Financial Lobbyists Seek Softer Rules on Policing Fraud
In a Dec. 28 letter to the commission, three trade industry trade groups, FIA, ISDA, and SIFMa, warned the CFTC to tread lightly as it writes the regulations regarding trading practices that disrupt markets, manipulate prices or amount to fraud.
The associations are particularly concerned with the commission's proposed definition of fraud. The CFTC, writing a proposed "antimanipulation" rule in November, said it wants to set "broad" criteria for judging traders. The commission likely will take aim at schemes that are intended to mislead investors or manipulate the market. The commission also plans to punish "reckless" behavior. The industry groups want the commission to raise the bar to proving fraud to "extreme recklessness."
Dodd-Frank gave the commission the authority to ban other similar practices. Freddie Mac, the government-controlled housing finance giant, has proposed adding some to the commission's watch list. In a Jan. 3 letter to the commission, Freddie denounced so-called front running - where banks trade on confidential information they receive from a client's trading order.
Publication
NY Times blog
Date
January 7, 2011
Cross References (links may require a Cabinet subscription)
Dodd-Frank Act, Title VII, Sec. 747