United States Code

EFFECTIVE DATE OF 1974 AMENDMENT Amendment by Pub. L. 93-463 effective on the 180th day after Oct. 23, 1974, with the establishment of the Commodity Futures Trading Commission to be immediately effective on Oct. 23, 1974, and with all activities necessary to implement the changes effected by this amendment to be carried out after Oct. 23, 1974, and before as well as after the 180th day thereafter, see section 418 of Pub. L. 93-463, set out as a note under section 2 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 7a, 20 of this title.

§ 12b. Trading ban violations; prohibition.

It shall be unlawful for any person, against whom there is outstanding any order of the Commission prohibiting him from trading on or subject to the rules of any contract market, to make or cause to be made in contravention of such order, any contract for future delivery of any commodity, on or subject to the rules of any contract market. (As amended Oct. 23, 1974, Pub. L. 93-463, title I, § 103(a), 88 Stat. 1392.)

AMENDMENTS

1974-Pub. L. 93-463 substituted "Commission" for "Secretary of Agriculture".

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 13 of this title.

§ 12c. Disciplinary actions; notice; review of action by Commission.

(1) (A) Any exchange or the Commission if the exchange fails to act, may suspend, expel, or otherwise discipline any person who is a member of that exchange, or deny any person access to the exchange. Any such action shall be taken solely in accordance with the rules of that exchange.

(B) Any suspension, expulsion, disciplinary, or access denial procedure established by an exchange rule shall provide for written notice to the Commission and to the person who is suspended, expelled, or disciplined, or denied access, within thirty days, which includes the reasons for the exchange action in the form and manner the Commission prescribes. Otherwise the notice and reasons shall be kept confidential.

(2) The Commission may, in its discretion and in accordance with such standards and procedures as it deems appropriate, review any decision by an exchange whereby a person is suspended, expelled, otherwise disciplined, or denied access to the exchange. In addition, the Commission may, in its discretion and upon application of any person who is adversely affected by any other exchange action, review such action.

(3) The Commission may affirm, modify, set aside, or remand any exchange decision it reviews pursuant to subsection (2) of this section, after a determination on the record whether the action of th

exchange was in accordance with the policies of this chapter. Subject to judicial review, any order of the Commission entered pursuant to subsection (2) of this section shall govern the exchange in its further treatment of the matter.

(4) The Commission, in its discretion, may order a stay of any action taken pursuant to subsection (1) of this section pending review thereof. (Sept. 21, 1922, ch. 369, § 8c, as added Oct. 23, 1974, Pub. L. 93-463, title II, § 216, 88 Stat. 1405.)

EFFECTIVE DATE

Section effective on the 180th day after Oct. 23, 1974, with the establishment of the Commodity Futures Trading Commission to be immediately effective on Oct. 23, 1974, and with all activities necessary to implement the changes effected by this section to be carried out after Oct. 23, 1974, and before as well as after the 180th day thereafter, see section 418 of Pub. L. 93-463, set out as a note under section 2 of this title.

§ 13. Violations generally; punishment; costs of prosecution.

(a) Embezzlement, larceny, etc.; felony; value.

It shall be a felony punishable by a fine of not more than $100,000 or imprisonment for not more than five years, or both, together with the costs of prosecution, for any futures commission merchant, or any employee or agent thereof, to embezzle, steal, purloin, or with criminal intent convert to his own use or the use of another, any money, securities, or property having a value in excess of $100, which was received by such commission merchant to margin, guarantee, or secure the trades or contracts of any customer of such commission merchant or accruing to such customer as the result of such trades or contracts. The word "value" as used in this paragraph means face, par, or market value, or cost price, either wholesale or retail, whichever is greater. (b) Price manipulation; cornering; postal or interstate dissemination of false or misleading informaton affecting price of commodity in interstate commerce; felony.

It shall be a felony punishable by a fine of not more than $100,000 or imprisonment for not more than five years, or both, together with the costs of prosecution, for any person to manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for future delivery on or subject to the rules of any contract market, or to corner or attempt to corner any such commodity, or knowingly to deliver or cause to be delivered for transmission through the mails or in interstate commerce by telegraph, telephone, wireless, or other means of communication false or misleading or knowingly inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of any commodity in interstate commerce. (c) Other violations; misdemeanors.

