Annual Adjustment of Civil Monetary Penalties To Reflect Inflation-2024

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 143

RIN 3038-AF32

Annual Adjustment of Civil Monetary Penalties To Reflect Inflation—2024

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

SUMMARY: The Commodity Futures Trading Commission (Commission) is amending its rule that governs the maximum amount of civil monetary penalties imposed under the Commodity Exchange Act (CEA), to adjust for inflation. This rule sets forth the maximum, inflation-adjusted dollar amount for civil monetary penalties (CMPs) assessable for violations of the 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 January 24, 2024 and is applicable to penalties assessed after January 15, 2024.

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] 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 15th, 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 FCPIAA is to establish a mechanism that shall (1) allow for regular adjustment for inflation of civil monetary penalties; (2) maintain the deterrent effect of civil monetary penalties and promote compliance with the law; and (3) improve 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-24-07, Implementation of Penalty Inflation Adjustments for 2024 (Dec. 19, 2023) (2023 OMB Guidance) (https://www.whitehouse.gov/wp-content/uploads/2023/12/M-24-07-Implementation-of-Penalty-Inflation-Adjustments-for-2024.pdf).

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]

[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 FCPIA does not affect the amounts of these criminal penalties.

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, the October 2023 CPI-U (307.671)/October 2022 CPI-U (298.012) = 1.03241.[10] In order to complete the 2024 annual adjustment, the CFTC must multiply each of its most recent CMP amounts by the multiplier, 1.03241, and round to the nearest dollar.[11]

[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. city average, All items—CUUR0000SA0”, and click the “Retrieve data” button.

[11] FCPIAA Section 5(a). See also, 2023 OMB Guidance at 1.

B. Civil Monetary Penalty Adjustments

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

Violations occurring on or after 11/02/2015

U.S. Code citation                   Civil monetary penalty         Penalty amount       CPI-U      New adjusted
                                           description                     in 2023  multiplier    penalty amount
                                                                   final rule \12\
----------------------------------------------------------------------------------------------------------------
                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 9 (Section 6(c) of    For any person    Other Than               $194,710     1.03241          $201,021
 the Commodity Exchange Act).   other than a      Manipulation
                                registered        or Attempted
                                entity\1\.        Manipulation.
                               For any person    Manipulation or         1,404,520     1.03241         1,450,040
                                other than a      Attempted
                                registered        Manipulation.
                                entity \1\.
7 U.S.C. 13a (Section 6b of    For a registered  Other Than              1,072,570     1.03241         1,107,332
 the Commodity Exchange Act).   entity \1\ or     Manipulation
                                any of its        or Attempted
                                directors,        Manipulation.
                                officers or
                                employees.
                               For a registered  Manipulation or         1,404,520     1.03241         1,450,040
                                entity \1\ or     Attempted
                                any of its        Manipulation.
                                directors,
                                officers or
                                employees.
----------------------------------------------------------------------------------------------------------------
             Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 13a-1 (Section 6c of  Any Person......  Other Than                214,514     1.03241           221,466
 the Commodity Exchange Act).                     Manipulation
                                                  or Attempted
                                                  Manipulation.
                               Any Person......  Manipulation or         1,404,520     1.03241         1,450,040
                                                  Attempted
                                                  Manipulation.
----------------------------------------------------------------------------------------------------------------

[1] 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 January 15, 2024, for violations that occurred on or after November 2, 2015, the effective date of the FCPIAA amendment requiring annual adjustments, the 2015 Act.

[12] Annual Adjustment of Civil Monetary Penalties to Reflect Inflation—2023, 88 FR 1501 (Jan. 11, 2023); https://www.cftc.gov/sites/default/files/2023/01/2023-00396a.pdf.

[13] FCPIAA Section 6.

IV. Administrative Compliance

A. Notice Requirement

The FCPIAA specifically exempted from the Administrative Procedure Act (APA) the rulemakings required to implement annual inflation adjustments.[14] 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.[15] 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.[16]

[14] FCPIAA Section 4(b)(2).

