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: [email protected]

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

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

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

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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

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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