Except as provided in paragraphs (a) and (b) of this section, it shall be a misdemeanor punishable by a fine of not more than $100,000 or imprisonment for not more than one year, or both, together with the costs of prosecution, for any person to violate the provisions of sections 6 to 6e, 6h, 61, 6k, 6m, 60 or 12b of this title, or to fail to evidence any con* mentioned in section 6 of this title by a record as therein required.

(d) Transactions by Commissioners and Commission employees prohibited.

It shall be a felony punishable by a fine of not more than $10,000 or imprisonment for not more than five years, or both, together with the costs of prosecution, for any Commissioner of the Commission or any employee or agent thereof, to participate, directly or indirectly, in any transaction in commodity futures or any transaction of the character of or which is commonly known to the trade as an "option", "privilege", "indemnity", "bid", "offer", "put", "call", "advance guaranty", or "decline guaranty", or for any such person to participate, directly or indirectly, in any investment transaction in an actual commodity: Provided, That such prohibition against any investment transaction in an actual commodity shall not apply to a transaction in which such person buys an agricultural commodity or livestock for use in his own farming or ranching operations or sells an agricultural commodity which he has produced in connection with his own farming or ranching operations nor to any transaction in which he sells livestock which he has owned at least three months. With respect to such excepted transactions, the Commission shall require any Commissioner of the Commission or any employee or agent thereof who participates in any such transaction to notify the Commission thereof in accordance with such regulations as the Commission shall prescribe and the Commission shall make such information available to the public.

(e) Use of information by Commissioners and Commission employees prohibited.

It shall be a felony punishable by a fine of not more than $10,000 or imprisonment for not more than five years, or both, together with the costs of prosecution (1) for any Commissioner of the Commission or any employee or agent thereof who, by virtue of his employment or position, acquires information which may affect or tend to affect the price of any commodity futures or commodity and which information has not been made public to impart such information with intent to assist another person, directly or indirectly, to participate in any transaction in commodity futures, any transaction in an actual commodity, or in any transaction of the character of or which is commonly known to the trade as an "option", "privilege", "indemnity", "bid", "offer", "put", "call", "advance guaranty", or "decline guaranty"; and (2) for any person to acquire such information from any Commissioner of the Commission or any employee or agent thereof and to use such information in any transaction in commodity futures, any transaction in an actual commodity, or in any transaction of the character of or which is commonly known to the trade as an "option", "privilege", "indemnity", "bid", "offer", "put", "call", "advance guaranty", or "decline guaranty". (As amended Oct. 23, 1974, Pub. L. 93-463, title II, § 212(d), title IV, §§ 401, 409, 88 Stat. 1404, 1412, 1414.)

AMENDMENTS

1974-Par. (a). Pub. L. 93-463, § 212(d) (1), substituted "$100,000" for "$10,000".

Par. (b). Pub. L. 93-463, § 212(d) (2), substituted "$100,000" for "$10,000".

40-190 0-75-Vol. 1- 15

Par. (c). Pub. L. 93-463, §§ 212 (d) (3), 409, substituted "$100,000" for "$10,000" and inserted reference to sections 6k, 6m, and 60 of this title.

Subsec. (d), (e). Pub. L. 93-463, § 401, added subsecs. (d) and (e).

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 13b, 15a of this title.

§ 13-1. Violations, prohibition against dealings in onion futures; punishment.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2 of this title.

§ 13a. Nonenforcement of rules of government or other violations; cease and desist orders; fines and penalties; imprisonment; misdemeanor; separate offenses.

If any contract market is not enforcing or has not enforced its rules of government made a condition of its designation as set forth in section 7 of this title, or if any contract market, or any director, officer, agent, or employee of any contract market otherwise is violating or has violated any of the provisions of this chapter or any of the rules, regulations, or orders of the Commission thereunder, the Commission may, upon notice and hearing and subject to appeal as in other cases provided for in paragraph (a) of section 8 of this title, make and enter an order directing that such contract market, director, officer, agent, or employee shall cease and desist from such violation, and assess a civil penalty of not more than $100,000 for each such violation. If such contract market, director, officer, agent, or employee, after the entry of such a cease and desist order and the lapse of the period allowed for appeal of such order or after the affirmance of such order, shall fail or refuse to obey or comply with such order, such contract market, director, officer, agent, or employee shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not less than six months nor more than one year, or both. Each day during which such failure or refusal to obey such cease and desist order continues shall be deemed a separate offense. If the offending contract market or other person upon whom such penalty is imposed, after the lapse of the period allowed for appeal or after the affirmance of such penalty, shall fail to pay such penalty, the Commission shall refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court. In determining the amount of the money penalty assessed under this section, the Commission shall consider the appropriateness of such penalty to the net worth of the offending person and the gravity of the offense, and in the case of a contract market shall further consider whether the amount of the penalty will materially impair the contract market's ability to

carry on its operations and duties. (As amended Oct. 23, 1974, Pub. L. 93-463, title II, § 212(b), 88 Stat. 1403.)

