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Strategic Goal Two–Protect Market Users and the Public

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Growth in the futures and swaps markets carries an accompanying increased risk of fraud for market users and the public. The trend toward electronic trading platforms as well as the expanding complexity of trading instruments has challenged the Commission to reconfigure its ability to identify, investigate, and prosecute all parties involved in violating applicable laws and regulations. The difficulty of this challenge will only increase with the expansion of the Commission’s oversight duties to swaps markets pursuant to Dodd-Frank.

Over the years, the Commission has prosecuted a number of cases involving manipulations or attempted manipulations of commodity prices. The Sumitomo copper case and the Hunt brothers silver case are well-known examples of manipulation. Since 2001, the Commission charged over 80 companies and individuals and assessed approximately $458 million in penalties for attempting to manipulate, or for manipulating energy markets. A variety of administrative sanctions are available to the Commission, such as bans on futures trading, civil monetary penalties, and restitution orders. The Commission may also seek Federal court injunctions, asset freezes, and orders to disgorge ill-gotten gains. On average, the Commission has over 150 investigations open at any particular time, however in FY 2010 an unprecedented 453 investigations were opened. If evidence of criminal activity is found, matters are referred to state or Federal authorities for criminal prosecution.

In FY 2012, the Commission requests $70.0 million to fund its efforts to reach the following outcomes of Strategic Goal Two:

Breakout of Goal Two Request by Outcome


Breakout of Goal Two Request by Outcome
($ in thousands)
Goal Two Outcomes FY 2011 FY 2012 Change
Budget
Request
FTE Budget
Request
FTE Budget
Request
FTE
2.1 Violations of Federal commodities and swaps laws are detected and prevented. $28,300 108 $46,650 146 $18,350 38
2.2 Commodity professionals meet high standards. 8,130 32 17,667 56 9,537 24
2.3 Customer complaints against persons or firms falling within the jurisdiction of the Commodity Exchange Act are handled effectively and expeditiously. 4,470 18 5,722 18 1,252 0
Total Goal Two $40,900 158 $70,039 220 $29,139 62

 

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