Adjustment of Civil Monetary Penalties for Inflation, 41435-41438 [2016-15078]
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BILLING CODE 4910–13–P
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COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 143
RIN 3038–AE45
Adjustment of Civil Monetary Penalties
for Inflation
Commodity Futures Trading
Commission.
ACTION: Interim final rule.
AGENCY:
The Commodity Futures
Trading Commission (Commission) is
amending its rule that governs the
maximum amount of civil monetary
penalties, to adjust for inflation. This
rule sets forth the maximum, inflationadjusted dollar amount for civil
monetary penalties (CMPs) assessable
for violations of the Commodity
Exchange Act (CEA) and Commission
rules, regulations and orders
thereunder. The rule, as amended,
implements the Federal Civil Penalties
Inflation Adjustment Act of 1990, as
amended.
SUMMARY:
Effective Date: This interim final
rule is effective August 1, 2016.
FOR FURTHER INFORMATION CONTACT:
Edward J. Riccobene, Associate Chief
Counsel, Division of Enforcement, at
(202) 418–5327 or ericcobene@cftc.gov,
Commodity Futures Trading
Commission, 1155 21st Street NW.,
Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
DATES:
I. Background
The Federal Civil Penalties Inflation
Adjustment Act of 1990 (FCPIAA) 1
requires the head of each Federal agency
to periodically adjust for inflation the
minimum and maximum amount of
CMPs provided by law within the
jurisdiction of that agency.2 On
November 2, 2015, the President signed
into law the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015 (the 2015 Act),3 which
further amended the FCPIAA to
1 The FCPIAA, Public Law 101–410 (1990), as
amended, is codified at 28 U.S.C. 2461 note. The
FCPIAA states that the purpose of the act is to
establish a mechanism that (1) allows for regular
adjustment for inflation of civil monetary penalties;
(2) maintains the deterrent effect of civil monetary
penalties and promote compliance with the law;
and (3) improves the collection by the Federal
Government of civil monetary penalties.
2 For the relevant CMPs within the Commission’s
jurisdiction, the Act provides only for maximum
amounts that can be assessed for each violation of
the Act or the rules, regulations and orders
promulgated thereunder; the Act does not set forth
any minimum penalties. Therefore, the remainder
of this release will refer only to CMP maximums.
3 See 2015 Act, Public Law 114–74, 129 Stat. 584
(2015), title VII, Section 701.
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41435
improve the effectiveness of civil
monetary penalties and to maintain
their deterrent effect. The 2015 Act
requires agencies to: (1) Adjust the level
of civil monetary penalties with an
initial ‘‘catch-up’’ adjustment through
an interim final rulemaking; and (2)
make subsequent annual adjustments
for inflation.4 Agencies are required to
publish interim final rules with the
initial penalty adjustment amounts by
July 1, 2016, and the new penalty levels
must take effect no later than August 1,
2016.5
II. Commodity Exchange Act Civil
Monetary Penalties
The inflation adjustment requirement
applies to any penalty, fine or other
sanction that (A) is for a specific
monetary amount as provided by
Federal law or has a maximum amount
provided for by Federal law; (B) is
assessed or enforced by an agency
pursuant to Federal law; and (C) is
assessed or enforced pursuant to an
administrative proceeding or a civil
action in the Federal courts. 28 U.S.C.
2461 note. The CEA provides for CMPs
that meet the above definition and are,
therefore, subject to the inflation
adjustment in the following instances:
Sections 6(c), 6(d), 6b, and 6c of the
CEA.6
Section 6(c) of the CEA,7 as adjusted
by the FCPIAA,8 currently sets the
maximum CMP that may be imposed by
the Commission in an administrative
proceeding on ‘‘any person (other than
a registered entity)’’ for: (1) Each
violation of Section 6(c) of the CEA or
any other provisions of the Act or of the
rules, regulations, or orders of the
Commission thereunder to the greater of
$140,000 or triple the monetary gain to
the violator; and (2) any manipulation
or attempted manipulation in violation
of Section 6(c) or 9(a)(2) of the CEA to
the greater of $1,000,000 or triple the
monetary gain to the violator.
Section 6(d) of the CEA,9 as adjusted
by the FCPIAA,10 currently sets the
maximum CMP that may be imposed by
the Commission in an administrative
proceeding on ‘‘any person (other than
a registered entity)’’ 11 for violations of
4 Id., Section 701(b). Rule 143.8(b) is amended to
reflect the change to annual adjustments from ‘‘once
every four years.’’
5 2015 Act, Section 701(b).
6 7 U.S.C. 9, 13a, 13a–1, 13b.
7 7 U.S.C. 9.
8 See 17 CFR 143.8(a)(1).
9 7 U.S.C. 13b.
10 See 17 CFR 143.8(a)(2).
11 The term ‘‘registered entity’’ is a defined term
under the CEA. Section 1a(40) provides that the
term ‘‘registered entity’’ means (A) a board of trade
designated as a contract market under section 7 of
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the CEA or any other provisions of the
CEA or of the rules, regulations, or
orders of the Commission thereunder to
the greater of $140,000 or triple the
monetary gain to the violator.
Section 6b of the CEA 12 provides that
the Commission in an administrative
proceeding may impose a CMP on: (1)
Any registered entity for not enforcing
or has not enforced its rules of
government made a condition of its
designation or registration as set forth in
the CEA, or (2) any registered entity, or
any director, officer, agent, or employee
of any registered entity, for violations of
the CEA or any rules, regulations, or
orders of the Commission thereunder.
