The Commodity Futures Trading Commission brought 49 enforcement-related actions in the fiscal year that ended Sept. 30, 2017, including significant actions to root out manipulation and spoofing and to protect retail investors from fraud, according to the agency’s enforcement results for FY 2017.
CFTC enforcement actions included 29 administrative cases, 17 civil injunctive cases, and three non-prosecution agreements. The manipulation, attempted manipulation, false reporting, and disruptive trading actions included eight actions involving spoofing (including three non-prosecution agreements); two actions involving attempted manipulation; one action involving both spoofing and attempted manipulation; and one action involving a manipulative or deceptive device.
Many of the enforcement actions—12 in total—involved retail fraud. Some enforcement actions, however, involved multiple types of charges. For example, three of the retail fraud actions also involved illegal, off-exchange transactions; and four actions against registrants included a failure to supervise violation.
The CFTC also pursued significant and complex litigation, including cases charging manipulation, spoofing, and unlawful use of customer funds. The CFTC obtained orders totaling $412,726,307 in restitution, disgorgement, and penalties.
Specifically, in FY 2017, the CFTC obtained $333,830,145 in civil monetary penalties and $78,896,162 million in restitution and disgorgement orders. Of the civil monetary penalties imposed, the CFTC collected and deposited at the U.S. Treasury more than $265 million.
In addition to its enforcement actions, the CFTC also implemented enhancements to increase the effectiveness and strength of the agency’s enforcement program. New rules and procedures were put in place to better protect whistleblowers and to further incentivize whistleblowers to come forward.
The CFTC also realigned the market surveillance unit under the Division of Enforcement (DOE). Under the new alignment, the market surveillance unit conducts market analysis to confirm market integrity and identifies areas that may warrant enforcement inquiry. DOE also issued new cooperation advisories, bringing DOE’s cooperation program in line with other law enforcement agencies and will serve as a powerful enforcement tool going forward. Each of these developments will substantially strengthen the CFTC’s enforcement program, the CFTC stated.
“The integration of the market surveillance unit into the Division of Enforcement, the strengthening of our whistleblower protections, and the development of our cooperation program will open new avenues through which we can identify misconduct, hold wrongdoers accountable, and deter future violations of the law,” James McDonald, CFTC’s Director of Enforcement, said in a statement.
During FY 2017 the CFTC, through DOE, continued its successful benchmark rate anti-manipulation enforcement; brought significant actions to combat disruptive trading practices, including spoofing; and prosecuted retail fraud, including fraud involving virtual currency markets.
DOE also continued its robust cooperation with foreign regulators and law enforcement officials to combat the international components of many of its investigations. In addition, DOE continued and intensified its already close cooperation with the criminal authorities by referring appropriate matters to its criminal enforcement counterparts for consideration of criminal actions, including prison time for culpable individuals.