[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Rules and Regulations]
[Pages 7643-7645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00488]



[[Page 7643]]

=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 143

RIN 3038-AE51


Annual Adjustment of Civil Monetary Penalties for Inflation--2017

AGENCY: Commodity Futures Trading Commission.

ACTION: Interim final rule.

-----------------------------------------------------------------------

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 January 23, 
2017.

FOR FURTHER INFORMATION CONTACT: Edward J. Riccobene, Associate Chief 
Counsel, Division of Enforcement, at (202) 418-5327 or 
[email protected], 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\ A 2015 amendment to the 
FCPIAA \3\ required agencies to make an initial ``catch-up'' adjustment 
to its civil monetary penalties effective no later than August 1, 
2016.\4\ For every year thereafter effective not later than January 15, 
the FCPIAA, as amended, requires agencies to make annual adjustments 
for inflation, with guidance from the Director of the Office of 
Management and Budget.\5\
---------------------------------------------------------------------------

    \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\ Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, 2015 Act, Public Law 114-74, 129 Stat. 584 
(2015), title VII, Section 701.
    \4\ FCPIAA Sections 4 and 5. See also, Adjustment of Civil 
Monetary Penalties for Inflation, 81 FR 41435 (June 27, 2016) (to be 
codified at 17 CFR 143.8).
    \5\ FCPIAA Sections 4 and 5. See also, Executive Office of the 
President, Office of Management and Budget Memorandum, M-17-11, 
Implementation of the 2017 annual adjustment pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(Dec. 16, 2016) available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf.
---------------------------------------------------------------------------

II. Commodity Exchange Act Civil Monetary Penalties

    The CEA provides for CMPs that meet the FCPIAA definition \6\ and 
these CMPs are, therefore, subject to the inflation adjustment in the 
following instances: Sections 6(c), 6(d), 6b, and 6c of the CEA.\7\
---------------------------------------------------------------------------

    \6\ FCPIAA Section 3(2).
    \7\ 7 U.S.C. 9, 13a, 13a-1, 13b.
---------------------------------------------------------------------------

    Section 6(c) of the CEA,\8\ as adjusted by the FCPIAA,\9\ currently 
sets the maximum CMP that may be imposed by the Commission, in a 
proceeding initiated on or after August 1, 2016, 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 
$152,243 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 $1,098,190 or triple the monetary 
gain to the violator.
---------------------------------------------------------------------------

    \8\ 7 U.S.C. 9.
    \9\ See 17 CFR 143.8(a)(1)(ii).
---------------------------------------------------------------------------

    Section 6(d) of the CEA,\10\ as adjusted by the FCPIAA,\11\ 
currently sets the maximum CMP that may be imposed by the Commission, 
in a proceeding initiated on or after August 1, 2016, on ``any person 
(other than a registered entity)'' \12\ for violations of the CEA or 
any other provisions of the CEA or of the rules, regulations, or orders 
of the Commission thereunder to the greater of $152,243 or triple the 
monetary gain to the violator.
---------------------------------------------------------------------------

    \10\ 7 U.S.C. 13b.
    \11\ See 17 CFR 143.8(a)(2)(ii).
    \12\ 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 this 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 this title; 
(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).
---------------------------------------------------------------------------

    Section 6b of the CEA \13\ 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. In actions 
initiated on or after August 1, 2016, 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 $1,098,190 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 $838,640 or triple the monetary gain to such person for all 
other violations.\14\
---------------------------------------------------------------------------

    \13\ 7 U.S.C. 13a.
    \14\ 17 CFR 143.8(a)(3)(ii).
---------------------------------------------------------------------------

    Section 6c of the CEA \15\ 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. In actions initiated on or 
after August 1, 2016, 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 $1,098,190 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 $167,728 
or triple the monetary gain to such person for all other 
violations.\16\
---------------------------------------------------------------------------

    \15\ 7 U.S.C. 13a-1.
    \16\ 17 CFR 143.8(a)(4)(ii).
---------------------------------------------------------------------------

III. Annual Inflation Adjustment for Commodity Exchange Act Civil 
Monetary Penalties

A. Methodology

    The annual 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

[[Page 7644]]

the nearest multiple of one dollar.\17\ Annual inflation adjustments 
are based on the percent change between the October Consumer Price 
Index for all Urban Consumers (CPI-U) preceding the date of the 
adjustment, and the prior year's October CPI-U.\18\ In this case, 
October 2016 CPI-U (241.729)/October 2015 CPI-U (237.838) = 
1.01636.\19\ In order to complete the 2017 annual adjustment, the CFTC 
must multiply each of its most recent CMP amounts by the multiplier, 
1.01636, and round to the nearest dollar.
---------------------------------------------------------------------------

