX) between March and August 2016. (CFTC Press Release 7627-17, October 10, 2017).
October 17, 2017—LabCFTC releases “A CFTC Primer on Virtual Currencies.” This primer is the first of a series that LabCFTC plans to release to provide fundamental, and essential, information about financial technology (fintech) innovation. (CFTC Press Release 7631-17, October 17, 2017).
November 14, 2017—The CFTC issues an Order filing and settling charges against Statoil ASA (Statoil), an international energy company headquartered in Stavanger, Norway. The CFTC Order finds that from as early as October 2011 through November 2011, Statoil attempted to manipulate the Argus Far East Index (FEI) in order to benefit Statoil’s physical and financial positions, including Statoil’s NYMEX-cleared over-the-counter swaps which settled to the Argus FEI. The Order requires Statoil to pay a $4 million civil monetary penalty and to cease and desist from violating Section 9(a)(2) of the Commodity Exchange Act. (CFTC Press Release 7643-17, November 14, 2017).
December 1, 2017—The Chicago Mercantile Exchange Inc. (CME) and the Cboe Futures Exchange (CFE) self-certify new contracts for Bitcoin futures products, the first futures contracts on virtual currency. On the same day, the Cantor Exchange (Cantor) self-certifies a new contract for Bitcoin binary options. (CFTC Press Release 7654-17, December 1, 2017).
December 15, 2017—The CFTC launches a virtual currency resource web page, cftc.gov/bitcoin. This dedicated page is a central repository for CFTC-produced resources about virtual currency, and is designed to educate and inform the public about these commodities, including the possible risks associated with investing or speculating in virtual currencies or Bitcoin futures and options. (CFTC Press Release 7665-17, December 15, 2017).
January 19, 2018—The CFTC charges Colorado resident Dillon Michael Dean and his Company, The Entrepreneurs Headquarters Limited with engaging in a fraudulent scheme to solicit Bitcoin from members of the public, misrepresenting that customers’ funds would be pooled and invested in products including binary options, making Ponzi-style payments to commodity pool participants from other participants’ funds, misappropriating pool participants’ funds, and failing to register with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required. On the same day, the CFTC charges Patrick K. McDonnell and His Company CabbageTech, Corp. d/b/a Coin Drop Markets with and misappropriation in connection with purchases and trading of Bitcoin and Litecoin. (CFTC Press Release 7674-18, and CFTC Press Release 7675-18, January 19, 2018).
January 24, 2018—The CFTC announces the filing of a federal court enforcement action charging commodity fraud and misappropriation related to the ongoing solicitation of customers for a virtual currency known as My Big Coin (MBC). The CFTC Complaint charges Randall Crater of East Hampton, New York, Mark Gillespie of Hartland, Michigan, and My Big Coin Pay, Inc., a corporation based in Las Vegas, Nevada, with misappropriating over $6 million from customers by, among other things, transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods. (CFTC Press Release 7678-18, January 24, 2018).
January 29, 2018—The CFTC, in conjunction with the Department of Justice and Federal Bureau of Investigation’s Criminal Investigative Division, criminal and civil enforcement actions against three banks (Deutsche Bank, UBS, and HSBC) and six individuals involved in commodities fraud and spoofing schemes involving gold and other precious metals futures contracts and E-Mini S&P 500 futures contracts. (CFTC Press Release 7681-18, January 29, 2018).
February 1, 2018—The CFTC announces new paradigm for a more accurate measurement of the swaps market, specifically focused on its risk transfer function. In a paper, released that day, the CFTC Chief Economist explains why notional amount is not a good measure of the magnitude of risk transfer through the global interest rate swap (IRS) markets, and proposes the use of ENNs: Entity-Netted Notional Amounts instead. (CFTC Press Release 7691-18, February 1, 2018).
February 15, 2018—The CFTC issues a Customer Protection Advisory that warns customers to beware of and avoid pump-and-dump schemes that can occur in thinly traded or new “alternative” virtual currencies, digital coins or tokens. Pump-and-dump schemes are coordinated efforts to create phony demand for the virtual currency, coin, or token (the pump) and then sell quickly (the dump) to profit by taking advantage of traders who are unaware of the scheme. (CFTC Press Release 7697-18, February 15, 2018).