For each violation for which a CMP is
assessed pursuant to Section 6b, the
current, FCPIAA-adjusted maximum
penalty is set at: The greater of
$1,025,000 or triple the monetary gain
to such person for manipulation or
attempted manipulation in violation of
Section 6(c), 6(d), or 9(a)(2) of the CEA;
and the greater of $700,000 or triple the
monetary gain to such person for all
other violations.13
Section 6c of the CEA 14 provides that
Commission may bring an action in the
proper district court of the United States
or the proper United States court of any
territory or other place subject to the
jurisdiction of the United States and the
court may impose on a CMP on ‘‘any
registered entity or other person’’ found
by the court to have committed any
violation of any provision of the CEA or
any rule, regulation, or order
thereunder, or is restraining trading in
any commodity for future delivery or
any swap. For each violation for which
a CMP is assessed pursuant to Section
6c(d), the current, FCPIAA-adjusted
maximum penalty is set at: The greater
of $1,000,000 or triple the monetary
gain to such person for manipulation or
attempted manipulation in violation of
Section 6(c), 6(d), or 9(a)(2) of the CEA;
and the greater of $140,000 or triple the
monetary gain to such person for all
other violations.15
III. Inflation Adjustment for
Commodity Exchange Act Civil
Monetary Penalties
The inflation adjustment under the
FCPIAA, in the context of the CFTC’s
Year CMP last
set by law
other than
under the
FCPIAA 1
Description
Section 6(c) of the CEA,
7 U.S.C. 9.
Section 6b of the CEA, 7
U.S.C. 13a.
Section 6b of the CEA, 7
U.S.C. 13a.
Section 6c of the CEA, 7
U.S.C. 13a–1.
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CMP amount
last set by law
other than
under the
FCPIAA
2010
$140,000
$140,000
$152,243
2008
1,000,000
1,000,000
1,098,190
2010
140,000
140,000
152,243
1992
500,000
700,000
838,640
2008
1,000,000
1,025,000
1,098,190
1992
100,000
140,000
167,728
Prohibition Regarding Manipulation and False
Information [Other Violation (Non-Manipulation)].
Prohibition Regarding Manipulation and False
Information [Manipulation or Attempted Manipulation].
Manipulations or Other Violations; Cease and
Desist Orders Against Persons Other Than
Registered
Entities;
Punishment;
Misdemeanor or Felony; Separate Offenses.
Nonenforcement of Rules of Government or
Other Violations; Cease and Desist Orders;
Fines and Penalties; Imprisonment; Misdemeanor; Separate Offenses [Other Violation
(Non-Manipulation)].
Nonenforcement of Rules of Government or
Other Violations; Cease and Desist Orders;
Fines and Penalties; Imprisonment; Misdemeanor; Separate Offenses [Manipulation
or Attempted Manipulation].
Enjoining or Restraining Violations [Other Violation (Non-Manipulation)].
Section 6(d) of the CEA,
7 U.S.C. 13b.
the act; (B) a derivatives clearing organization
registered under section 7a–1 of the act; (C) a board
of trade designated as a contract market under
section 7b–1 of the act; (D) a swap execution facility
registered under section 7b–3 of the act; (E) a swap
data repository registered under section 24a of the
act; and (F) with respect to a contract that the
Commission determines is a significant price
discovery contract, any electronic trading facility on
which the contract is executed or traded. 7 U.S.C.
1a(40).
12 7 U.S.C. 13a.
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B. Civil Monetary Penalty Adjustments
Applying the FCPIAA catch-up
adjustment methodology results in the
following amended CMPs:
A. Methodology
Citation
Section 6(c) of the CEA,
7 U.S.C. 9.
CMPs, is determined by increasing the
maximum penalty by a ‘‘cost-of-living
adjustment,’’ rounded to the nearest
multiple of $1.16 For purposes of this
initial, catch-up adjustment, the cost-ofliving adjustment means the percentage
(if any) for each civil monetary penalty
by which the Consumer Price Index for
the month of October, 2015 exceeds the
Consumer Price Index for all Urban
Consumers (CPI–U) 17 for the month of
October of the calendar year during
which the amount of such civil
monetary penalty was established or
adjusted under a provision of law other
than the FCPIAA.18 The amount of the
CMP increase is capped at 150 percent
of the amount of that civil monetary
penalty on the date of enactment of the
2015 Act.19
13 17
CFR 143.8(a)(3).
U.S.C. 13a–1.
15 17 CFR 143.8(a)(2).
16 FCPIAA Sections 4 and 5.
17 The CPI–U is published by the Department of
Labor. Interested parties may find the relevant
Consumer Price Index on the Internet. To access
this information, go to the Consumer Price Index
Home Page at: https://www.bls.gov/cpi/. Under the
‘‘CPI Databases’’ heading, select ‘‘All Urban
Consumers (Current Series)’’, ‘‘Top Picks.’’ Then
check the box for ‘‘U.S. All Items, 1967=100 14 7
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Current CMP
amount
(including
prior FCPIAA
adjustments)
Inflation
adjusted
CMP amount 2
CUUR0000AA0’’, and click the ‘‘Retrieve data’’
button.
After this initial catch-up adjustment, subsequent
annual inflation adjustments will be based on the
percent change between the October CPI–U
preceding the date of the adjustment, and the prior
year’s October CPI–U. FCPIAA Section 4(b)(2).
18 FCPIAA Section 5(b)(2).
19 Id.
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Year CMP last
set by law
other than
under the
FCPIAA 1
Citation
Description
Section 6c of the CEA, 7
U.S.C. 13a–1.
CMP amount
last set by law
other than
under the
FCPIAA
2008
1,000,000
Enjoining or Restraining Violations [Manipulation
or Attempted Manipulation].
