Strategic Goal Two–Protect Market Users and the Public
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:
- Violations of Federal commodities and swaps laws are detected and prevented⎯with an FY 2012 performance goal of increasing the probability of violators being detected and sanctioned.
- Commodity professionals involved in both futures and swaps trading meet high standards⎯with an FY 2012 performance goal of zero unregistered, untested, or unlicensed commodity professionals required to be registered.
- Customer complaints against persons or firms registered under the CEA are handled effectively and expeditiously⎯with an FY 2012 performance goal of resolving: voluntary proceedings customer complaints within one year from the date filed; summary and formal proceedings customer complaints within one year and six months from the date filed; and resolving appeals within six months from the date filed.
Breakout of Goal Two Request by Outcome
| 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 |