I respectfully dissent from the proposed amendments to the Reporting Form for Investment Advisers to Private Funds and Certain Commodity Pool Operators and Commodity Trading Advisors (Form PF).  The proposed joint amendments, an action of the CFTC as well as the SEC, seem to impose overly broad obligations that would be unnecessarily burdensome and would present potentially significant operational challenges and costs without a persuasive cost-benefit analysis under the Commodity Exchange Act (CEA).[1]  In a time of economic challenges, including rising inflation, we must be careful when considering proposals that could inhibit positive economic activity that supports American businesses and jobs.  I look forward to hearing from commenters as to the proposed amendments, including practical implementation issues and the relative costs and benefits of the proposal.

I am respectfully voting to dissent on the joint SEC/CFTC proposed rulemaking to amend Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds.  The class of registered investment advisers required to submit Form PF includes those that also are registered with the CFTC as commodity pool operators or commodity trading advisors. 

As I previously stated in my concurrence to the CFTC’s recent Request for Information on Climate-Related Financial Risk (“Climate RFI”),[1] I support efforts to engage market participants, industry, and the general public in our policy-making process.  And I agree that after a decade of experience with Form PF, it is appropriate to evaluate possible amendments.  If improvements can be made that would enable us to collect more efficiently data that we truly need to fulfill our responsibilities, while reducing unnecessary burdens on those required to supply that data, we should...

As a U.S. financial markets regulator and a member of the Financial Stability Oversight Council (FSOC), the Commission has a critical responsibility to monitor, identify, and respond to systemic risks and emerging threats to U.S. financial stability.  I support the proposed amendments to Form PF because they will enhance one of the Commission’s tools to fulfill that critical responsibility and facilitate our regulatory oversight of private funds.[1]

One lesson from the financial crisis was the risk of contagion to U.S. financial markets from private-fund activities, strategies, and exposures, including those related to novel or complex derivatives.  This was evident with the failure of Bear Stearns’ structured credit funds in the lead-up to the financial crisis, and more recently, with the failure of Archegos Capital Management.  These examples, and others, highlight the necessity for U.S. financial regulators to have visibility into funds’ activities and...

Washington, D.C. — The Commodity Futures Trading Commission today voted to jointly propose amendments to Form PF with the Securities and Exchange Commission (SEC), as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Form PF is the confidential reporting form for certain investment advisers to private funds that are registered with the SEC, including those also registered with the CFTC. The SEC also approved the proposed amendments at a public meeting today. The proposed amendments to Form PF reflect the lessons learned over the past decade of private funds filing with the SEC. 

The proposed amendments are designed to improve the utility of Form PF data to enhance the Financial Stability Oversight Council’s ability to assess systemic risk as well as to bolster the oversight of private fund advisers in light of the growth of the private fund industry. Specifically, the joint proposal would amend Form PF’s general instructions as well...

I support extending the no-action relief originally granted in 2017 in Commodity Futures Trading Commission (CFTC or Commission) Letter No. 17-37 (CFTC Letter 17-37)[1] and subsequently extended in 2019 in CFTC Letter No. 19-19 (CFTC Letter 19-19, and collectively with CFTC Letter 17-37, the CFTC Letters).[2]  The CFTC Letters provide market participants with relief from certain position aggregation requirements in Commission Regulation 150.4.[3]  I appreciate that extending that relief will provide certainty to impacted market participants for an additional three years.  However, the certainty that market participants seek, and that the Commission owes them, should be provided by the Commission fixing unworkable rules rather than using no-action relief to “kick the can down the road” for another three years. 

Just recently, I highlighted the need for the Commission to address unworkable regulations applicable to swap execution facilities instead of...

Washington, D.C. — The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) today announced it has issued a no-action letter temporarily extending CFTC Staff Letter No. 19-19, regarding certain position aggregation requirements, which expires August 12. CFTC Staff Letter No. 22-09, issued today, provides that DMO will not make an enforcement referral to the Commission with respect to CFTC Regulation 150.4, subject to certain conditions, including compliance with:

Commissioner Kristin N. Johnson to host a roundtable for CFTC Staff on digital assets and financial inclusion with opening remarks by Chairman Behnam and closing remarks by CFTC Chief Diversity Officer Tanisha Cole Edmonds .

Washington, D.C. — The Commodity Futures Trading Commission today issued a customer advisory warning the public to thoroughly research potential investments in over-the-counter foreign exchange (OTC forex). The new advisory, Eight Things You Should Know Before Trading Forex, provides potential investors with eight cautionary tips about the risks of trading OTC forex. To help protect themselves against fraud, the advisory encourages potential investors to thoroughly research an OTC forex dealer before making any deposits or sharing personal information. It also outlines what forex dealer registration entails, and why it matters, as well as common signs of fraudulent OTC forex websites.

The CFTC has seen a growing number of complaints from customers who deposited money into accounts with unregistered retail OTC forex dealers, but later were unable to withdraw their principal or earnings. There are several tactics fraudulent dealers commonly use, including, soliciting...

