Washington, D.C.—Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham released the following statement regarding the CFTC’s administrative order regarding Trafigura Trading LLC announced today: 

“While I commend the CFTC Division of Enforcement for their efforts to pursue manipulation in global markets, the Commission inappropriately tacks on an additional charge to fly under the radar with a wholly new interpretation of a 7-year-old rule that has never been the subject of a staff advisory or other notice to the public since it was issued. I’m incredibly grateful for those whistleblowers that report bad actors–often at great risk to their own wellbeing. Of course, we should always encourage open lines of communications and prevent whistleblowers from being silenced. But this settlement order essentially wordsmiths job offer letters and other employment-related agreements with boilerplate confidentiality provisions for commodity firms around the world that have no CFTC registration requirements, and other market participants. Because the settlement order not only inaccurately uses the term “non-disclosure agreements,” but also fails to include important details about what contractual language the CFTC thinks violates Regulation 165.19, companies and lawyers all over the world are left playing a guessing game to revise tens or hundreds of thousands of documents for both current and former employees that fail to include a carve-out for the magic words “Commodity Futures Trading Commission.” I made numerous requests for examples of the agreements that the CFTC found violative, and I received only one job offer letter and one separation agreement. Only the job offer letter had language requiring written pre-approval from the firm regarding confidential information, similar to prior SEC—not CFTC—enforcement actions, but it also had two savings clauses that voided any language that may violate any law or regulation whether current or prospective. In addition, the firm did not enforce these confidentiality provisions and the separation agreement actually required cooperation in government investigations. Let me be clear: These were not “non-disclosure agreements” as is commonly understood by in-house lawyers and external legal counsel. The Commission once again overreaches in its zeal to fine millions of dollars for technical issues like nitpicking legal documents in the absence of a firm taking any action to “enforc[e] [] confidentiality and pre-dispute arbitration clauses respecting actions by potential whistleblowers in any pre-employment, employment or post-employment agreements” as stated in the Commission’s only interpretation of Regulation 165.19(b) to date, in its 2016 proposed rulemaking. As I keep reminding the Commission, we are not the SEC, and the SEC’s orders or precedents do not provide sufficient notice to the public for CFTC interpretations because we are a different agency with a different statute, regulations, and markets. 

“In addition, I could not vote on this matter because I did not have sufficient evidence to determine there was a reasonable basis for the alleged charges, even after repeated requests. Yet, this case was called for a vote anyway while I was still attempting to access and review the record. These actions are yet another example of why I have called for a GAO study on the CFTC’s internal procedures.”