Supreme Court Justices Appear Hesitant to Narrow the Scope of Insider Trading Liability

Since the Second Circuit Court of Appeals’ December 2014 decision in United States v. Newman, the government’s ability to aggressively pursue insider trading cases involving tipping has been in doubt.  But, on October 5, the Supreme Court heard oral arguments in Salman v. United States, a case that should clarify the government’s burden in proving insider trading cases against tippers and tippees.  read more

Posted in Cases, Enforcement and Investigations, Oil & Gas, Power, Regulation, Supreme Court

CFTC Issues Fourth Penalty for Inaccurate Large Trader Reporting of Swaps

On September 27, 2016, the U.S. Commodity Futures Trading Commission (“CFTC” or the “Commission”) issued a fourth penalty for violations of its Swaps Large Trader Reporting (“Swaps LTR”) rule.  This time, the penalty was imposed against Wells Fargo Bank, N.A. (“Wells Fargo”).  As we noted in July, the CFTC is continuing on its trend toward more aggressive enforcement of reporting violations, including violations of the particularly complex and technical Swaps LTR rule. Compliance professionals should continue to review their reporting processes, including Swaps LTR, to confirm that they conform to the CFTC rules.  read more

Posted in CFTC, Commodity Trading, Regulation

The Federal Reserve’s Proposed Rollback of Physical Commodities Authority for Financial Holding Companies

On September 23, 2016, the Board of Governors of the Federal Reserve System (the “FRB”) issued a proposed regulation concerning the ability of a financial holding company (“FHC”) to engage in physical commodities activities (the “Commodities Proposal”).  The Commodities Proposal follows an advanced notice of proposed rulemaking issued by the FRB more than two years ago in early 2014.  read more

Posted in Uncategorized

CFTC Staff Issues Final Swap Dealer De Minimis Exception Report

By Athena Eastwood, Anthony Mansfield, Paul Pantano and Neal Kumar

On August 15, 2016, Staff of the U.S. Commodity Futures Trading Commission (“CFTC”) published a final report regarding the de minimis exception from swap dealer registration (“Staff De Minimis Report”).  The Staff De Minimis Report highlights continued insufficient data to identify swap dealing activity.  As a result, the Staff De Minimis Report does not include any Staff recommendations about whether the Commission should raise, lower, or retain the interim $8 billion de minimis threshold.  read more

Posted in Commodity Trading, Mining/Metals, Oil & Gas, Power, Regulation

CFTC Issues $560,000 Penalty for Inaccurate Large Trader Reporting of Swaps

By Anthony Mansfield, Jonathan Flynn, Neal Kumar and Michael Selig

On July 6, 2016, the Commodity Futures Trading Commission (“CFTC” or the “Commission”) fined Barclays Bank PLC (“Barclays”) $560,000 for inaccurate large trader reporting of swaps positions.  This is the third and largest civil monetary penalty to date for violations of the CFTC’s Part 20 swaps large trader reporting rules and demonstrates the continuation of a trend toward more aggressive enforcement of swap reporting violations.  read more

Posted in CFTC, Commodity Trading, Enforcement and Investigations, Regulation

FERC Issues Order Assessing Civil Penalties Against ETRACOM

On Friday, June 17, 2016, the Federal Energy Regulatory Commission (the “Commission”) issued an Order Assessing Civil Penalties against ETRACOM LLC (“ETRACOM”) and ETRACOM’s founding member and majority owner, Michael Rosenberg (together, “Respondents”).1 The Commission held that the Respondents violated section 222 of the Federal Power Act and section 1c.2 of the Commission’s regulations (the “Anti-Manipulation Rule”). Specifically, the Commission found that between May 14, 2011 and May 31, 2011 (the “Manipulation Period”), ETRACOM and Rosenberg engaged in a “cross-commodity” scheme in which they submitted virtual supply offers at the New Melones intertie at the border of the California Independent System Operator (“CAISO”) wholesale electric market with the intent to lower power prices artificially at New Melones in order to increase the value of ETRACOM’s Congestion Revenue Rights (“CRRs”) positions that settled based upon power prices at that location. Respondents offered two primary defenses to Staff’s allegations, each of which the Commission rejected: (1) that CAISO was not a well-functioning market and (2) that ETRACOM based its trading activity on market fundamentals.  read more