AMENDMENTS

1974-Pub. L. 93-463 added provision for the assessment of a civil penalty of not more than $100,000 for each violation, substituted "not more than $100,000" for "not less than $500 nor more than $10,000" as the permissible range of fines imposed, added provisions for the enforcement of a penalty, and substituted "orders of the Commission" for "orders of the Secretary of Agriculture or the commission".

§ 13a-1. Action to enjoin or restrain violations; compliance; writs and orders; iurisdiction and venue; process.

Whenever it shall appear to the Commission that any contract market or other person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule, regulation, or order thereunder, or is restraining trading in any commodity for future delivery, the 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, to enjoin such act or practice, or to enforce compliance with this chapter, or any rule, regulation or order thereunder, and said courts shall have jurisdiction to entertain such actions: Provided, That no restraining order or injunction for violation of the provisions of this chapter shall be issued ex parte by said court. Upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. Upon application of the Commission, the district courts of the United States and the United States courts of any territory or other place subject to the jurisdiction of the United States shall also have jurisdiction to issue writs of mandamus, or orders affording like relief, commanding any person to comply with the provisions of this chapter or any rule, regulation, or order of the Commission thereunder, including the requirement that such person take such action as is necessary to remove the danger of violation of this chapter or any such rule, regulation, or order: Provided, That no such writ of mandamus, or order affording like relief, shall be issued ex parte. Any action under this section may be brought in the district wherein the defendant is found or is an inhabitant or transacts business or in the district where the act or practice occurred, is occurring, or is about to occur, and process in such cases may be served in any district in which the defendant is an inhabitant or wherever the defendant may be found. In lieu of bringing actions itself pursuant to this section, the Commission may request the Attorney General to bring the action. Where the Commission elects to bring the action, it

shall inform the Attorney General of such suit and advise him of subsequent developments. (Sept. 21, 1922, ch. 369, § 6c, as added Oct. 23, 1974, Pub. L. 93-463, title II, § 211, 88 Stat. 1402.)

EFFECTIVE DATE

§ 13b. Manipulations or other violations; cease and desist orders against persons other than contract markets; punishment; misdemeanor or felony; separate offenses.

If any person (other than a contract market) is manipulating or attempting to manipulate or has manipulated or attempted to manipulate the market price of any commodity, in interstate commerce, or for future delivery on or subject to the rules of any contract market, or otherwise is violating or has violated any of the provisions of this chapter or of the rules, regulations, or orders of the Commission thereunder, the Commission may, upon notice and hearing, and subject to appeal as in other cases provided for in section 9 of this title, make and enter an order directing that such person shall cease and desist therefrom and, if such person thereafter and after the lapse of the period allowed for appeal of such order or after the affirmance of such order, shall fail or refuse to obey or comply with such order, such person shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $100,000, or imprisoned for not less than six months nor more than one year, or both, except that if such failure or refusal to obey or comply with such order involves any offense within paragraph (a) or (b) of section 13 of this title, such person shall be guilty of a felony and, upon conviction thereof, shall be subject to the penalties of said paragraph (a) or (b): Provided, That any such cease and desist order against any respondent in any case of manipulation of, or attempt to manipulate, the price of any commodity shall be issued only in conjunction with an order issued against such respondent under section 9 of this title. Each day during which such failure or refusal to obey or comply with such order continues shall be deemed a separate offense. (As amended Oct. 23, 1974, Pub. L. 93-463. title I, § 103 (a), (b), title II, § 212 (c), 88 Stat. 1392, 1404.)

AMENDMENTS

1974-Pub. L. 93-463 substituted "not more than $100,000" for "not less than $500 nor more than $10,000" and substituted "Commission" for "Secretary of Agriculture or the Commission" and "Secretary".

§ 13c. Responsibility as principal; minor violations.