Current CMP
amount
(including
prior FCPIAA
adjustments)
1,025,000
41437
Inflation
adjusted
CMP amount 2
1,098,190
1 Sections 212 and 221 of the Futures Trading Practices Act of 1992, Public Law 102–546, 106 Stat. 3590 (1992), set maximum CMPs for
Sections 6b and 6c of the CEA, 7 U.S.C. 13a, 13a–1, with respect to non-manipulation violations. Section 13103 of the CFTC Reauthorization
Act of 2008, Title XIII of Public Law 110–234, 122 Stat. 923 (2008), set maximum CMPs for Sections 6(c), 6b and 6c of the CEA, 7 U.S.C. 9,
13a, 13a–1, with respect to manipulation violations. Section 753 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law
111–203, 124 Stat. 1376 (2010), set maximum CMPs for Sections 6(c) and 6(d) of the CEA, 7 U.S.C. 9, 13b, with respect to non-manipulation
violations.
2 The catch-up cost-of-living adjustment for CMPs last set by law 1992 is 67.728%. The cost-of-living adjustment for CMPs last set by law 2008
is 9.819%. The cost-of-living adjustment for CMPs last set by law 2010 is 8.745%.
The FCPIAA, as amended by the 2015
Act, provides that any increase under
the FCPIAA in a civil monetary penalty
shall apply only to civil monetary
penalties, including those whose
associated violation predated such
increase, which are assessed after the
date the increase takes effect.20 Thus,
the new CMP amounts may be applied
only in Commission administrative or
civil injunctive enforcement
proceedings that are initiated on or after
the effective date of this amendment,
August 1, 2016.21
IV. Administrative Compliance
A. Notice Requirement
The notice and comment procedures
of 5 U.S.C. 553 do not apply to this
rulemaking because the Commission is
acting herein pursuant to statutory
language which mandates that the
Commission act in a nondiscretionary
matter. Lake Carriers’ Ass’n v. E.P.A.,
652 F.3d 1, 10 (D.C. Cir. 2011).22
B. Regulatory Flexibility Act
The Regulatory Flexibility Act 23
requires agencies with rulemaking
authority to consider the impact of
certain of their rules on small
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20 FCPIAA
Section 6.
21 Prior to the 2015 Act, the date of the violation
determined the inflation-adjusted penalty
applicable to the violation. 28 U.S.C. 2461 note,
Section 6 (2012) (inflation-adjusted penalty
increases applied ‘‘only to violations which occur
after the date the increase takes effect’’).
Consequently, rule 143.8 as revised will continue
apply the prior violation date specific penalty
amount with respect to CFTC enforcement
proceedings initiated prior to August 1, 2016.
Further, the Commission will strike rule 143.8(c),
which memorialized the prior intent of Congress
regarding the application of inflation-adjusted
penalties, which was amended by the 2015 Act.
22 The Commission has determined that the
amendment to rule 143.8 is exempt from the
provisions of the Administrative Procedure Act, 5
U.S.C. 553, which generally require notice of
proposed rulemaking and provide other
opportunities for public participation, but excludes
rules of agency practice, such as those found in part
143 of the Commission’s regulations, and in
particular rule 143.8 being revised herein.
23 5 U.S.C. 601–612.
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businesses. A regulatory flexibility
analysis is only required for rule(s) for
which the agency publishes a general
notice of proposed rulemaking pursuant
to section 553(b) or any other law.
Because the Commission is not
obligated by section 553(b) or any other
law to publish a general notice of
proposed rulemaking with respect to the
revisions being made to regulation
143.8, the Commission additionally is
not obligated to conduct a regulatory
flexibility analysis.
that CMPs do not lose their deterrence
value because of inflation. An analysis
of the costs and benefits of these
adjustments were made before
enactment of the statutory provisions
under which the Commission is
operating, and limit the discretion of the
Commission to the extent that there are
no regulatory choices the Commission
could make that would supersede the
pre-enactment analysis with respect to
the five factors enumerated in section
15(a), or any other factors.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA),24 which imposes certain
requirements on Federal agencies,
including the Commission, in
connection with their conducting or
sponsoring any collection of
information as defined by the PRA, does
not apply to this rule. This rule
amendment does not contain
information collection requirements that
require the approval of the Office of
Management and Budget.
List of Subjects in 17 CFR Part 143
Civil monetary penalties, Claims.
For the reasons stated in the
preamble, the Commodity Futures
Trading Commission amends 17 CFR
part 143 as follows:
D. Consideration of Costs and Benefits
Section 15(a) of the CEA 25 requires
the Commission to consider the costs
and benefits of its action before issuing
a new regulation. Section 15(a) further
specifies that costs and benefits shall be
evaluated in light of five broad areas of
market and public concern: (1)
Protection of market participants and
the public; (2) efficiency,
competitiveness, and financial integrity
of futures markets; (3) price discovery;
(4) sound risk management practices;
and (5) other public interest
considerations.
The Commission believes that
benefits of this rulemaking greatly
outweigh the costs, if any. As the
Commission understands, the statutory
provisions by which it is making costof-living adjustments to the CMPs in
regulation 143.8 were enacted to ensure
24 44
25 7
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U.S.C. 3507(d).
U.S.C. 19(a).
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PART 143—COLLECTION OF CLAIMS
OWED THE UNITED STATES ARISING
FROM ACTIVITIES UNDER THE
COMMISSION’S JURISDICTION
1. The authority citation for part 143
is revised to read as follows:
■
Authority: 7 U.S.C. 9, 15, 9a, 12a(5), 13a,
13a–1(d), 13(a), 13b; 31 U.S.C. 3701–3720E;
28 U.S.C. 2461 note.
2. Amend § 143.8 as follows:
a. Revise paragraphs (a)(1) through (4)
and (b); and
■ b. Remove paragraph (c).
