CFTC to Shift Enforcement Actions to Administrative Courts
The CFTC plans to revive the use of administrative courts to bring enforcement actions for violations of the Commodity Exchange Act and CFTC regulations, according to recent remarks by Aitan Goelman, Director of the Division of Enforcement (reported here by Reuters). This marks a shift from the agency’s practice in recent years of prosecuting such cases almost exclusively before federal courts. The Commodity Exchange Act grants authority to the CFTC to prosecute cases before either forum and to seek civil penalties of up to $140,000 before administrative courts and $100,000 before federal courts for general violations (or triple the monetary gain of the violator in either forum; or up to $1,000,000 for manipulation or attempted manipulation).
The increased use of administrative enforcement proceedings would mimic the recent practice of the SEC, which gained expanded authority to use administrative proceedings under the Dodd-Frank Act. The SEC’s use of such proceedings has been challenged by a handful of defendants, with one district court earlier this month upholding the constitutionality of such use. The SEC enforcement chief remarked alongside Goelman that the use of administrative courts resolves matters more expeditiously and offers the benefit of judges who are better equipped to tackle complex legal matters. As for Mr. Goelman, the CFTC Director of Enforcement added that the use of administrative courts would lower enforcement costs for his cash-strapped agency, although he expects similar venue challenges from defendants.
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