Commissioner Caroline D. Pham will participate in a keynote fireside chat, “Roadmap for Future Regulation of Digital Assets.” She will also speak at multiple events during Korea Blockchain Week, including “Empowering Women’s Leadership for a Better Future” and “Global Symposium on Crypto Regulation Harmonization.”

Washington, D.C. — Commodity Futures Trading Commission Chairman Rostin Behnam, sponsor of the CFTC’s Agricultural Advisory Committee (AAC), is seeking nominations for AAC membership and the submission of public input on the AAC’s upcoming priorities through a formal request published in today’s Federal Register. The deadline for submissions is September 7, 2022.

Though public meetings, the AAC advises the Commission on agricultural derivatives market regulatory issues and priorities that are of importance to producers, processors, consumers, and other interested stakeholders. The AAC is authorized to submit reports and recommendations to the Commission.   

“The AAC’s mission is particularly important in light of recent environmental developments and geopolitical events affecting the agricultural markets,” said Chairman Behnam. “Sustained drought conditions in the U.S. and current conflicts abroad threaten to impact not just American farmers, ranchers,...

Washington, D.C. — The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the District of Hawaii against Gregory Demetrius Bryant, Jr., formerly of Hawaii, for fraudulent solicitation, misappropriation, operation of an unlawful commodity pool, and failure to register with the CFTC.

According to the complaint, Bryant fraudulently solicited approximately $426,000 from at least 35 participants for pooled futures and foreign currency (forex) trading—misappropriating at least $356,000 to pay personal expenses, including international travel, shopping, and rent, as well as at least $66,000 to make Ponzi payments to conceal and further his fraudulent scheme.

Case Background

The complaint alleges that since approximately September 2016 through at least June 2020, Bryant—while using the alias “Gregory Surrey England,” purported president of the nonexistent company “Surrey Libor Capital, LLC”—falsely guaranteed...

Washington, D.C. — The Commodity Futures Trading Commission today announced that Judge Gregory A. Presnell of the U.S. District Court for the Middle District of Florida issued an order granting a permanent injunction against Ronald Montano, a resident of St. Cloud, Florida, and Montano Enterprises LLC (MEL), and requiring them to pay a combined $2.5 million in restitution and civil monetary penalty for solicitation fraud in connection with binary options trading.

The order specifically requires Montano and MEL to pay restitution in the amount of $825,000 and a civil monetary penalty of $1.675 million. Montano and MEL are also ordered to cease and desist from further violating the Commodity Exchange Act (CEA) and CFTC regulations, from trading on or subject to the rules of any CFTC-registered entity, and from engaging in any activities requiring registration with the CFTC.

The court’s order stems from a CFTC complaint filed on September 27, 2018, charging...

September 15 to October 15 is National Hispanic American Heritage Month The Library of Congress, National Archives and Records Administration, National Endowment for the Humanities, National Gallery of Art, National Park Service, Smithsonian Institution and United States Holocaust Memorial Museum join in paying tribute to the generations of Hispanic Americans who have positively influenced and enriched our nation and society.

Washington, D.C. — The Commodity Futures Trading Commission today announced the filing of an enforcement action in the U.S. District Court for the Northern District of Texas, charging defendants Rudy Avila and six U.S. and Costa Rican companies with fraudulent solicitation to trade in commodity futures, options on commodity futures, and retail off-exchange foreign currency (derivatives and forex), misappropriation of funds, and issuing false statements.

The six companies charged are The L.I.F.T. Group LLC (LIFT), CIG Internacional Sociedad Anónima ( CIG) and Trading Technologies Group Sociedad Anónima (TTG) organized in Costa Rica, Trading Ventures Group, LLC (TVG), Capital Ventures Group, LLC (CVG), and Ventures Group, LLC (VGL.). The complaint also charges CIG and TVG with failure to register as Commodity Trading Advisors (CTA). 

In the litigation against the defendants, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent...

Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Cody Malosi Wilson of Idaho Falls, Idaho for failing to register as a commodity pool operator (CPO) and failing to comply with CFTC regulations regarding CPOs. The order requires Wilson to pay a $150,000 civil monetary penalty and to cease and desist from any further violations of the Commodity Exchange Act (CEA) or CFTC regulations, as charged.

Case Background

The order finds that from approximately August 2015 to October 2018, Wilson operated commodity pools that he ran under various names, including Young Millionaires, Simple Wealth, and Simple Wallet. In connection with those pools, Wilson solicited and accepted funds from pool participants for the purpose of trading binary options on foreign currency pairs. Wilson used interstate commerce to operate the pools and solicit and accept funds from pool participants, but failed to...

Washington, D.C. — CFTC Commissioner Dan M. Berkovitz, the sponsor of the Energy and Environmental Markets Advisory Committee (EEMAC), today announced that the EEMAC will hold a public meeting on Wednesday, September 15, 2021. The meeting will begin at 9:00 a.m. (EDT) and be held via videoconference in accordance with the agency’s implementation of social distancing due to the COVID-19 (coronavirus) pandemic.

