Commodity Futures Trading Commission.
Final rule.
The Commodity Futures Trading Commission (Commission) is amending Rule 143.8, which governs the maximum amount of civil monetary penalties, to adjust for inflation. This rule sets forth the maximum, inflation-adjusted dollar amount for civil monetary penalties assessable for violations of the Commodity Exchange Act (Act) and Commission rules and orders thereunder. The rule, as amended, implements the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996.
October 23, 2000.
Lawrence B. Patent, Associate Chief Counsel, or Julie R. Windhorn, Law Clerk, Division of Trading and Markets, Commodity Futures Trading Commission, 1155 21st Street, NW., Washington, DC 20581. Telephone Number: (202) 418–5450.
The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement Act of 1996 (DCIA),
DCIA also requires that the range of minimum and maximum CMPs be adjusted, if applicable. This is not applicable to the Commission because, for the relevant CMPs within the Commission's jurisdiction, the Act provides only for maximum amounts that can be assessed for each violation of the Act or the rules and orders thereunder; the Act does not set forth any minimum penalties. Therefore, the remainder of this release will refer only to CMP maximums.
The purpose of [the FCPIAA] is to establish a mechanism that shall—
(1)allow for regular adjustment for inflation of civil monetary penalties;
(2) maintain the deterrent effect of civil monetary penalties and promote compliance with the law; and
(3) improve the collection by the Federal Government of civil monetary penalties.
The inflation adjustment requirement applies to:
(A) (i) is for a specific monetary amount as provided by Federal law; or
(ii) has a maximum amount provided for by Federal law; and
(B) is assessed or enforced by an agency pursuant to Federal law; and
(C) is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts. 28 U.S.C. 2461 note.
The Act provides for CMPs that meet the above definition, and are therefore subject to the inflation adjustment, in three sections: section 6(c) of the Act, section 6b of the Act, and section 6c of the Act.
Penalties may be assessed pursuant to Section 6(c) of the Act, 7 U.S.C. 9, against “any person” found by the Commission to have—
(1) engaged in the manipulation of the price of any commodity or futures contract;
(2) made willfully a false or misleading statement or omitted a material fact in an application or report filed with the Commission; or
(3) violated any provision of the Act or of the rules, regulations or orders thereunder.
Penalties may be assessed pursuant to Section 6b of the Act, 7 U.S.C. 13a, against: (1) Any contract market that the Commission finds is not enforcing or has not enforced its rules; or (2) any contract market, or any director, officer, agent, or employee of any contract market, that is violating or has violated any of the provisions of the Act or any of the rules, regulations, or orders thereunder.
Penalties may be assessed by “the proper district court of the United States or the proper United States court of any territory or other place subject to the jurisdiction of the United States” pursuant to section 6c of the Act, 7 U.S.C. 13a–1, against “any person found * * * to have committed any violation [of any provision of the Act or any rule, regulation or order thereunder].”
The cost-of-living adjustment is defined by the FCPIAA, as amended by the DCIA, as the amount by which the Consumer Price Index for the month of June of the calendar year preceding the adjustment exceeds the Consumer Price Index for the month of June of the calendar year in which the amount of such civil monetary penalty was last set or adjusted pursuant to law.
The Commission's initial inflation adjustment, reflected in the current Rule 143.8, was published in the
(5) multiple of $10,000 in the case of penalties greater than $100,000 but less than or equal to $200,000; and
(6) multiple of $25,000 in the case of penalties greater than $200,000.”
Calculations of the Commission's inflation-adjusted CMP maximums are the following:
(497.9/469.5)×$110,000=$116,653.89
(497.9/469.5)×$550,000=$583,269.44
When rounded according to the statutory requirements, the inflation-adjusted CMP maximums would be $120,000 and $575,000.
This amendment to Rule 143.8 will implement a statutory change regarding agency procedure or practice within the meaning of 5 U.S.C. 553(b)(3)(A) and therefore does not require notice.