The revisions read as follows:
■
■
§ 143.8 Inflation-adjusted civil monetary
penalties.
(a) * * *
(1) For a civil penalty assessed
pursuant to Section 6(c) of the
Commodity Exchange Act, 7 U.S.C. 9,
against any person (other than a
registered entity):
(i) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated prior to
August 1, 2016:
(A) For manipulation or attempted
manipulation violations:
(1) Committed on or after May 22,
2008, not more than the greater of
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$1,000,000 or triple the monetary gain
to such person for each such violation;
and
(2) [Reserved]
(B) For all other violations:
(1) Committed between November 27,
1996 and October 22, 2000, not more
than the greater of $110,000 or triple the
monetary gain to such person for each
such violation;
(2) Committed between October 23,
2000 and October 22, 2004, not more
than the greater of $120,000 or triple the
monetary gain to such person for each
such violation;
(3) Committed between October 23,
2004 and October 22, 2008, not more
than the greater of $130,000 or triple the
monetary gain to such person for each
such violation; and
(4) Committed on or after October 23,
2008, not more than the greater of
$140,000 or triple the monetary gain to
such person for each such violation;
(ii) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated on or after
August 1, 2016:
(A) For manipulation or attempted
manipulation violations, not more than
the greater of $1,098,190 or triple the
monetary gain to such person for each
such violation; and
(B) For all other violations:
(1) Not more than the greater of
$152,243 or triple the monetary gain to
such person for each such violation; and
(2) [Reserved]
(2) For a civil monetary penalty
assessed pursuant to Section 6(d) of the
Commodity Exchange Act, 7 U.S.C. 13b,
against any person (other than a
registered entity):
(i) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated prior to
August 1, 2016, for violations
committed on or after August 15, 2011,
not more than the greater of $140,000 or
triple the monetary gain to such person
for each such violation; and
(ii) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated prior or after
August 1, 2016, not more than the
greater of $152,243 or triple the
monetary gain to such person for each
such violation; and
(3) For a civil monetary penalty
assessed pursuant to Section 6b of the
Commodity Exchange Act, 7 U.S.C. 13a,
against any registered entity or any
director, officer, agent, or employee of
any registered entity:
(i) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated prior to
August 1, 2016:
(A) For manipulation or attempted
manipulation violations:
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(1) Committed between May 22, 2008
and August 14, 2011, not more than the
greater of $1,000,000 or triple the
monetary gain to such person for each
such violation;
(2) Committed on or after August 15,
2011, not more than the greater of
$1,025,000 or triple the monetary gain
to such person for each such violation;
and
(B) For all other violations:
(1) Committed between November 27,
1996 and October 22, 2000, not more
than $550,000 for each such violation;
(2) Committed between October 23,
2000 and October 22, 2004, not more
than $575,000 for each such violation;
(3) Committed between October 23,
2004 and October 22, 2008, not more
than $625,000 for each such violation;
(4) Committed between October 23,
2008 and October 22, 2012, not more
than the greater of $675,000 or triple the
monetary gain to such person for each
such violation; and
(5) Committed on or after October 23,
2012, not more than the greater of
$700,000 or triple the monetary gain to
such person for each such violation; and
(ii) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated on or after
August 1, 2016:
(A) For manipulation or attempted
manipulation violations, not more than
the greater of $1,098,190 or triple the
monetary gain to such person for each
such violation; and
(B) For all other violations, not more
than the greater of $838,640 or triple the
monetary gain to such person for each
such violation;
(4) For a civil monetary penalty
assessed pursuant to Section 6c of the
Commodity Exchange Act, 7 U.S.C. 13a–
1, against any registered entity or other
person:
(i) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated prior to
August 1, 2016:
(A) For manipulation or attempted
manipulation violations:
(1) Committed between May 22, 2008
and August 14, 2011, not more than the
greater of $1,000,000 or triple the
monetary gain to such person for each
such violation; and
(2) Committed on or after August 15,
2011, not more than the greater of
$1,025,000 or triple the monetary gain
to such person for each such violation;
and
(B) For all other violations:
(1) Committed between November 27,
1996 and October 22, 2000, not more
than the greater of $110,000 or triple the
monetary gain to such person for each
such violation;
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Fmt 4700
Sfmt 4700
(2) Committed between October 23,
2000 and October 22, 2004, not more
than the greater of $120,000 or triple the
monetary gain to such person for each
such violation;
(3) Committed between October 23,
2004 and October 22, 2008, not more
than the greater of $130,000 or triple the
monetary gain to such person for each
such violation; and
(4) Committed on or after October 23,
2008, not more than the greater of
$140,000 or triple the monetary gain to
such person for each such violation;
(ii) In an administrative proceeding
before the Commission or a civil action
in Federal court initiated on or after
August 1, 2016:
(A) For manipulation or attempted
manipulation violations, not more than
the greater of $1,098,190 or triple the
monetary gain to such person for each
such violation; and
(B) For all other violations, not more
than the greater of $167,728 or triple the
monetary gain to such person for each
such violation.
(b) The Commission will adjust for
inflation the maximum penalties set
forth in this section on a yearly basis.
Issued in Washington, DC, on June 21,
2016, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.
Note: The following appendix will not
appear in the Code of Federal Regulations.
Appendix to Adjustment of Civil
Monetary Penalties for Inflation—
Commission Voting Summary
On this matter, Chairman Massad and
Commissioners Bowen and Giancarlo voted
in the affirmative. No Commissioner voted in
the negative.
[FR Doc. 2016–15078 Filed 6–24–16; 8:45 am]
BILLING CODE 6351–01–P
SOCIAL SECURITY ADMINISTRATION
20 CFR Part 498
[Docket No. SSA–2016–0009]
RIN 0960–AH99
Penalty Inflation Adjustments for Civil
Money Penalties
Social Security Administration.
