The CFTC was established in 1974 as an independent agency to supervise futures trading and to protect investors by taking legal action against fraudsters. The CFTC was also granted more powers than its predecessor, the Commodity Exchange Authority. The CFTC is made up of seven divisions: clearing and risk, enforcement, market oversight, market participants division, division of data, legal division, and division of administration. The objective of the CFTC as the Federal government’s regulator is as follows:
The CFTC initially regulated the markets of agricultural commodities such as wheat, corn, and cotton. However, in the course of time, the CFTC took charge of supervising the contracts of energy, metals, crude oil, heating oil, gasoline, precious metals, and even financial products (interest rates, stock indices, and currencies). The 2008 credit crisis led to the inclusion of the $400 trillion swap market, dominated by large firms and financial institutions, under its supervision.
The CFTC does not involve itself in the
Irrespective of whether an individual or organization is an NFA member or not, the CFTC has the right to get involved in case of
Any individual or organization willing to do business as futures professionals should compulsorily register themselves with the CFTC. Registration process enables a clear assessment the financial health of the individual or organization. Furthermore, subject to federal regulations, the activities of a registered individual or entity can be tracked quite easily.
The term futures professional refers to an individual or organization with any of the following status:
It should be noted that any individual or entity willing to pursue
The CFTC identifies fraud by administering the activities of designated contract markets, swap execution facilities, derivatives clearing organizations, swap data repositories, swap dealers, futures commission merchants, and commodity pool operators. Furthermore, the agency immediately acts on individuals or entities who fail to comply with the regulations discussed above. The CFTC also relies heavily on its whistleblower program, incentivizing information submission regarding regulatory breaches in companies.
The CFTC also acts on complaints received from the public and other market participants. In this regard, the online NFA BASIC database enables an individual to check whether a Forex broker is registered with the CFTC in any capacity. The CFTC also publishes the Red list, which includes the list of Forex brokers who accept the US clients illegally, without being authorized by the Commission.
In April 2021, the CFTC fined Glenn Olson $1 million for for his role in a binary options fraud that harmed US customers involving Blue Bit Banc, a United Kingdom company, and Blue Bit Analytics, Ltd, located in Turks and Caicos.
In March 2021, the CFTC filed a civil enforcement action in the Washington District Court against Easterday Ranches Inc. and Cody Easterday, its co-owner and formerly president, for a fraud involving selling non-existent head of cattle to a beef processor, making false statements to an exchange, and violating exchange-set position limits.
In April 2021, the CFTC banned Jozef Gherman of Florida and J Squared LLC for 10 years from registering with CFTC and trading in any of the
In May 2021, SummerHaven Investment Management LLC was ordered to cease and desist from further violations in wash sales and non-competitive transactions on the InterContinental Exchange (ICE) and various Chicago Mercantile Exchange (CME) exchanges on top of a $500,000 fine.
Back in 2011, the CFTC charged Lyndon Lydell Parrilla and Green Tree Capital for a fraud in a
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