(a) Any person who commits, or who willfully aids, abets, counsels, commands, induces, or procures the commission of, a violation of any of the provisions of this chapter, or any of the rules; regulations, or orders issued pursuant to this chapter, or who acts in combination or concert with any other person in any such violation, or who willfully causes an act to be done or omitted which if directly performed or omitted by him or another would be a violation of the provisions of this chapter or any of such rules, regulations, or orders may be held responsible in administrative proceedings under this chapter for such violation as a principal.

(b) Nothing in this chapter shall be construed as requiring the Commission to report minor violations of this chapter for prosecution, whenever it appears that the public interest does not require such action. (As amended Oct. 23, 1974, Pub. L. 93-463, title I, § 103(b), 88 Stat. 1392.)

AMENDMENTS

1974-Par. (b). Pub. L. 93-463 substituted "Commission" for "Secretary of Agriculture or the commission".

§ 15. Provisions of Interstate Commerce Act made applicable.

For the purpose of securing effective enforcement of the provisions of this chapter, and for the purpose of any investigation or proceeding under this chapter, the provisions, including penalties, of section 12 of Title 49, relating to the attendance and testimony of witnesses and the production of documentary evidence, are made applicable to the power, jurisdiction, and authority of the Commission, and any Administrative Law Judge designated pursuant to the provisions of this chapter, and to any person subject thereto. (As amended Oct. 23, 1974, Pub. L. 93-463, title I, § 103(d), title IV, § 408 (b), 88 Stat. 1392, 1414.)

AMENDMENTS

1974-Pub. L. 93-463 struck out "the Secretary of Agriculture (or any person designated by him)," following "jurisdiction, and authority of" and substituted "Administrative Law Judge" for "referee".

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 12 of this title.

§ 15a. Leverage contracts for gold and silver.

(a) No person shall offer to enter into, enter into, or confirm the execution of any transaction for the

delivery of silver bullion, gold bullion, or bulk silver coins or bulk gold coins, pursuant to a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract contrary to any rule, regulation, or order of the Commodity Futures Trading Commission designed to insure the financial solvency of the transaction or prevent manipulation or fraud: Provided, That such rule, regulation, or order may be made only after notice and opportunity for hearing. If the Commission determines that any such transaction is a contract for future delivery within the meaning of this chapter, such transaction shall be regulated in accordance with the provisions of this chapter.

(b) The provisions of section 13(c) of this title shall be applicable with respect to persons who violate the provisions of this section. (Pub. L. 93-463, title II, § 217, Oct. 23, 1974, 88 Stat. 1405.)

CODIFICATION

Section was enacted as part of the Commodity Futures Trading Commission Act of 1974, and not as part of the Commodity Exchange Act which enacted this chapter. EFFECTIVE DATE

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 2 of this title.

§ 16. Commission operations.

(a) Cooperation with other agencies.

The Commission may cooperate with any Department or agency of the Government, any State, territory, district, or possession, or department, agency, or political subdivision thereof, or any person. (b) Employment of investigators, experts, Administrative Law Judges, consultants, clerks, and other personnel; contracts.

The Commission shall have the authority to employ such investigators, special experts, Administrative Law Judges, clerks, and other employees as it may from time to time find necessary for the proper performance of its duties and as may be from time to time appropriated for by Congress. The Commission may employ experts and consultants in accordance with section 3109 of Title 5, and compensate such persons at rates not in excess of the maximum daily rate prescribed for GS-18 under section 5332 of Title 5. The Commission shall also have authority to make and enter into contracts with respect to all matters which in the judgment of the Commission are necessary and appropriate to effectuate the purposes and provisions of this chapter, including, but not limited to, the rental of necessary space at the seat of Government and elsewhere.

All of the expenses of the Commissioners, including all necessary expenses for transportation incurred by them while on official business of the Commission, shall be allowed and paid on the presen

tation of itemized vouchers therefor approved by the Commission.

(d) Authorization of appropriations.

There are hereby authorized to be appropriated to carry out the provisions of this chapter such sums as may be required for the fiscal year ending June 30, 1975, for the fiscal year ending June 30, 1976, for the fiscal year ending June 30, 1977, and for the fiscal year ending June 30, 1978. (As amended Oct. 23, 1974, Pub. L. 93-463, title I, § 101 (b), 88 Stat. 1391.) AMENDMENTS

1974-Pub. L. 93-463 designated existing unlettered provisions as subsecs. (a)-(d) and in subsecs. (a)-(d) as so designated substituted "Commission" for "Secretary of Agriculture", added provisions authorizing the expenditure of funds for expenses upon the presentation of itemized vouchers therefor approved by the Commission, substituted provisions authorizing appropriations specifically for fiscal years ending June 30, 1975, 1976, 1977, and 1978, for provisions making a general authorization of appropriations without a fiscal year limitation, and added authorization to enter into contracts and compensate experts and consultants in accordance with section 3109 of Title 5 at rates not in excess of the maximum daily rate prescribed for GS-18 under section 5332 of Title 5.

