November 6, 2014

CFTC Releases Annual Enforcement Results for Fiscal Year 2014

Agency Obtained a Record $3.27 Billion in Monetary Sanctions

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today reported on the agency’s enforcement results for fiscal year 2014. The CFTC obtained a record $3.27 billion in monetary sanctions imposed against companies and individuals. The CFTC filed 67 new enforcement actions while continuing to devote significant resources to litigating a host of complex cases filed in prior years. A number of those litigations reached successful resolutions, either through settlement, the granting of summary judgment, or a finding of liability after trial.

“The CFTC is committed to aggressive enforcement and policing of our financial markets. Through the outstanding work of CFTC enforcement staff, the CFTC sends the message that the protection of customers and the integrity of the markets are paramount,” said Timothy Massad, Chairman of the CFTC.

The $3.27 billion in sanctions includes more than $1.8 billion in civil monetary penalties and more than $1.4 billion in restitution and disgorgement.^* This brings the Commission’s total monetary sanctions over the past two fiscal years to more than $5 billion, which is more than the total sanctions imposed during the prior 10 fiscal years combined. Alone, this year's civil monetary penalties total more than eight times the Commission’s operating budget for the fiscal year. The Division of Enforcement (Enforcement Division) also opened more than 240 new investigations in FY 2014. This year also marked the first award made under the CFTC’s new Whistleblower Program, which Congress created as part of the Dodd-Frank Act.

“The Enforcement Division’s results reflect the unwavering dedication and hard work of our talented staff,” said Aitan Goelman, the Enforcement Division’s Director. “Going forward, we will continue to enforce the rules governing the behavior of market participants to ensure that the wrongdoers who seek to take advantage of customers or game our markets are pursued and punished so that the integrity of our markets is protected.”

The Commission’s enforcement results are even more noteworthy because of constrained resources and a truncated work year. The Enforcement Division’s staffing levels are now more than 10 percent smaller than when Dodd-Frank was enacted, and the CFTC was subject to the staff furloughs and a government shutdown last October.

FY 2014 CFTC Enforcement Highlights

Market Integrity: Manipulation, Attempted Manipulation and False Reporting of Market Information

Illegal Off-Exchange Metals Fraud

MF Global Inc.; Distribution to Customers - Pursuant to the settlement obtained by the CFTC against MF Global Inc., the Trustee for MF Global began making final distributions to its customers to satisfy its obligation of full restitution for $1.212 billion in losses sustained by customers of MF Global when the company failed in 2011. The enforcement action was filed on June 27, 2013 against MF Global, MF Global Holdings Ltd. (Holdings), former Chief Executive Officer of MF Global and Holdings Jon S. Corzine, and former Assistant Treasurer of MF Global Edith O’Brien based on, 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 Enforcement Division continues in its suit against the remaining defendants, MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.

Under-Capitalization and Under-Segregation and Failure to Supervise Violations - Enforcement actions against CFTC-registered firms to ensure that they have the necessary capital, protect customer funds, and maintain adequate supervisory controls.

False Statements to the Commission - Protecting the integrity of information provided to the Commission by rigorous enforcement of Dodd-Frank’s prohibition against making false statements to the Commission or its staff.

Failure to File Required Reports – The Commission uses required reports to evaluate potential market risks and monitor compliance with CFTC requirements. These reports are also important to members of the public, many of whom rely on that information in forming trading strategies.

Speculative Position Limit Violations – The Commission continues to bring enforcement actions against market participants that hold positions in excess of CFTC-approved speculative position limits.

Prearranged Trading - The Commission filed and settled charges against several respondents for noncompetitive, prearranged trades that negated market risk and price competition and constituted fictitious sales.

Charges against Precious Metals Boiler Rooms - The CFTC also pursued the firms who solicited retail customers to buy precious metals in off-exchange leveraged, margined or financed transactions while acting as dealers for purported metal merchants, including Hunter Wise.

Other Fraud Actions

Cooperative Enforcement - During FY 2014, the Enforcement Division maintained its long-standing active cooperative enforcement work with federal and state criminal and civil law enforcement authorities, self-regulatory organizations, and international civil and criminal authorities. Approximately 95 percent of the Enforcement Division’s major fraud and manipulation cases filed in FY 2014 involved a parallel criminal proceeding. During the past year, judgments were entered in 12 federal criminal proceedings related to CFTC enforcement cases, which resulted in prison sentences against 17 persons and criminal restitution amounting to $793 million.

Note (from page 1)

^* This amount reflects the total monetary sanctions ordered in CFTC enforcement actions during FY 2014, not the total amount collected. The CFTC refers outstanding judgments to the U.S. Department of Justice or the U.S. Department of the Treasury for collection. The CFTC cautions that collection efforts may not result in the recovery of money because the wrongdoers may not have sufficient funds or assets.

Media Contact
Dennis Holden
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Last Updated: November 6, 2014