Federal Register: CFTC Makes Annual Adjustments to Civil Monetary Penalties for CEA and CFTC Violations
Commentary by Bob Zwirb
To adjust for inflation, the CFTC amended its rule that governs the maximum amount of civil monetary penalties.
The rule sets forth the maximum, inflation-adjusted dollar amount for civil monetary penalties that can be assessed for violations of the CEA and CFTC rules, regulations and orders. In general, most common violations will rise from the current ceiling of $152,243 to $154,734 per violation, and from $1,098,190 to $1,116,156 for manipulation and false reporting.
This change is effective as of January 23, 2017.
Commentary
Readers should consult the table on page 7644 of the Federal Register release for a more detailed listing of penalty ceilings adjusted for inflation, which vary by type of violation. Readers also should keep in mind that the setting of maximum ceilings is more an art than a science. First, the number of violations can be based not only on conduct but also by duration; i.e., the same wrongful conduct carried out on more than one day can result in multiple violations at the CFTC’s discretion so that a ten-day spree of bad conduct can result in a fine of $154,734 times ten. Second, under the rules, the CFTC has the choice of basing a penalty on the GREATER of the ceiling per violation OR “triple the monetary gain to such person for each such violation.” So if a person gains $100,000 from his violation, the CFTC can treble that amount and impose a fine of $300,000 instead of $154,734.