EFFECTIVE DATE OF 1974 AMENDMENT

Amendment by Pub. L. 93-463 effective on the 180th day after Oct. 23, 1974, with the establishment of the Commodity Futures Trading Commission to be immediately effective on Oct. 23, 1974, and with all activities necessary to implement the changes effected by this amendment to be carried out after Oct. 23, 1974, and before as well as after the 180th day thereafter, see section 418 of Pub. L. 93-463, set out as a note under section 2 of this title.

§ 18. Complaints against registered persons. (a) Petition.

Any person complaining of any violation of any provision of this chapter or any rule, regulation, or order thereunder by any person registered under section 6d, 6e, 6j or 6m of this title may, at any time within two years after the cause of action accrues, apply to the Commission by petition, which shall briefly state the facts, whereupon, if, in the opinion of the Commission, the facts therein contained warrant such action, a copy of the complaint thus made shall be forwarded by the Commission to the respondent, who shall be called upon to satisfy the complaint, or to answer it in writing, within a reasonable time to be prescribed by the Commission. (b) Investigation and hearing.

If there appear to be, in the opinion of the Commission, any reasonable grounds for investigating any complaint made under this section, the Commission shall investigate such complaint and may, if in its opinion the facts warrant such action, have said complaint served by registered mail or by certified mail or otherwise on the respondent and afford such person an opportunity for a hearing thereon before an Administrative Law Judge designated by the Commission in any place in which the said person is engaged in business: Provided, That in complaints wherein the amount claimed as damages does not exceed the sum of $2,500, a hearing need not be held and proof in support of the complaint and in support of the respondent's answer may be supplied in the form of depositions or verified statements of fact.

(c) Determination. After opportunity for hearing on complaints where the damages claimed exceed the sum of $2,500 has been provided or waived and on complaints where damages claimed do not exceed the sum of $2,500 not requiring hearing as provided herein, the Commission shall determine whether or not the respondent has violated any provision of this chapter or any rule, regulation, or order thereunder.

(d) Bond requirement when complainant is nonresident; waiver.

In case a complaint is made by a nonresident of the United States, the complainant shall be required, before any formal action is taken on his complaint, to furnish a bond in double the amount of the claim conditioned upon the payment of costs, including a reasonable attorney's fee for the respondent if the respondent shall prevail, and any reparation award that may be issued by the Commission against the complainant on any counterclaim by respondent: Provided, That the Commission shall have authority to waive the furnishing of a bond by a complainant who is a resident of a country which permits the filing of a complaint by a resident of the United States without the furnishing of a bond.

(e) Reparations.

If after a hearing on a complaint made by any person under subsection (a) of this section, or without hearing as provided in subsections (b) and (c) of this section, or upon failure of the party complained against to answer a complaint duly served within the time prescribed, or to appear at a hearing after being duly notified, the Commission determines that the respondent has violated any provision of this chapter, or any rule, regulation, or order thereunder, the Commission shall, unless the offender has already made reparation to the person complaining, determine the amount of damage, if any, to which such person is entitled as a result of such violation and shall make an order directing the offender to pay to such person complaining such amount on or before the date fixed in the order. If, after the respondent has filed his answer to the complaint, it appears therein that the respondent has admitted liability for a portion of the amount claimed in the complaint as damages, the Commission under such rules and regulations as it shall prescribe, unless the respondent has already made reparation to the person complaining, may issue an order directing the respondent to pay to the complainant the undisputed amount on or before the date fixed in the order, leaving the respondent's liability for the disputed amount for subsequent determination. The remaining disputed amount shall be determined in the same manner and under the same procedure as it would have been determined if no order had been issued by the Commission with respect to the undisputed sum.

(f) Enforcement of reparation award.

If any person against whom an award has been made does not pay the reparation award within the time specified in the Commission's order, the complainant, or any person for whose benefit such order was made, within three years of the date of the order, may file a certified copy of the order of the

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