Interim Final Rule.
AGENCY:
ACTION:
In accordance with the
Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by
the Debt Collection Improvement Act of
1996, and further amended by the
Bipartisan Budget Act of 2015, section
701: Federal Civil Penalties Inflation
SUMMARY:
E:\FR\FM\27JNR1.SGM
27JNR1
]]>Agencies
[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)]
[Rules and Regulations]
[Pages 41435-41438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15078]
=======================================================================
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 143
RIN 3038-AE45
Adjustment of Civil Monetary Penalties for Inflation
AGENCY: Commodity Futures Trading Commission.
ACTION: Interim final rule.
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SUMMARY: The Commodity Futures Trading Commission (Commission) is
amending its rule that governs the maximum amount of civil monetary
penalties, to adjust for inflation. This rule sets forth the maximum,
inflation-adjusted dollar amount for civil monetary penalties (CMPs)
assessable for violations of the Commodity Exchange Act (CEA) and
Commission rules, regulations and orders thereunder. The rule, as
amended, implements the Federal Civil Penalties Inflation Adjustment
Act of 1990, as amended.
DATES: Effective Date: This interim final rule is effective August 1,
2016.
FOR FURTHER INFORMATION CONTACT: Edward J. Riccobene, Associate Chief
Counsel, Division of Enforcement, at (202) 418-5327 or
ericcobene@cftc.gov, Commodity Futures Trading Commission, 1155 21st
Street NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Civil Penalties Inflation Adjustment Act of 1990
(FCPIAA) \1\ requires the head of each Federal agency to periodically
adjust for inflation the minimum and maximum amount of CMPs provided by
law within the jurisdiction of that agency.\2\ On November 2, 2015, the
President signed into law the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (the 2015 Act),\3\ which
further amended the FCPIAA to improve the effectiveness of civil
monetary penalties and to maintain their deterrent effect. The 2015 Act
requires agencies to: (1) Adjust the level of civil monetary penalties
with an initial ``catch-up'' adjustment through an interim final
rulemaking; and (2) make subsequent annual adjustments for
inflation.\4\ Agencies are required to publish interim final rules with
the initial penalty adjustment amounts by July 1, 2016, and the new
penalty levels must take effect no later than August 1, 2016.\5\
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\1\ The FCPIAA, Public Law 101-410 (1990), as amended, is
codified at 28 U.S.C. 2461 note. The FCPIAA states that the purpose
of the act is to establish a mechanism that (1) allows for regular
adjustment for inflation of civil monetary penalties; (2) maintains
the deterrent effect of civil monetary penalties and promote
compliance with the law; and (3) improves the collection by the
Federal Government of civil monetary penalties.
\2\ For the relevant CMPs within the Commission's jurisdiction,
the Act provides only for maximum amounts that can be assessed for
each violation of the Act or the rules, regulations and orders
promulgated thereunder; the Act does not set forth any minimum
penalties. Therefore, the remainder of this release will refer only
to CMP maximums.
\3\ See 2015 Act, Public Law 114-74, 129 Stat. 584 (2015), title
VII, Section 701.
\4\ Id., Section 701(b). Rule 143.8(b) is amended to reflect the
change to annual adjustments from ``once every four years.''
\5\ 2015 Act, Section 701(b).
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II. Commodity Exchange Act Civil Monetary Penalties
The inflation adjustment requirement applies to any penalty, fine
or other sanction that (A) is for a specific monetary amount as
provided by Federal law or has a maximum amount provided for by Federal
law; (B) is assessed or enforced by an agency pursuant to Federal law;
and (C) is assessed or enforced pursuant to an administrative
proceeding or a civil action in the Federal courts. 28 U.S.C. 2461
note. The CEA provides for CMPs that meet the above definition and are,
therefore, subject to the inflation adjustment in the following
instances: Sections 6(c), 6(d), 6b, and 6c of the CEA.\6\
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\6\ 7 U.S.C. 9, 13a, 13a-1, 13b.
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Section 6(c) of the CEA,\7\ as adjusted by the FCPIAA,\8\ currently
sets the maximum CMP that may be imposed by the Commission in an
administrative proceeding on ``any person (other than a registered
entity)'' for: (1) Each violation of Section 6(c) of the CEA or any
other provisions of the Act or of the rules, regulations, or orders of
the Commission thereunder to the greater of $140,000 or triple the
monetary gain to the violator; and (2) any manipulation or attempted
manipulation in violation of Section 6(c) or 9(a)(2) of the CEA to the
greater of $1,000,000 or triple the monetary gain to the violator.
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\7\ 7 U.S.C. 9.
\8\ See 17 CFR 143.8(a)(1).
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Section 6(d) of the CEA,\9\ as adjusted by the FCPIAA,\10\
currently sets the maximum CMP that may be imposed by the Commission in
an administrative proceeding on ``any person (other than a registered
entity)'' \11\ for violations of
[[Page 41436]]
the CEA or any other provisions of the CEA or of the rules,
regulations, or orders of the Commission thereunder to the greater of
$140,000 or triple the monetary gain to the violator.
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\9\ 7 U.S.C. 13b.
\10\ See 17 CFR 143.8(a)(2).
\11\ The term ``registered entity'' is a defined term under the
CEA. Section 1a(40) provides that the term ``registered entity''
means (A) a board of trade designated as a contract market under
section 7 of the act; (B) a derivatives clearing organization
registered under section 7a-1 of the act; (C) a board of trade
designated as a contract market under section 7b-1 of the act; (D) a
swap execution facility registered under section 7b-3 of the act;
(E) a swap data repository registered under section 24a of the act;
and (F) with respect to a contract that the Commission determines is
a significant price discovery contract, any electronic trading
facility on which the contract is executed or traded. 7 U.S.C.