    \17\ FCPIAA Sections 4 and 5.
    \18\ FCPIAA Section 5(b)(1).
    \19\ 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: http://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, 1982-84 = 100-
CUUR0000SA0'', and click the ``Retrieve data'' button.
---------------------------------------------------------------------------

B. Civil Monetary Penalty Adjustments

    Applying the FCPIAA annual inflation adjustment methodology results 
in the following amended CMPs:

----------------------------------------------------------------------------------------------------------------
                                                                                      Current       2017 Annual
                                                                                     inflation       inflation
                  Citation                               Description               adjusted CMP    adjusted CMP
                                                                                      amount          amount
----------------------------------------------------------------------------------------------------------------
Section 6(c) of the CEA, 7 U.S.C. 9........  Prohibition Regarding Manipulation         $152,243        $154,734
                                              and False Information [Other
                                              Violation (Non-Manipulation)].
Section 6(c) of the CEA, 7 U.S.C. 9........  Prohibition Regarding Manipulation        1,098,190       1,116,156
                                              and False Information
                                              [Manipulation or Attempted
                                              Manipulation].
Section 6(d) of the CEA, 7 U.S.C. 13b......  Manipulations or Other Violations;          152,243         154,734
                                              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                  838,640         852,360
                                              Government 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                1,098,190       1,116,156
                                              Government 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         167,728         170,472
                                              [Other Violation (Non-
                                              Manipulation)].
Section 6c of the CEA, 7 U.S.C. 13a-1......  Enjoining or Restraining Violations       1,098,190       1,116,156
                                              [Manipulation or Attempted
                                              Manipulation].
----------------------------------------------------------------------------------------------------------------

    The FCPIAA 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 established by this rulemaking may be applied only 
in Commission administrative or civil injunctive enforcement 
proceedings that are initiated on or after the effective date of this 
amendment, January 15, 2017.
---------------------------------------------------------------------------

    \20\ FCPIAA Section 6.
---------------------------------------------------------------------------

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).\21\
---------------------------------------------------------------------------

    \21\ 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.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act \22\ 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 rules 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.
---------------------------------------------------------------------------

    \22\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA),\23\ 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.
---------------------------------------------------------------------------

    \23\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

D. Consideration of Costs and Benefits

    Section 15(a) of the CEA \24\ 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.
---------------------------------------------------------------------------

    \24\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    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

[[Page 7645]]

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 part 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 continues 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)(ii) introductory text, (a)(2)(ii), 
(a)(3)(ii) introductory text, and (a)(4)(ii) introductory text; and
0
b. Add paragraphs (a)(1)(iii), (a)(2)(iii), (a)(3)(iii), and 
(a)(4)(iii).
    The revisions and additions read as follows:


Sec.  143.8  Inflation-adjusted civil monetary penalties.

    (a) * * *
    (1) * * *
    (ii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on August 1, 2016 through 
January 14, 2017:
* * * * *
    (iii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on or after January 15, 2017:
    (A) For manipulation or attempted manipulation violations, not more 
than the greater of $1,116,156 or triple the monetary gain to such 
person for each such violation; and
    (B) For all other violations, not more than the greater of $154,734 
or triple the monetary gain to such person for each such violation; and
    (2) * * *
    (ii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on August 1, 2016 through 
January 14, 2017, not more than the greater of $152,243 or triple the 
monetary gain to such person for each such violation;
    (iii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on or after January 15, 2017, 
not more than the greater of $154,734 or triple the monetary gain to 
such person for each such violation; and
    (3) * * *
    (ii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on August 1, 2016 through 
January 14, 2017:
* * * * *
    (iii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on or after January 15, 2017:
    (A) For manipulation or attempted manipulation violations, not more 
than the greater of $1,116,156 or triple the monetary gain to such 
person for each such violation; and
    (B) For all other violations, not more than the greater of $852,360 
or triple the monetary gain to such person for each such violation; and
    (4) * * *
    (ii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on August 1, 2016 through 
January 14, 2017:
* * * * *
    (iii) In an administrative proceeding before the Commission or a 
civil action in Federal court initiated on or after January 15, 2017:
    (A) For manipulation or attempted manipulation violations, not more 
than the greater of $1,116,156 or triple the monetary gain to such 
person for each such violation; and
    (B) For all other violations, not more than the greater of $170,472 
or triple the monetary gain to such person for each such violation.
* * * * *

    Issued in Washington, DC, on January 6, 2017, by the Commission.
Robert N. Sidman,
Deputy 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--
2017--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. 2017-00488 Filed 1-19-17; 8:45 am]
 BILLING CODE 6351-01-P