March 6, 2018—The CFTC announces that Judge Jack B. Weinstein of the U.S. District Court for the Eastern District of New York entered a Preliminary Injunction Order against Defendants Patrick K. McDonnell and CabbageTech, Corp. d/b/a Coin Drop Markets. The Court’s decision stems from the CFTC’s January 18, 2018 Complaint charging Defendants with fraud and misappropriation in connection with purchases and trading of the virtual currencies Bitcoin and Litecoin (see CFTC Press Release & Complaint 7675-18). In the injunction, the court finds that virtual currencies are commodities within the anti-fraud jurisdiction of the CFTC. (CFTC Press Release 7702-18, March 6, 2018).
April 5 and 6, 2018—AgCon2018, a joint conference of the CFTC and the Center for Risk Management Education and Research at Kansas State University is held in Overland Park, Kansas, along with a meeting at the same location of the CFTC’s Agriculture Advisory Committee. (CFTC Press Release 7703-18, March 7, 2018).
June 4, 2018—The CFTC orders Société Générale S.A. to pay a $475 million civil monetary penalty to resolve charges of manipulation, attempted manipulation, and false reporting of LIBOR and Euribor. (CFTC Press Release 7736-18, June 4, 2018).
June 18, 2018—The CFTC orders JPMorgan Chase Bank, N.A. to pay a $65 million civil monetary penalty for false reporting and attempted manipulation of U.S. dollar ISDAFIX benchmark swap rates. (CFTC Press Release 7742-18, June 18, 2018).
July 12, 2018—The CFTC Announces its largest ever whistleblower award of approximately $30 million to a whistleblower who voluntarily provided key original information that led to a successful enforcement action. (CFTC Press Release 7753-18, July 12, 2018).
July 16, 2018—The CFTC issues a Customer Advisory, entitled “Use Caution When Buying Digital Coins or Tokens.” The advisory warns customers to use caution and do extensive research before purchasing virtual coins or tokens, including those that are self-described as “utility coins,” or “consumption coins.” (CFTC Press Release 7756-18, July 16, 2018).
August 23, 2018— Following a four-day bench trial, a New York federal court enters final judgment ordering defendants Patrick K. McDonnell and his company CabbageTech, Corp. d/b/a Coin Drop Markets (CDM), to pay over $1.1 million in civil monetary penalties and restitution in connection with a lawsuit brought by the CFTC alleging fraud in connection with virtual currencies, including Bitcoin and Litecoin. The court found that the defendants engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies to CDM, purportedly in exchange for real-time expert virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under McDonnell’s direction. In fact, these misrepresentations were lies, and McDonnell simply misappropriated customer funds in what the Court found was the “vicious defrauding of customers.” (CFTC Press Release 7774-18, August 24, 2018).
August 29, 2018—The CFTC orders BNP Paribas to pay a $90 million civil monetary penalty for attempted manipulation and false reporting of U.S. Dollar ISDAFIX benchmark swap rates. (CFTC Press Release 7776-18, August 29, 2018).
September 18 and 19, 2018—In separate actions, the CFTC orders ICAP Capital Markets LLC (ICAP) to pay a $50 million civil monetary penalty for aiding and abetting attempted manipulation and orders Bank of America, N.A. to pay a $30 million civil monetary penalty for attempted manipulation and false reporting, both of U.S. Dollar ISDAFIX benchmark swap rates. (CFTC Press Releases 7793-18, September 18, 2018 (ICAP) and 7794-19, September 19, 2018 (Bank of America).
September 26, 2018—A U.S. District Court judge enters an order holding that the CFTC has the power to prosecute fraud involving virtual currency and denying the defendants’ motion to dismiss the CFTC’s complaint regarding the virtual currency My Big Coin. (CFTC Press Release 7820-18, October 3, 2018).
October 3 and 4, 2018—The CFTC holds a two-day conference at its Washington, D.C. headquarters, Fintech Forward 2018: Innovation, Regulation and Education. (CFTC Press Release 7810-18, September 28, 2018). At the conference, the CFTC and the Australian Securities and Investments Commission (ASIC) sign an arrangement to cooperate and support innovation through each other’s financial technology (fintech) initiatives – CFTC’s LabCFTC and ASIC’s Innovation Hub. (CFTC Press Release 7824-18, October 4, 2018).
November 30, 2018—A U.S. District Court judge in the Southern District of New York releases his finding that the CFTC failed to prove in a bench trial that Donald R. Wilson and his firm DRW Investments, LLC manipulated or attempted to manipulate the IDEX USD Three-Month Interest Rate Swap futures contract by “banging the close” and enters a judgment in favor of the defendants.