1a(40).
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Section 6b of the CEA \12\ provides that the Commission in an
administrative proceeding may impose a CMP on: (1) Any registered
entity for not enforcing or has not enforced its rules of government
made a condition of its designation or registration as set forth in the
CEA, or (2) any registered entity, or any director, officer, agent, or
employee of any registered entity, for violations of the CEA or any
rules, regulations, or orders of the Commission thereunder. For each
violation for which a CMP is assessed pursuant to Section 6b, the
current, FCPIAA-adjusted maximum penalty is set at: The greater of
$1,025,000 or triple the monetary gain to such person for manipulation
or attempted manipulation in violation of Section 6(c), 6(d), or
9(a)(2) of the CEA; and the greater of $700,000 or triple the monetary
gain to such person for all other violations.\13\
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\12\ 7 U.S.C. 13a.
\13\ 17 CFR 143.8(a)(3).
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Section 6c of the CEA \14\ provides that Commission may bring an
action in the proper district court of the United States or the proper
United States court of any territory or other place subject to the
jurisdiction of the United States and the court may impose on a CMP on
``any registered entity or other person'' found by the court to have
committed any violation of any provision of the CEA or any rule,
regulation, or order thereunder, or is restraining trading in any
commodity for future delivery or any swap. For each violation for which
a CMP is assessed pursuant to Section 6c(d), the current, FCPIAA-
adjusted maximum penalty is set at: The greater of $1,000,000 or triple
the monetary gain to such person for manipulation or attempted
manipulation in violation of Section 6(c), 6(d), or 9(a)(2) of the CEA;
and the greater of $140,000 or triple the monetary gain to such person
for all other violations.\15\
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\14\ 7 U.S.C. 13a-1.
\15\ 17 CFR 143.8(a)(2).
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III. Inflation Adjustment for Commodity Exchange Act Civil Monetary
Penalties
A. Methodology
The inflation adjustment under the FCPIAA, in the context of the
CFTC's CMPs, is determined by increasing the maximum penalty by a
``cost-of-living adjustment,'' rounded to the nearest multiple of
$1.\16\ For purposes of this initial, catch-up adjustment, the cost-of-
living adjustment means the percentage (if any) for each civil monetary
penalty by which the Consumer Price Index for the month of October,
2015 exceeds the Consumer Price Index for all Urban Consumers (CPI-U)
\17\ for the month of October of the calendar year during which the
amount of such civil monetary penalty was established or adjusted under
a provision of law other than the FCPIAA.\18\ The amount of the CMP
increase is capped at 150 percent of the amount of that civil monetary
penalty on the date of enactment of the 2015 Act.\19\
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\16\ FCPIAA Sections 4 and 5.
\17\ The CPI-U is published by the Department of Labor.
Interested parties may find the relevant Consumer Price Index on the
Internet. To access this information, go to the Consumer Price Index
Home Page at: https://www.bls.gov/cpi/. Under the ``CPI Databases''
heading, select ``All Urban Consumers (Current Series)'', ``Top
Picks.'' Then check the box for ``U.S. All Items, 1967=100 -
CUUR0000AA0'', and click the ``Retrieve data'' button.
After this initial catch-up adjustment, subsequent annual
inflation adjustments will be based on the percent change between
the October CPI-U preceding the date of the adjustment, and the
prior year's October CPI-U. FCPIAA Section 4(b)(2).
\18\ FCPIAA Section 5(b)(2).
\19\ Id.
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B. Civil Monetary Penalty Adjustments
Applying the FCPIAA catch-up adjustment methodology results in the
following amended CMPs:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year CMP last CMP amount Current CMP
set by law last set by amount Inflation
Citation Description other than law other than (including adjusted CMP
under the under the prior FCPIAA amount \2\
FCPIAA \1\ FCPIAA adjustments)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 6(c) of the CEA, 7 U.S.C. 9............ Prohibition Regarding Manipulation and 2010 $140,000 $140,000 $152,243
False Information [Other Violation
(Non-Manipulation)].
Section 6(c) of the CEA, 7 U.S.C. 9............ Prohibition Regarding Manipulation and 2008 1,000,000 1,000,000 1,098,190
False Information [Manipulation or
Attempted Manipulation].
Section 6(d) of the CEA, 7 U.S.C. 13b.......... Manipulations or Other Violations; 2010 140,000 140,000 152,243
Cease and Desist Orders Against
Persons Other Than Registered
Entities; Punishment; Misdemeanor or
Felony; Separate Offenses.
Section 6b of the CEA, 7 U.S.C. 13a............ Nonenforcement of Rules of Government 1992 500,000 700,000 838,640
or Other Violations; Cease and Desist
Orders; Fines and Penalties;
Imprisonment; Misdemeanor; Separate
Offenses [Other Violation (Non-
Manipulation)].
Section 6b of the CEA, 7 U.S.C. 13a............ Nonenforcement of Rules of Government 2008 1,000,000 1,025,000 1,098,190
or Other Violations; Cease and Desist
Orders; Fines and Penalties;
Imprisonment; Misdemeanor; Separate
Offenses [Manipulation or Attempted
Manipulation].
Section 6c of the CEA, 7 U.S.C. 13a-1.......... Enjoining or Restraining Violations 1992 100,000 140,000 167,728
[Other Violation (Non-Manipulation)].
[[Page 41437]]
Section 6c of the CEA, 7 U.S.C. 13a-1.......... Enjoining or Restraining Violations 2008 1,000,000 1,025,000 1,098,190
[Manipulation or Attempted
Manipulation].