On June 3, 2021, the EEMAC met to discuss how the derivatives markets can facilitate the transition to a low-carbon economy, including the status of carbon reduction through cap-and-trade and other carbon trading market mechanisms. The discussion at the June 3rd meeting included a proposal to form an EEMAC subcommittee to provide a report to the EEMAC on guiding principles for the design of the derivatives and underlying cash markets for environmental products, such as carbon allowances and offsets, that are used to address greenhouse gas emissions. At this meeting,...

Washington, D.C. —  The Commodity Futures Trading Commission announced today that the U.S. District Court for the Northern District of Georgia entered an order granting the CFTC’s motion for entry of default judgment against defendants Silver Star FX, LLC d/b/a Silver Star Live (SSL), a former New Mexico limited liability company, Silver Star Live Software LLC (SSLS), a Florida limited liability company, and David Wayne Mayer (known by the pseudonym “Quicksilver”) of Roswell, Georgia. The order finds that all three defendants are liable for solicitation fraud in connection with forex transactions, Commodity Trading Advisor (CTA) fraud, as well as multiple CFTC registration violations.

The order requires SSLS and Mayer to pay $3,712,035.93 in restitution jointly and severally and SSL to pay $198,143.03 in restitution. The order further imposes $9,798,107.79 in civil monetary penalties on SSLS; $9,798,107.79 on SSL; and $1,338,000 on Mayer. Additionally, under the...

Washington, D.C. — The Commodity Futures Trading Commission announced today that the U.S. District Court for the Southern District of Texas entered a consent order against Charles McAllister of Alabama. The order requires McAllister to pay $16,186,212.56 in restitution and permanently enjoins McAllister from engaging in conduct that violates the Commodity Exchange Act (CEA), from registering with the CFTC, and from trading in any CFTC-regulated markets. 

Case Background

The order stems from a complaint the CFTC filed against McAllister on April 26, 2018. [See CFTC Press Release No. 7720-18]. The order finds that from August 15, 2011 through July 20, 2015, McAllister and his defunct and bankrupt company BullionDirect, Inc. (BDI) defrauded thousands of customers throughout the U.S. who purchased precious metals from or through BDI through various misrepresentations and omissions.

According to the order, BDI customers sent money to McAllister...

The CFTC’s regulatory oversight authority, as well as the application of our enforcement authority, must be well understood by the public.  Only then can proper regulatory compliance be demanded.  The recent growth in popularity of crypto products and other digital assets has drawn much attention to the question of how this new financial asset class is regulated in the United States.  In response, there has often been a grossly inaccurate oversimplification offered which suggests these are either securities regulated by the Securities and Exchange Commission, or commodities regulated by the Commodity Futures Trading Commission.  The prevalence of this misunderstanding about U.S. regulatory delineations has grown to a point that I believe requires correction.

Therefore, I have laid out 10 concise points to clarify how and what the CFTC regulates, as well as how Congress has distinguished our enforcement authority from our regulatory oversight....

I am deeply honored to have served as a Commissioner of the Commodity Futures Trading Commission over the last four years.  My statutory term expired in April of 2020.  At that point, I announced I would not seek re-nomination to another five-year term.  I originally anticipated stepping down from my role by either October-end of last year or once my replacement had been confirmed.  Without a successfully appointed replacement, I decided to remain in my role this year to ensure my voice was heard as important derivatives market and financial innovation issues were raised during the administration’s transition.

Now, with four years having passed since I was sworn in and an end-of-year hard stop to my ability to continue serving in this role, it is time for me to pursue new challenges and opportunities. I will step down as a Commissioner on August 31st, 2021.

Since joining the agency, I have strived to build my service around three broad...

Washington, D.C. — The Commodity Futures Trading Commission has filed a civil enforcement action in the Eastern District of Michigan against Ali Bazzi and his company Welther Oaks, LLC, both of Michigan, charging them with fraud and misappropriation in connection with their operation of a foreign currency (forex) commodity pool. 

In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA), and CFTC regulations, as charged.

Case Background

According to the complaint, starting in at least March 2018, Bazzi, the owner of Welther Oaks, fraudulently solicited at least $470,000 from at least 25 pool participants for a commodity pool that would purportedly trade forex. As alleged, in order to entice pool participants, Bazzi and Welther Oaks falsely represented that...

Washington, D.C. — The Commodity Futures Trading Commission today announced that it has filed a civil enforcement action in the U.S. District Court for the District of Nebraska against commodity pool operator (CPO) Centurion Capital Management, Inc. (Centurion), and its owner, Terry M. Svejda (Svejda) of Blair, Nebraska. The complaint alleges that Centurion and Svejda engaged in commodity pool fraud in connection with commodity futures trading, in that he fraudulently misappropriated participant funds and made false or misleading statements about how their funds would be invested in the commodity pool.

In litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans and injunctions against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

Case Background

The complaint alleges that beginning in at least 2012, and continuing...