[Federal Register Volume 83, Number 44 (Tuesday, March 6, 2018)]
[Rules and Regulations]
[Pages 9426-9429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04480]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 143

RIN 3038-AE58


Annual Adjustment of Civil Monetary Penalties to Reflect 
Inflation--2018

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is 
amending Rule 143.8, 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: This rule is effective on March 6, 2018 and is applicable to 
penalties assessed after March 6, 2018.

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\
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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 FCPIAA 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, Public Law 114-74, 129 Stat. 584 (2015) 
(2015 Act), 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).
    \5\ FCPIAA Sections 4 and 5. See also, Executive Office of the 
President, Office of Management and Budget Memorandum, M-18-03, 
Implementation of Penalty Inflation Adjustments for 2018, Pursuant 
to the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 (Dec. 15, 2017) (2017 OMB Guidance) (https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf).
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II. Commodity Exchange Act Civil Monetary Penalties

    The following sections of the CEA provide for CMPs that meet the 
FCPIAA definition \6\ and these CMPs are, therefore, subject to the 
inflation adjustment: Sections 6(c), 6b, and 6c of the CEA.\7\
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    \6\ FCPIAA Section 3(2).
    \7\ 7 U.S.C. 9, 13a-1, 13b. Criminal authorities may also seek 
fines for criminal violations of the CEA (see 7 U.S.C. 13, 13(c), 
13(d), 13(e), and 13b). The FCPIAA does not affect the amounts of 
these criminal penalties.
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III. Annual Inflation Adjustment for Commodity Exchange Act Civil 
Monetary Penalties

A. Methodology

    The FCPIAA annual inflation adjustment, 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 one 
dollar.\8\ 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.\9\ In this case, October 2017 CPI-U (246.663)/October 2015 CPI-U 
(241.729) = 1.02041.\10\ In order to

[[Page 9427]]

complete the 2018 annual adjustment, the CFTC must multiply each of its 
most recent CMP amounts by the multiplier, 1.02041, and round to the 
nearest dollar.\11\
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    \8\ FCPIAA Sections 4 and 5.
    \9\ FCPIAA Section 5(b)(1).
    \10\ 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/. Click the ``CPI Data/
Databases'' heading, and 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.
    \11\ 2017 OMB Guidance at 3.
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B. Civil Monetary Penalty Adjustments

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

 
 
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U.S. Code citation                   Civil monetary penalty
                                           description
                                  Violations occurring on or after 11/02/2015
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                                                                      Penalty          CPI-U            New
                                                                       amount in      multiplier        adjusted
                                                                    January 2017                         penalty
                                                                      Final Rule                          amount
                                                                            \12\
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                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
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7 U.S.C. 9 (Section 6(c) of    For any person    Non-                   $157,892         1.02041        $161,115
 the Commodity Exchange Act).   other than a      Manipulation
                                registered        or Attempted
                                entity *.         Manipulation.
                               For any person    Manipulation or       1,138,937         1.02041       1,162,183
                                other than a      Attempted
                                registered        Manipulation.
                                entity *.
7 U.S.C. 13a (Section 6b of    For a registered  Non-                    869,757         1.02041         887,509
 the Commodity Exchange Act).   entity * or any   Manipulation
                                of its            or Attempted
                                directors,        Manipulation.
                                officers or
                                employees.
                               For a registered  Manipulation or       1,138,937         1.02041       1,162,183
                                entity * or any   Attempted
                                of its            Manipulation.
                                directors,
                                officers or
                                employees.
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             Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action
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7 U.S.C. 13a-1 (Section 6c of  Any Person......  Non-                    173,951         1.02041         177,501
 the Commodity Exchange Act).                     Manipulation
                                                  or Attempted
                                                  Manipulation.
                               Any Person......  Manipulation or       1,138,937         1.02041       1,162,183
                                                  Attempted
                                                  Manipulation.
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* The term ``registered entity'' is defined in 7 U.S.C. 1a (Section 1a of the Commodity Exchange Act).

    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.\13\ Thus, 
the new CMP amounts established by this rulemaking shall apply to 
penalties assessed after March 6, 2018, for violations that occurred on 
or after November 2, 2015, the effective date of the FCPIAA amendment 
requiring annual adjustments, the 2015 Act.\14\
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    \12\ 82 FR 7643.
    \13\ FCPIAA Section 6.
    \14\ Prior Commission rulemakings to affect the required 
inflation adjustments referenced the date the enforcement action was 
filed without regard to the date of the corresponding violation. 
This rulemaking specifically references the date of the violation, 
thereby the Commission clarifies its determination that these 
adjusted penalties apply only with respect to violations occurring 
on or after November 2, 2015, the effective date of the 2015 Act.
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IV. Administrative Compliance

