It was a record-breaking year for enforcement at the U.S. Commodity Futures Trading Commission, which announced today that it brought 99 actions in fiscal year 2011, an all-time high. Agency lawyers also opened more than 450 investigations in FY 2011, another record.
Fifty-five of the cases involved allegations of fraud such as Ponzi schemes or misstated financial statements. Another 23 cases arose from new regulations under the Dodd-Frank Act that require foreign exchange dealers and introducing brokers to register with the commission.
The Division of Enforcement also touted its work with federal and state criminal and civil law enforcement authorities. During FY 2011, more than 70 indictments and convictions were obtained in criminal cases related to CFTC enforcement actions.
In all, CFTC lawyers won orders imposing more than $290 million in civil penalties and $160 million in restitution and disgorgement.
“As these figures reflect, the dedicated men and women of the CFTC’s Division of Enforcement are working every day to rid the markets of fraud, manipulation and other abuses, and will continue to do so under our new Dodd-Frank authority,” said David Meister, the director of the Division of Enforcement, in a news release.
A one-time prosecutor in the Southern District of New York, Meister was appointed by CFTC Chairman Gary Gensler in November 2010, replacing acting director Stephen Obie, who returned to his position as regional administrator of the CFTC’s New York office. Meister joined the agency from Skadden, Arps, Slate, Meagher & Flom, where he was a partner in the white collar group.
Overall, CFTC enforcement actions in 2011 were up 74% over 2010, when 57 actions were filed. The 2010 total represented a 14% increase over FY 2009.
It seems likely the upward trend will continue as other Dodd-Frank enforcement authorities kick in. These include the addition of fraud-based manipulation to the CFTC’s existing anti-manipulation authority, prohibitions targeting disruptive trading practices and other misconduct on registered entities, anti-fraud and anti-manipulation authority over swaps, clarified jurisdiction with respect to retail foreign currency transactions and new authority over cash commodity transactions such as those involving precious metals.
Contact Jenna Greene at firstname.lastname@example.org.