Public Statements & Remarks

Supporting Statement of Commissioner Dan M. Berkovitz Regarding Sunoco Enforcement Action and Opposing “Bad Actor” Waiver

September 30, 2020

I support the Commission’s enforcement against Sunoco LP for the spoofing of the crude oil, gasoline, and heating oil futures markets.  However, I oppose the CFTC’s determination that Sunoco’s conduct should not result in any disqualifications under the “bad actor” provisions of the securities laws.  The CFTC has neither the authority to make this determination, nor the tools to adequately protect investors in the securities markets.

The Securities and Exchange Commission (“SEC”) is responsible for determining who is subject to registration requirements for the offer and sale of securities, and what type of misconduct warrants any disqualifications in the securities markets.  Various SEC regulations, including Regulations A and D, exempt companies from the requirement to register securities offerings with the SEC.[1]  “Bad actors” found to have committed certain violations of the securities laws are automatically disqualified from claiming such exemptions absent a determination by the SEC to provide a waiver.  SEC regulations also provide for automatic disqualification for certain violations of the Commodity Exchange Act.  However, under those SEC regulations, the automatic disqualification does not apply if the CFTC “advises” the SEC that disqualification under Regulations A and D should not arise as a consequence of the CFTC’s order.

Congress, however, has not authorized the CFTC—the federal derivatives regulator—to determine whether companies should be required to register securities offerings with the SEC.  Nor did it authorize the SEC to delegate this responsibility to the CFTC.[2]

Furthermore, the CFTC does not have any history of regulating these markets, nor does it have the same ability as the SEC to protect investors.  For example, the CFTC does not have the same authority as the SEC to require “bad actors” to undertake remedial measures to ensure the integrity of their conduct in the securities markets.

Any advice that the CFTC offers about compliance with securities registration requirements is, as the term indicates, purely advisory and has no effect on a firm’s qualifications under the securities laws.  For this reason, although I disagree with the Commission’s proffering of this advice, its inclusion does not affect my overall support of this enforcement action.

I look forward to continuing to work with the SEC to imminently resolve this issue.

I thank the staff of the Division of Enforcement for their work in this case.


[1] See 17 CFR § 230.251 (“Regulation A”); 17 CFR § 230.506 (“Regulation D”).

[2] For more detailed statutory background and analysis of legal authority, see Dissenting Statement of Commissioner Dan M. Berkovitz: In re Tower Research Capital LLC: Waiver of SEC “Bad Actor” Disqualifications (Nov. 7, 2019), available at; see also Supporting Statement of Commissioner Dan M. Berkovitz Regarding Historic Penalty against JPMorgan and Opposing “Bad Actor” Waiver (Sep. 29, 2020), available at