Annual Adjustment of Civil Monetary Penalties To Reflect Inflation-2019

Published date11 February 2019
Citation84 FR 3103
Record Number2019-01852
SectionRules and Regulations
CourtCommodity Futures Trading Commission
Federal Register, Volume 84 Issue 28 (Monday, February 11, 2019)
[Federal Register Volume 84, Number 28 (Monday, February 11, 2019)]
                [Rules and Regulations]
                [Pages 3103-3105]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-01852]
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                COMMODITY FUTURES TRADING COMMISSION
                17 CFR Part 143
                RIN 3038-AE69
                Annual Adjustment of Civil Monetary Penalties To Reflect
                Inflation--2019
                AGENCY: Commodity Futures Trading Commission.
                ACTION: Final rule.
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                SUMMARY: The Commodity Futures Trading Commission (Commission) is
                amending its rules governing 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 February 11, 2019 and is applicable to
                penalties assessed after January 15, 2019.
                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 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-19-04,
                Implementation of Penalty Inflation Adjustments for 2019, Pursuant
                to the Federal Civil Penalties Inflation Adjustment Act Improvements
                Act of 2015 (Dec. 14, 2018) (2018 OMB Guidance) (https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.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 FCPIA 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, the October 2018 CPI-U (252.885)/October 2017
                CPI-U (246.663) = 1.02522.\10\ In order to complete the 2019 annual
                adjustment, the CFTC must multiply each of its most recent CMP amounts
                by the multiplier, 1.02522, 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\ 2018 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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                 Violations occurring on or after 11/02/2015
                 -----------------------------------------------
                 U.S. code citation Civil monetary penalty Penalty amount
                 description in 2018 final CPI-U New adjusted
                 rule \12\ multiplier penalty amount
                ----------------------------------------------------------------------------------------------------------------
                 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- $161,115 1.02552 $165,227
                 the Commodity Exchange Act). other than a Manipulation
                 registered or Attempted
                 entity \1\. Manipulation.
                 For any person Manipulation or $1,162,183 1.02552 $1,191,842
                 other than a Attempted
                 registered Manipulation.
                 entity \1\.
                7 U.S.C. 13a (Section 6b of For a registered Non- $887,509 1.02552 $910,158
                 the Commodity Exchange Act). entity \1\ or Manipulation
                 any of its or Attempted
                 directors, Manipulation.
                 officers or
                 employees.
                [[Page 3104]]
                
                 For a registered Manipulation or $1,162,183 1.02552 $1,191,842
                 entity \1\ or Attempted
                 any 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
                ----------------------------------------------------------------------------------------------------------------
                7 U.S.C. 13a-1 (Section 6c of Any Person...... Non- $177,501 1.02552 $182,031
                 the Commodity Exchange Act). Manipulation
                 or Attempted
                 Manipulation.
                 Any Person...... Manipulation or $1,162,183 1.02552 $1,191,842
                 Attempted
                 Manipulation.
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                \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, 2019, for violations that occurred
                on or after November 2, 2015, the effective date of the FCPIAA
                amendment requiring annual adjustments, the 2015 Act.
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                 \12\ 83 FR 9426.
                 \13\ FCPIAA Section 6.
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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.\14\ ``This means that the public procedure the APA
                generally requires (i.e.,--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\
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                 \14\ FCPIAA Section 4(b)(2).
                 \15\ 2018 OMB Guidance at 4.
                 \16\ Lake Carriers' Ass'n v. E.P.A., 652 F.3d 1, 10 (D.C. Cir.
                2011).
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                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 Sec. 143.8, the Commission
                additionally is not obligated to conduct a regulatory flexibility
                analysis.
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                 \17\ 5 U.S.C. 601-612.
                 \18\ 5 U.S.C. 603(a).
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                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.
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                 \19\ 44 U.S.C. 3507(d).
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                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) 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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                 \20\ 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 Sec. 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(b) to read as follows:
                Sec. 143.8 Inflation-adjusted civil monetary penalties.
                * * * * *
                 (b) 2019 Inflation adjustment. The maximum amount of each civil
                monetary penalty in the following charts applies to penalties assessed
                after January 15, 2019:
                 (1) For non-manipulation or attempted manipulation violations:
                [[Page 3105]]
                 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
                ----------------------------------------------------------------------------------------------------------------
                 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 $165,227
                 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 $910,158
                 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
                ----------------------------------------------------------------------------------------------------------------
                7 U.S.C. 13a-1 (Section 6c of Any Person...... $130,000 $140,000 $140,000 $182,031
                 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 $1,191,842
                 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 $1,191,842
                 the 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 Any Person...... $130,000 $1,000,000 $1,025,000 $1,191,842
                 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 6, 2019, 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 Adjustment of Civil Monetary Penalties for Inflation--
                Commission Voting Summary
                 On this matter, Chairman Giancarlo, and Commissioners Quintenz,
                Behnam, Stump, and Berkovitz voted in the affirmative. No
                Commissioner voted in the negative.
                [FR Doc. 2019-01852 Filed 2-8-19; 8:45 am]
                 BILLING CODE 6351-01-P
                

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