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
0
1. The authority citation for part 12 continues read as follows:
Authority: 7 U.S.C. 2a(12), 12a(5) and 18.
0
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
[[Page 70276]]
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