remarks before the International Futures Industry Conference,
Acting Chairman J. Christopher Giancarlo—who was just
nominated by President Trump to be permanent Chairman—talked
about the future of the Commodity Futures Trading Commission (CFTC)
on a wide range of regulatory issues, priorities and reforms. Among
them was enforcement. The CFTC, an independent rather than
executive agency, aggressively pursued enforcement actions for
violations of CFTC-enforced statutes and
regulations—including the prohibitions against fraud, market
manipulation and disruptive trading practices (e.g.,
"spoofing")—throughout the Obama administration.
See, for example, the CFTC's most recent annual
report. A question among energy industry participants (and
other commodities-based industries regulated by the CFTC) has been
whether a newly constituted Commission under the Trump
administration will do the same. Acting Chairman Giancarlo's
remarks make it clear that the answer is "yes." In the
key passage, he states:
A similar balance is appropriate for the CFTC's
Division of Enforcement (DOE), which is staffed by experienced and
decorated former prosecutors and, I can proudly say, is one of the
premier civil law enforcement arms of the federal government. Yet,
DOE also must look to benefit from cooperation and, where
appropriate, deference to civil and criminal capabilities of other
federal and state regulators and enforcement agencies.
But, as I mention the CFTC's Division of
Enforcement, let me take this moment to warn those who may seek to
cheat or manipulate our markets: you will face aggressive and
assertive enforcement action by the CFTC under the Trump
Administration. There will be no pause, let up or reduction in our
duty to enforce the law and punish wrongdoing in our derivatives
markets. The American people are counting on us. (Bold in
original version of speech on CFTC website)
Although the CFTC's focus in the coming years will
undoubtedly be influenced by three new Commissioners (once
President Trump nominates and the Senate confirms them), if Acting
Chairman Giancarlo is confirmed as permanent Chairman, his
statements make clear that tough enforcement will remain a CFTC
Like the CFTC, the Federal Energy Regulatory Commission (FERC)
currently has three openings. At present, there is still no
official word on who will be nominated for the open seats,
including the Chairman's seat—although many industry
reports say that nomination announcements are imminent. Until then,
the new FERC's approach to enforcement is necessarily a matter
of speculation. But market participants in the energy industry
might find it significant that the potential new Chairman of the
CFTC has just given an unambiguous endorsement of "aggressive
and assertive enforcement" under the Trump administration.
Also noteworthy, Acting Chairman Giancarlo states that elements
of the CFTC's market surveillance efforts—which are now
housed in the Division of Market Oversight—will be moved to
the Division of Enforcement to "strengthen our mission to
identify and prosecute violations of law and regulations, such as
spoofing, manipulation and fraud." While not necessarily
motivated by how other federal enforcement agencies organize and
manage their surveillance efforts, this CFTC restructuring will
make its Division of Enforcement look more like FERC's Office
of Enforcement. One of the more important aspects of FERC
Enforcement—which, since 2012, has significantly expanded its
natural gas and electric market surveillance capabilities—is
that the surveillance staff and the investigative staff are all
housed within the Office of Enforcement and that the analysts and
investigators work closely together on inquiries and
investigations. Acting Chairman Giancarlo states that housing
surveillance and enforcement together "will foster increased
efficiencies through knowledge sharing and cross training under
unified leadership; thus benefitting the Commission's
surveillance mission and enforcement responsibilities." Many
within FERC would say the same about their own agency's
integration of surveillance and enforcement.
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