A. Notice Requirement

    The FCPIAA specifically exempted from the Administrative Procedure 
Act (APA) the rulemakings required to implement annual inflation 
adjustments.\15\ ``This means that the public procedure the APA 
generally requires--notice, an opportunity for comment, and a delay in 
effective date--is not required for agencies to issue regulations 
implementing the annual adjustment.'' \16\ The Commission further notes 
that the notice and comment procedures of the APA do not apply to this 
rulemaking because the Commission is acting herein pursuant to 
statutory language that mandates that the Commission act in a 
nondiscretionary matter.\17\
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    \15\ FCPIAA Section 4(b)(2).
    \16\ 2017 OMB Guidance at 4.
    \17\ Lake Carriers' Ass'n v. EPA, 652 F.3d 1, 10 (DC Cir. 2011).
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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act \18\ 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.\19\ Because, as 
discussed above, 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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    \18\ 5 U.S.C. 601-612.
    \19\ 5 U.S.C. 603(a).
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C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA),\20\ 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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    \20\ 44 U.S.C. 3507(d).
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D. Consideration of Costs and Benefits

    Section 15(a) of the CEA \21\ 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,

[[Page 9428]]

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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    \21\ 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 set forth in the preamble, the Commodity Futures 
Trading Commission amends part 143 of title 17 of the Code of Federal 
Regulations 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. Revise Sec.  143.8 to read as follows:


Sec.  143.8   Inflation-adjusted civil monetary penalties.

    (a) Statutory inflation adjustment of civil monetary penalties. The 
Inflation Adjustment Act of 1990, as amended, requires annual inflation 
adjustments to the civil monetary penalties imposed under the Commodity 
Exchange Act for violations that occurred on or after November 2, 2015. 
The Commission will publish notice of these adjusted penalty amounts in 
the Federal Register. The inflation adjustment is calculated by 
multiplying the maximum dollar amount of the civil monetary penalty for 
the previous calendar year by the cost-of-living inflation adjustment 
multiplier provided by the Office Management and Budget, which is based 
on the change in the Consumer Price Index, and rounding the total to 
the nearest dollar. Set forth in the charts in paragraph (b) of this 
section are the inflation adjusted penalty amounts for violations 
occurring on or after November 2, 2015 and the penalty amounts for 
violations that occurred prior to November 2, 2015. These penalty 
charts are also available on the Commission's website at: http://www.cftc.gov/LawRegulation/Enforcement/InflationAdjustedCivilMonetaryPenalties/index.htm.
    (b) 2018 inflation adjustment. The maximum amount of each civil 
monetary penalty in the following charts applies to penalties assessed 
after March 6, 2018:
    (1) For Non-Manipulation or Attempted Manipulation Violations:

                                           Table 1 to Paragraph (b)(1)
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                                                            Date of violation and corresponding penalty
                                 Civil monetary  ---------------------------------------------------------------
      U.S. Code citation             penalty        10/23/2004      10/23/2008      10/23/2012
                                   description    through  10/22/ through  10/22/ through  11/01/ 11/02/2015  to
                                                       2008            2012            2015           present
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                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
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7 U.S.C. 9 (Section 6(c) of     For any person          $130,000        $130,000        $140,000        $161,115
 the Commodity Exchange Act).    other than a
                                 registered
                                 entity \1\.
7 U.S.C. 13a (Section 6b of     For a registered         625,000         675,000         700,000         887,509
 the Commodity Exchange Act).    entity \1\ or
                                 any of its
                                 directors,
                                 officers or
                                 employees.
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             Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action
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7 U.S.C. 13a-1 (Section 6c of   Any Person......         130,000         140,000         140,000         177,501
 the Commodity Exchange Act).
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\1\ The term ``registered entity'' is defined in 7 U.S.C. 1a (Section 1a of the Commodity Exchange Act).

    (2) For Manipulation or Attempted Manipulation Violations:

                                           Table 1 to Paragraph (b)(2)
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                                                            Date of violation and corresponding penalty
                                 Civil monetary  ---------------------------------------------------------------
      U.S. Code citation             penalty        10/23/2004      05/22/2008      08/15/2011
                                   description    through  05/21/ through  08/14/ through  11/01/ 11/02/2015  to
                                                       2008            2011            2015           present
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                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
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7 U.S.C. 9 (Section 6(c) of     For any person          $130,000      $1,000,000      $1,025,000      $1,162,183
 the Commodity Exchange Act).    other than a
                                 registered
                                 entity \1\.
7 U.S.C. 13a (Section 6b of     For a registered         625,000       1,000,000       1,025,000       1,162,183
 the Commodity Exchange Act).    entity \1\ or
                                 any of its
                                 directors,
                                 officers or
                                 employees.
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[[Page 9429]]

 
             Civil Monetary Penalty Imposed by a Federal District Court In a Civil Injunctive Action
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7 U.S.C. 13a-1 (Section 6c of   Any Person......         130,000       1,000,000       1,025,000       1,162,183
 the Commodity Exchange Act).
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\1\ The term ``registered entity'' is defined in 7 U.S.C. 1a (Section 1a of the Commodity Exchange Act).


    Issued in Washington, DC, on February 28, 2018, 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--
2018--Commission Voting Summary

    On this matter, Chairman Giancarlo and Commissioners Quintenz 
and Behnam voted in the affirmative. No Commissioner voted in the 
negative.

[FR Doc. 2018-04480 Filed 3-5-18; 8:45 am]
 BILLING CODE 6351-01-P