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\1\ Sections 212 and 221 of the Futures Trading Practices Act of 1992, Public Law 102-546, 106 Stat. 3590 (1992), set maximum CMPs for Sections 6b and
6c of the CEA, 7 U.S.C. 13a, 13a-1, with respect to non-manipulation violations. Section 13103 of the CFTC Reauthorization Act of 2008, Title XIII of
Public Law 110-234, 122 Stat. 923 (2008), set maximum CMPs for Sections 6(c), 6b and 6c of the CEA, 7 U.S.C. 9, 13a, 13a-1, with respect to
manipulation violations. Section 753 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010), set
maximum CMPs for Sections 6(c) and 6(d) of the CEA, 7 U.S.C. 9, 13b, with respect to non-manipulation violations.
\2\ The catch-up cost-of-living adjustment for CMPs last set by law 1992 is 67.728%. The cost-of-living adjustment for CMPs last set by law 2008 is
9.819%. The cost-of-living adjustment for CMPs last set by law 2010 is 8.745%.
The FCPIAA, as amended by the 2015 Act, provides that any increase
under the FCPIAA in a civil monetary penalty shall apply only to civil
monetary penalties, including those whose associated violation predated
such increase, which are assessed after the date the increase takes
effect.\20\ Thus, the new CMP amounts may be applied only in Commission
administrative or civil injunctive enforcement proceedings that are
initiated on or after the effective date of this amendment, August 1,
2016.\21\
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\20\ FCPIAA Section 6.
\21\ Prior to the 2015 Act, the date of the violation determined
the inflation-adjusted penalty applicable to the violation. 28
U.S.C. 2461 note, Section 6 (2012) (inflation-adjusted penalty
increases applied ``only to violations which occur after the date
the increase takes effect''). Consequently, rule 143.8 as revised
will continue apply the prior violation date specific penalty amount
with respect to CFTC enforcement proceedings initiated prior to
August 1, 2016. Further, the Commission will strike rule 143.8(c),
which memorialized the prior intent of Congress regarding the
application of inflation-adjusted penalties, which was amended by
the 2015 Act.
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IV. Administrative Compliance
A. Notice Requirement
The notice and comment procedures of 5 U.S.C. 553 do not apply to
this rulemaking because the Commission is acting herein pursuant to
statutory language which mandates that the Commission act in a
nondiscretionary matter. Lake Carriers' Ass'n v. E.P.A., 652 F.3d 1, 10
(D.C. Cir. 2011).\22\
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\22\ The Commission has determined that the amendment to rule
143.8 is exempt from the provisions of the Administrative Procedure
Act, 5 U.S.C. 553, which generally require notice of proposed
rulemaking and provide other opportunities for public participation,
but excludes rules of agency practice, such as those found in part
143 of the Commission's regulations, and in particular rule 143.8
being revised herein.
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act \23\ requires agencies with
rulemaking authority to consider the impact of certain of their rules
on small businesses. A regulatory flexibility analysis is only required
for rule(s) for which the agency publishes a general notice of proposed
rulemaking pursuant to section 553(b) or any other law. Because the
Commission is not obligated by section 553(b) or any other law to
publish a general notice of proposed rulemaking with respect to the
revisions being made to regulation 143.8, the Commission additionally
is not obligated to conduct a regulatory flexibility analysis.
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\23\ 5 U.S.C. 601-612.
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C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA),\24\ which imposes
certain requirements on Federal agencies, including the Commission, in
connection with their conducting or sponsoring any collection of
information as defined by the PRA, does not apply to this rule. This
rule amendment does not contain information collection requirements
that require the approval of the Office of Management and Budget.
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\24\ 44 U.S.C. 3507(d).
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D. Consideration of Costs and Benefits
Section 15(a) of the CEA \25\ requires the Commission to consider
the costs and benefits of its action before issuing a new regulation.
Section 15(a) further specifies that costs and benefits shall be
evaluated in light of five broad areas of market and public concern:
(1) Protection of market participants and the public; (2) efficiency,
competitiveness, and financial integrity of futures markets; (3) price
discovery; (4) sound risk management practices; and (5) other public
interest considerations.
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\25\ 7 U.S.C. 19(a).
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The Commission believes that benefits of this rulemaking greatly
outweigh the costs, if any. As the Commission understands, the
statutory provisions by which it is making cost-of-living adjustments
to the CMPs in regulation 143.8 were enacted to ensure that CMPs do not
lose their deterrence value because of inflation. An analysis of the
costs and benefits of these adjustments were made before enactment of
the statutory provisions under which the Commission is operating, and
limit the discretion of the Commission to the extent that there are no
regulatory choices the Commission could make that would supersede the
pre-enactment analysis with respect to the five factors enumerated in
section 15(a), or any other factors.
List of Subjects in 17 CFR Part 143
Civil monetary penalties, Claims.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission amends 17 CFR part 143 as follows:
PART 143--COLLECTION OF CLAIMS OWED THE UNITED STATES ARISING FROM
ACTIVITIES UNDER THE COMMISSION'S JURISDICTION
0
1. The authority citation for part 143 is revised to read as follows:
Authority: 7 U.S.C. 9, 15, 9a, 12a(5), 13a, 13a-1(d), 13(a),
13b; 31 U.S.C. 3701-3720E; 28 U.S.C. 2461 note.
0
2. Amend Sec. 143.8 as follows:
0
a. Revise paragraphs (a)(1) through (4) and (b); and
0
b. Remove paragraph (c).
The revisions read as follows:
Sec. 143.8 Inflation-adjusted civil monetary penalties.