[15] 2023 OMB Guidance at 3-4.

[16] Lake Carriers' Ass'n v. E.P.A., 652 F.3d 1, 10 (D.C. Cir. 2011).

B. Regulatory Flexibility Act

The Regulatory Flexibility Act [17] 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.[18] 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 Rule 143.8, the Commission additionally is not obligated to conduct a regulatory flexibility analysis.

[17] 5 U.S.C. 601-612.

[18] 5 U.S.C. 603(a).

C. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA),[19] 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.

[19] 44 U.S.C. 3507(d).

D. Consideration of Costs and Benefits

Section 15(a) of the CEA [20] requires the Commission to consider the costs and benefits of its action before issuing a new regulation. Section 15(a) of the CEA 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.

[20] 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 Rule 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) of the CEA, or any other factors.

List of Subjects in 17 CFR Part 143

Claims, Penalties.

For the reasons set forth in the preamble, the Commodity Futures Trading Commission amends part 143 of chapter I 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, 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 by revising paragraph (b) to read as follows:

Sec. 143.8 Inflation-adjusted civil monetary penalties.

---

(b) 2024 Inflation adjustment. The maximum amount of each civil monetary penalty in the following charts applies to penalties assessed after January 15, 2024:

(1) For violations, other manipulation, or attempted manipulation:

Table 1 to Paragraph (b)(1)

Date of violation and corresponding penalty

        U.S. Code citation             Civil monetary      10/23/2004    10/23/2008    10/23/2012
                                     penalty description   through 10/   through 10/   through 11/   11/02/2015
                                                             22/2008       22/2012       01/2015     to present
----------------------------------------------------------------------------------------------------------------
                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 9 (Section 6(c) of the     For any person other      $130,000      $140,000      $140,000      $201,021
 Commodity Exchange Act).            than a registered
                                     entity \1\.
7 U.S.C. 13a (Section 6b of the     For a registered           625,000       675,000       700,000     1,107,332
 Commodity Exchange Act).            entity \1\ or any
                                     of its directors,
                                     officers or
                                     employees.
----------------------------------------------------------------------------------------------------------------
             Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 13a-1 (Section 6c of the   Any Person..........       130,000       140,000       140,000       221,466

Commodity Exchange Act).

[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 2 to Paragraph (b)(2)

Date of violation and corresponding penalty

        U.S. Code citation             Civil monetary      10/23/2004    05/22/2008    08/15/2011
                                     penalty description   through 05/   through 08/   through 11/   11/02/2015
                                                             21/2008       14/2011       01/2015     to present
----------------------------------------------------------------------------------------------------------------
                  Civil Monetary Penalty Imposed by the Commission in an Administrative Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 9 (Section 6(c) of the     For any person other      $130,000    $1,000,000    $1,025,000    $1,450,040
 Commodity Exchange Act).            than a registered
                                     entity \1\.
7 U.S.C. 13a (Section 6b of the     For a registered           625,000     1,000,000     1,025,000     1,450,040
 Commodity Exchange Act).            entity \1\ or any
                                     of its directors,
                                     officers or
                                     employees.
----------------------------------------------------------------------------------------------------------------
             Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action
----------------------------------------------------------------------------------------------------------------
7 U.S.C. 13a-1 (Section 6c of the   Any Person..........       130,000     1,000,000     1,025,000     1,450,040

Commodity Exchange Act).

[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 January 19, 2024, by the Commission. Robert Sidman, Deputy Secretary of the Commission.

Note: The following appendix will not appear in the Code of Federal Regulations.

Appendix to Annual Adjustment of Civil Monetary Penalties To Reflect Inflation—2024—Commission Voting Summary

On this matter, Chairman Behnam and Commissioners Johnson, Goldsmith Romero, Mersinger, and Pham voted in the affirmative. No Commissioner voted in the negative.

[FR Doc. 2024-01341 Filed 1-23-24; 8:45 am]

BILLING CODE 6351-01-P