US futures regulator clarifies factors to decide criminal referrals

The Commodity Futures Trading Commission issued on Wednesday an advisory that defines the factors CFTC’s Department of Enforcement staff should consider when deciding whether to refer violations to the Department of Justice.

The advisory cited six factors: the harm or risk of harm caused by the offence; the potential gain to the defendant; if the defendant had specialist knowledge or a license; evidence of the defendant’s awareness of the unlawfulness of his conduct; recidivism by the defendant; and whether a referral will lead to additional protection for customers.

The advisory is a response to an executive order issued by US President Donald Trump in May entitled “Fighting Overcriminalisation in Federal Regulations”.

The executive order argued “the United States is drastically overregulated”, adding the “status quo is absurd and unjust”.

The order continued: “It allows the executive branch to write the law, in addition to executing it. That situation can lend itself to abuse and weaponisation by providing Government officials tools to target unwitting individuals.

“It privileges large corporations, which can afford to hire expensive legal teams to navigate complex regulatory schemes and fence out new market entrants, over average Americans.”

The US regulatory regime is changing quickly under the new US President, with all the current CFTC commissioners having left or announced their intention to leave after Trump took office in January.

CFTC chair-elect Brian Quintenz, who was a commissioner in Trump’s first term, declined last month to give emphatic support for the “bi-partisan” tradition that the CFTC has three commissioners from the governing party and two from the minority party.

Quintenz said at his nomination hearing: “The president is the head of the executive. The president will make his own decisions with the advice and consent of Congress. But I would pledge to you that I would work with whoever is at the commission to keep the bi-partisanship spirit of the agency alive.”

US President Trump picked in February Quintenz to be the next chair of the CFTC.