(a) * * *
(1) For a civil penalty assessed pursuant to Section 6(c) of the
Commodity Exchange Act, 7 U.S.C. 9, against any person (other than a
registered entity):
(i) In an administrative proceeding before the Commission or a
civil action in Federal court initiated prior to August 1, 2016:
(A) For manipulation or attempted manipulation violations:
(1) Committed on or after May 22, 2008, not more than the greater
of
[[Page 41438]]
$1,000,000 or triple the monetary gain to such person for each such
violation; and
(2) [Reserved]
(B) For all other violations:
(1) Committed between November 27, 1996 and October 22, 2000, not
more than the greater of $110,000 or triple the monetary gain to such
person for each such violation;
(2) Committed between October 23, 2000 and October 22, 2004, not
more than the greater of $120,000 or triple the monetary gain to such
person for each such violation;
(3) Committed between October 23, 2004 and October 22, 2008, not
more than the greater of $130,000 or triple the monetary gain to such
person for each such violation; and
(4) Committed on or after October 23, 2008, not more than the
greater of $140,000 or triple the monetary gain to such person for each
such violation;
(ii) In an administrative proceeding before the Commission or a
civil action in Federal court initiated on or after August 1, 2016:
(A) For manipulation or attempted manipulation violations, not more
than the greater of $1,098,190 or triple the monetary gain to such
person for each such violation; and
(B) For all other violations:
(1) Not more than the greater of $152,243 or triple the monetary
gain to such person for each such violation; and
(2) [Reserved]
(2) For a civil monetary penalty assessed pursuant to Section 6(d)
of the Commodity Exchange Act, 7 U.S.C. 13b, against any person (other
than a registered entity):
(i) In an administrative proceeding before the Commission or a
civil action in Federal court initiated prior to August 1, 2016, for
violations committed on or after August 15, 2011, not more than the
greater of $140,000 or triple the monetary gain to such person for each
such violation; and
(ii) In an administrative proceeding before the Commission or a
civil action in Federal court initiated prior or after August 1, 2016,
not more than the greater of $152,243 or triple the monetary gain to
such person for each such violation; and
(3) For a civil monetary penalty assessed pursuant to Section 6b of
the Commodity Exchange Act, 7 U.S.C. 13a, against any registered entity
or any director, officer, agent, or employee of any registered entity:
(i) In an administrative proceeding before the Commission or a
civil action in Federal court initiated prior to August 1, 2016:
(A) For manipulation or attempted manipulation violations:
(1) Committed between May 22, 2008 and August 14, 2011, not more
than the greater of $1,000,000 or triple the monetary gain to such
person for each such violation;
(2) Committed on or after August 15, 2011, not more than the
greater of $1,025,000 or triple the monetary gain to such person for
each such violation; and
(B) For all other violations:
(1) Committed between November 27, 1996 and October 22, 2000, not
more than $550,000 for each such violation;
(2) Committed between October 23, 2000 and October 22, 2004, not
more than $575,000 for each such violation;
(3) Committed between October 23, 2004 and October 22, 2008, not
more than $625,000 for each such violation;
(4) Committed between October 23, 2008 and October 22, 2012, not
more than the greater of $675,000 or triple the monetary gain to such
person for each such violation; and
(5) Committed on or after October 23, 2012, not more than the
greater of $700,000 or triple the monetary gain to such person for each
such violation; and
(ii) In an administrative proceeding before the Commission or a
civil action in Federal court initiated on or after August 1, 2016:
(A) For manipulation or attempted manipulation violations, not more
than the greater of $1,098,190 or triple the monetary gain to such
person for each such violation; and
(B) For all other violations, not more than the greater of $838,640
or triple the monetary gain to such person for each such violation;
(4) For a civil monetary penalty assessed pursuant to Section 6c of
the Commodity Exchange Act, 7 U.S.C. 13a-1, against any registered
entity or other person:
(i) In an administrative proceeding before the Commission or a
civil action in Federal court initiated prior to August 1, 2016:
(A) For manipulation or attempted manipulation violations:
(1) Committed between May 22, 2008 and August 14, 2011, not more
than the greater of $1,000,000 or triple the monetary gain to such
person for each such violation; and
(2) Committed on or after August 15, 2011, not more than the
greater of $1,025,000 or triple the monetary gain to such person for
each such violation; and
(B) For all other violations:
(1) Committed between November 27, 1996 and October 22, 2000, not
more than the greater of $110,000 or triple the monetary gain to such
person for each such violation;
(2) Committed between October 23, 2000 and October 22, 2004, not
more than the greater of $120,000 or triple the monetary gain to such
person for each such violation;
(3) Committed between October 23, 2004 and October 22, 2008, not
more than the greater of $130,000 or triple the monetary gain to such
person for each such violation; and
(4) Committed on or after October 23, 2008, not more than the
greater of $140,000 or triple the monetary gain to such person for each
such violation;
(ii) In an administrative proceeding before the Commission or a
civil action in Federal court initiated on or after August 1, 2016:
(A) For manipulation or attempted manipulation violations, not more
than the greater of $1,098,190 or triple the monetary gain to such
person for each such violation; and
(B) For all other violations, not more than the greater of $167,728
or triple the monetary gain to such person for each such violation.
(b) The Commission will adjust for inflation the maximum penalties
set forth in this section on a yearly basis.
Issued in Washington, DC, on June 21, 2016, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix to Adjustment of Civil Monetary Penalties for Inflation--
Commission Voting Summary
On this matter, Chairman Massad and Commissioners Bowen and
Giancarlo voted in the affirmative. No Commissioner voted in the
negative.
[FR Doc. 2016-15078 Filed 6-24-16; 8:45 am]
BILLING CODE 6351-01-P