April 26, 2019—The CFTC and SEC release Watch Out for Fraudulent Digital Asset and “Crypto” Trading Websites, an Investor Alert this week to warn investors to scrutinize investment opportunities through websites purporting to operate advisory and trading businesses related to digital assets. (CFTC Press Release 7917-19, April 26, 2019).
May 8, 2019—The CFTC’s Division of Enforcement makes available to the public its Enforcement Manual for the first time. The Manual provides an overview of the CFTC and the Division, and it establishes certain general policies and procedures that guide the work of Division staff in detecting, investigating, and prosecuting violations of the Commodity Exchange Act and CFTC Regulations. (CFTC Press Release 7925-19, May 8, 2019).
May 15, 2019—The CFTC’s Division of Market Oversight issues a statement regarding a self-certification by ICE Futures U.S. of a rule amendment allowing ICE to implement a new functionality, named Passive Order Protection (POP). The POP functionality creates a delay or “speed bump” in the processing of incoming “aggressive” orders that would otherwise execute against “resting” or “passive” orders, but does not delay the processing of passive orders or their cancellations or modifications. The POP functionality is designed to reduce the impact of latency (or speed) advantages among a segment of higher speed traders. (CFTC Press Release 7928-19, May 15, 2019).
June 24, 2019—The chairmen of the CFTC and the SEC and the chief executive of the U.K. Financial Conduct Authority issue a joint statement regarding their concerns in credit derivatives markets. The statement says “the continued pursuit of various opportunistic strategies in the credit derivatives markets, including but not limited to those that have been referred to as ‘manufactured credit events,’ may adversely affect the integrity, confidence and reputation of the credit derivatives markets, as well as markets more generally. These opportunistic strategies raise various issues under securities, derivatives, conduct and antifraud laws, as well as public policy concerns.” On July 10, 2019, the CFTC releases a CFTC Talks podcast highlighting the CFTC’s work in this critical area. (CFTC Press Release 7966-19, July 10, 2019)
September 4, 2019—The Securities and Exchange Commission and the CFTC announce that the Options Clearing Corporation (OCC) agrees to undertake remedial efforts and pay $20 million in penalties to settle charges that it failed to implement policies to manage certain risks as required by U.S. laws and SEC and CFTC rules. This enforcement action is the SEC’s first charging violations of SEC clearing agency standards adopted in 2012 and in 2016, and the CFTC’s first charging violations of Core Principles applicable to Derivatives Clearing Organizations. (CFTC Press Release 8000-19, September 4, 2019).
September 30, 2019—The CFTC issues orders filing and settling charges against two interdealer brokers: BGC Financial, LP and GFI Securities, LLC. The orders find that brokers employed by BGC and GFI on their respective emerging markets foreign exchange options desks made false representations that certain bids and offers were executable and that certain trades had occurred. The respective orders require BGC to pay a civil monetary penalty of $15 million and GFI to pay a civil monetary penalty of $10 million. (CFTC Press Release 8035-19, October 2, 2019).
October 8, 2019— Five federal financial regulatory agencies, including the CFTC, announce that they have finalized revisions to simplify compliance requirements relating to the “Volcker rule.” By statute, the Volcker rule generally prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds.
Under the revised rule, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements. (CFTC Press Release 8048-19, October 8, 2019).
November 7, 2019—The CFTC issues an order filing and settling charges against proprietary trading firm Tower Research Capital LLC arising from a manipulative and deceptive scheme, spanning nearly two years and involving thousands of occasions of spoofing in equity index futures products traded on the CME and CBOT. The order finds that Tower, by and through three former Tower traders, engaged in this unlawful activity while placing orders for, and trading futures contracts through Tower accounts, which benefited Tower financially while causing $32,593,849 million in market losses. The order imposes a total of $67.4 million against Tower, comprised of $32,593,849 in restitution, $10,500,000 in disgorgement, and a $24,400,000 civil monetary penalty—the largest total monetary relief ever ordered in a spoofing case. (CFTC Press Release 8074-19, November 7, 2019).
December 18, 2019—Three divisions of the CFTC announces that each has issued a no-action letter that provides relief to swap dealers and other market participants from various regulatory requirements as it relates to the industry-wide initiative to transition from swaps that reference the London Interbank Offered Rate (LIBOR) and other interbank offered rates to swaps that reference alternative benchmarks, e.g., the Secured Overnight Financing Rate (SOFR).