(A) * * * interpretive rules, general statements of policy, or rules of agency organization, procedure or practice; or
(B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary or contrary to the public interest.
While higher maximum CMPs may expose persons to potentially higher financial liability, in nominal terms, for violations of the Act or Commission rules or orders thereunder, the rule amendments do not require that the maximum penalty be imposed on any party, nor do they alter any substantive due process rights that a party has in an administrative proceeding or a court of law that protect against imposition of excessive penalties. Further, the rule amendments only apply to violations of the Act, Commission rules or Commission orders that occur after the effective date of these amendments.
The Regulatory Flexibility Act, 5 U.S.C. 601
While the Commission recognizes that certain persons assessed a CMP for violating the Act or Commission rules or orders may be small businesses, the rule does not mandate the imposition of the maximum fixed CMP set forth in the rule on any party. As is currently the case, the imposition of the maximum fixed CMP will occur only where the administrative law judge, the Commission or a Federal court finds that the gravity of the offense warrants a CMP in that amount.
The rule should not increase in real terms the economic burden of the fixed maximum CMPs set forth in the Act. Instead, the rule implements a statutory requirement that agencies adjust for inflation existing CMPs so that the real economic value of such penalties, and therefore the Congressionally-intended deterrent effect of such CMPs, is not reduced over time by inflation. Nor does the rule impose any new, affirmative duty on any party or change any existing requirements and thus no party who is currently complying with the Act and Commission regulations will incur any expense in order to comply with the new rule. Therefore, the Commission believes that this final rule will not have a significant economic impact on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3507(d), which imposes certain requirements on federal agencies, including the Commission, in connection with their conducting or sponsoring any collection of information as defined by the PRA, does not apply to this rule. The Commission
Civil monetary penalty, Claims.
7 U.S.C. 9 and 15, 9a, 12a(5), 13a, 13a–1(d) and 13(a); 31 U.S.C. 3701–3719; 28 U.S.C. 2461 note.
(a) Unless otherwise amended by an act of Congress, the inflation-adjusted maximum civil monetary penalty for each violation of the Commodity Exchange Act or the rules or orders promulgated thereunder that may be assessed or enforced by the Commission under the Commodity Exchange Act pursuant to an administrative proceeding or a civil action in Federal court will be:
(1) For each violation for which a civil monetary penalty is assessed against any person (other than a contract market) pursuant to section 6(c) of the Commodity Exchange Act, 7 U.S.C. 9:
(i) For violations committed between November 27, 1996 and October 22, 2000, not more than the greater of $110,000 or triple the monetary gain to such person for each such violation; and
(ii) For violations committed on or after October 23, 2000, not more than the greater of $120,000 or triple the monetary gain to such person for each such violation;
(2) For each violation for which a civil monetary penalty is assessed against any contract market or other person pursuant to section 6c of the Commodity Exchange Act, 7 U.S.C. 13a–1:
(i) For violations committed between November 27, 1996 and October 22, 2000, not more than the greater of $110,000 or triple the monetary gain to such person for each such violation; and
(ii) For violations committed on or after October 23, 2000, not more than the greater of $120,000 or triple the monetary gain to such person for each such violation; and
(3) For each violation for which a civil monetary penalty is assessed against any contract market or any director, officer, agent, or employee of any contract market pursuant to section 6b of the Commodity Exchange Act, 7 U.S.C. 13a:
(i) For violations committed between November 27, 1996 and October 22, 2000, not more than $550,000 for each such violation; and
(ii) For violations committed on or after October 23, 2000, not more than $575,000 for each such violation.
(c) Unless otherwise amended by an act of Congress, the penalties set forth in this section or any penalty adjusted for inflation in the future pursuant to paragraph (b) of this section shall be applicable only to violations of the Commodity Exchange Act, Commission rules, or Commission orders which occur after the date on which such future inflation adjustments become effective.