Posted in Enforcement and Investigations, FERC, Oil & Gas, Power, Regulation

D.C. Circuit Upholds FERC’s NEPA Analysis in Sabine Pass and Freeport LNG Projects

On June 28, 2016, the U.S. Court of Appeals for the District of Columbia Circuit rejected two related challenges to the Federal Energy Regulatory Commission’s environmental review of the Sabine Pass LNG and Freeport LNG applications to site, construct, and operate liquefied natural gas (“LNG”) export facilities under Section 3 of the Natural Gas Act.  read more

Posted in Cases, Enforcement and Investigations, LNG, Oil & Gas, Power, Regulation

FERC Issues Order Clarifying Reporting Requirements in the Electric Quarterly Report and Updating Data Dictionary

On June 16, 2016, the Federal Energy Regulatory Commission issued an order implementing specified clarifications to existing Electric Quarterly Report (“EQR”) reporting requirements and the accompanying EQR Data Dictionary.  The Commission’s order revised or affirmed the following reporting requirements and data fields:  (1) Increment Name; (2) Commencement Date of Contract Terms; (3) Transmission-related data; (4) Time Zone field options; and (5) E-Tag ID-related data fields.  Notably, the Commission also announced that, going forward, it will post to its website such “minor or non-material” changes to EQR reporting requirements and the EQR Data Dictionary, in addition to notifying EQR users via e-mail.  It will no longer propose these types of changes in a Commission order or rulemaking and, as a result, will not provide an opportunity for comment.  It explained that this will enable the agency to make minor or non-material changes in a more timely manner.  What the Commission deems to be “significant changes” to the EQR reporting requirements and the EQR Data Dictionary will be proposed in a Commission Order or rulemaking.  read more

Posted in Enforcement and Investigations, Power, Regulation

CFTC Holds Roundtable to Consider Proposed Regulation AT

By Gregory Mocek, Paul Pantano, Neal Kumar, Michael Selig, and Mary Treanor

On June 10, 2016, Staff for the Commodity Futures Trading Commission (“CFTC”) held a public roundtable to discuss its proposed Regulation Automated Trading (“Regulation AT”).  The CFTC proposed Regulation AT in an attempt to reduce the risk of market disruptions caused by automated trading.  Proposed Regulation AT includes risk controls and transparency measures for futures commission merchants (“FCMs”), designated contract markets (“DCMs”), and CFTC registrants using algorithmic trading systems.  The proposed rule also includes a new registration requirement for persons engaged in proprietary algorithmic trading on a DCM through direct electronic access (“DEA”).  Panelists at the roundtable – including representatives of FCMs, DCMs, and market participants with DEA – expressed concerns about the broad and prescriptive scope of Regulation AT and advocated a more flexible, principles-based, approach.  read more

Posted in CFTC, Commodity Trading, Enforcement and Investigations, Mining/Metals, Oil & Gas, Power, Regulation

Traders and Compliance Professionals Take Note: Phase One of New BIS “Global Code” Establishes “Best Practices” in the Foreign Exchange Markets

By Anthony Mansfield, Gregory Mocek, Jonathan Flynn, and Jorge Pesok

On May 26, 2016, the Foreign Exchange Working Group (“FXWG”) of the Bank for International Settlements (“BIS”) published the first phase of a new “Global Code of Conduct for the Foreign Exchange Market” (“Global Code”).  According to Guy Debelle, Assistant Governor (Financial Markets) at the Reserve Bank of Australia and head of the FXWG, the purpose of the Global Code is to set out “global principles of good practice in the foreign exchange market to provide a common set of guidance to the market, including in areas where there is a degree of uncertainty about what sort of practices are acceptable, and what are not.”  As such, the Global Code will likely be used by global regulators to define “best practices” in the FX markets, and the behavior that would be deemed disruptive, abusive, or manipulative.  read more

Posted in Commodity Trading, Regulation