Any CFTC penalties imposed against a broker fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) established in 1974. This regulatory US agency acts independently by overseeing the derivatives markets on the stock exchange. Driviatiees include options, swaps, contracts, and futures. 

When you are targeted by the CFTC, you may be under suspicion for manipulating trades or committing similar fraudulent activities. Naturally, you don’t want to reach the point where you are assessed penalties and need a lawyer’s help to resolve or dispute the matter. However, if you do reach this juncture, you’ll need to act immediately. 

The best time to review possible CFTC allegations is when you’re under investigation. That is when you need to contact a criminal defense law firm such as Spodek Law Group right away. In the meantime, it helps to know what penalties the CFTC may impose if you’re convicted of misconduct.

Why You May Be Penalized by the CFTC

The CFTC’s enforcement division investigates alleged violations relating to the Commodity Exchange Act or CEA. Some of the infractions may include:

The perpetration of a Ponzi scheme
Using deceptive practices in trading commodities
Improperly marketing options and futures on U.S. exchanges
Engaging in disruptive trading*

*Disruptive trading may include showing a reckless disregard for orderly trading during a closing period or spoofing - bidding with the intent of canceling the  bid before it is executed. The Office of the Director of the CFTC enforcement division oversees the investigations.

Once the enforcement officers complete an investigation the division may recommend that administrative proceedings be implemented to provide ancillary or injunctive relief.

*Injunctive relief, also known legally as an injunction, represents a remedy that prevents a perpetrator of a crime from performing certain activities. It is often used as a remedy if the court fears irreparable harm will result if the relief is not imposed.

Common CFTC Penalties

1. Suspending or Revoking Trading Privileges

One of the injunctions imposed for committing a CFTC violation is the suspension or revocation of trading privileges. If the misconduct is serious, the litigant may be barred from making trades or conducting business on the exchange. Therefore, the Commission may obtain a restraining order or injunction to stop the accused from committing further violations.

2. Appointing a Receiver

In some CFTC cases, the court may appoint a receiver to safeguard the property or assets managed by a broker or brokerage business. Therefore, appointing a receiver is recommended if the court fears that the broker or company may squander the victim’s assets.

3. The Payment of Restitution

Restitution serves as a form of compensation to a victim. It is paid to cover the damages and financial losses for unscrupulous trades or unethical trading practices.

4. The Freezing of Assets

If the government or CFTC believes your assets were acquired through criminal activity, law enforcement officials, through a court order, can freeze the assets. Therefore, you cannot use the property or your bank account as long as your assets remain frozen.

5. Disgorgement of Illegally Acquired Monies or Benefits

Disgorgement is a legal term that mandates repayment of stolen monies or gains that were received  through unethical or unlawful transactions. These repayments are often made, including penalties or interest, to the victim. 

This type of punishment is designed to offer financial relief to the victim and therefore focuses less on the accused and his or her behavior in the crime.

Review Your CFTC Defense with an Experienced Attorney

If you’ve been convicted of a CFTC offense or you’re under investigation, review your case with a lawyer as soon as possible. The sooner you act, the sooner you can defend your case to realize a more positive outcome.