Investigations under the Commodity Exchange Act
44 Pages Posted: 3 Nov 2010
Date Written: Summer 1979
Trading interest in commodity futures and related transactions has grown rapidly in recent years. The 1976 dollar value of the commodities for which commodity futures contracts were traded was $676 billion, “more than three times the value of stocks traded on the New York and American Stock Exchanges combined.” In 1978, the value of commodities for which commodity futures contracts were traded was estimated at $1.5 trillion. Trading in commodity options and leverage contracts has added even greater dimensions to the futures industry.
The Commodity Futures Trading Commission (CFTC), one of the newer federal regulatory agencies, was granted “exclusive” jurisdiction over commodity futures transactions by the Commodity Exchange Act (CEA). The CFTC was also granted significant enforcement authority to enforce compliance with the Act. For example, the CFTC is authorized to seek injunctive relief, to suspend or revoke the registration of persons registered under the Act, prohibit persons from trading on contract markets and impose civil penalties of up to $100,000 for each violation.
The CFTC was also granted broad investigative authority to support its enforcement efforts. In fiscal year 1977 alone, the Commission’s Division of Enforcement initiated 151 investigations, which concerned nearly every aspect of the futures industry. This Article will review the CFTC’s investigative authority, its investigative practices and cases relating to CFTC investigations.
Keywords: Commodity Exchange Act (CEA), Commodity Futures Trading Commission (CFTC), futures contracts, enforcement, authority, compliance, investigations, trade practice, audits, reporting system, trader, market surveillance, inspection, fingerprinting, criminal prosecution, immunity, confidentiality
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