Compliance Departments Must Continue to Evolve as Regulators Refine Their Approach to Spoofing

By Anthony Mansfield, Gregory Mocek, Paul Pantano and Jonathan Flynn

The government’s pursuit of alleged “spoofing” continues to garner headlines with the criminal authorities recently securing a conviction in the prosecution of Michael Coscia for alleged spoofing on the Chicago Mercantile Exchange as well as an order requiring the extradition of a UK resident, Navinder Sarao, to face a combination of criminal and civil charges in the United States for alleged spoofing in the S&P 500 E-mini futures contract.  read more

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

Long-Awaited Decision is a Mixed Result for Litigants Battling FERC Enforcement Actions in Federal Court

By Paul PantanoThomas Millar and Mary Treanor

Individuals and organizations litigating the imposition of civil penalties by the Federal Energy Regulatory Commission (“FERC” or “Commission”) under its anti-manipulation authority in federal court received another opinion last week, this time from the Federal District Court for the District of Massachusetts, in what are commonly known as the “Paper Mill” cases. On April 11, 2016, the court denied motions to dismiss and for judgment on the pleadings filed as early as December 19, 2013 by Lincoln Paper and Tissue, LLC (“Lincoln”), Competitive Energy Services, LLC (“CES”), and Richard Silkman (together, “Defendants”). The decision is significant because it follows Judge Nunley’s decision in FERC v. Barclays Bank PLC et al., in the Eastern District of California as only the second time that a federal court has ruled on dispositive motions challenging FERC’s jurisdiction and the adequacy of its allegations in a civil penalty enforcement action under the Federal Power Act (“FPA”).  read more

Posted in Cases, Commodity Trading, FERC, Oil & Gas, Power, Regulation

CFTC Awards More than $10 Million to Whistleblower

On April 4, 2016, the Commodity Futures Trading Commission (“CFTC”) announced a whistleblower award of more than $10 million.  This is only the third whistleblower award that the CFTC has approved since the inception of the CFTC whistleblower program in 2011, and by far, the largest award amount.  Although the CFTC Whistleblower Rules are not new, this award is a reminder that there are now potentially powerful incentives for people to report internal wrongdoing.  read more

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

CFTC Adopts Final Trade Option Rule

On March 16, 2016, the Commodity Futures Trading Commission (“CFTC”) unanimously approved amendments to the rules applicable to certain physically-settled options referred to as “trade options.”  This final rule substantially reduces the regulatory burdens for end-users entering into trade options by eliminating reporting and recordkeeping requirements.  The CFTC also confirmed that it does not intend to impose position limits on trade options.  The final rule becomes effective upon publication in the Federal Register, which we expect to occur later this week or early next week.  read more

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

New ICE Futures U.S. Wash Trade FAQ

Effective February 23, 2016, ICE Futures U.S., Inc. (“ICE” or “Exchange”) issued a revised Wash Trade Frequently Asked Questions (“ICE FAQ”).  This ICE FAQ replaces a 2009 ICE Wash Trade FAQ and provides additional guidance to market participants on trades that may constitute wash trades.  The ICE FAQ also highlights intermediary and third party obligations not to accept orders for trades if it knows or should know that they are wash trades.

The scope of the wash trade prohibition applies to any “market participant” which the FAQ defines as “any person initiating or executing a transaction directly or through an intermediary, and any person for whose benefit such a transaction has been initiated or executed.  A market participant also includes any individual or firm that is involved with the placement, negotiation, or execution of a transaction such as a floor, firm or voice broker.”  read more

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

CFTC Energy and Environmental Markets Advisory Committee Meeting

On February 25, 2016, the Commodity Futures Trading Commission’s (“CFTC”) Energy and Environmental Markets Advisory Committee (“EEMAC”) convened its first public meeting of the year.  During the first of two panel discussions, the EEMAC considered the CFTC’s proposed order granting exemptive relief for certain transactions offered or sold in markets administered by the Southwest Power Pool (“SPP”) from provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations.  During the second panel, the EEMAC discussed CFTC Staff’s “Preliminary Report on the Swap Dealer De MinimisException.” The meeting concluded with a presentation of the EEMAC’s “Report on EEMAC’s 2015 Review and Consideration of the CFTC’s Proposed Rule on Position Limits.”  read more

Posted in CFTC, Regulation

CFTC Technology Advisory Committee Meeting

On February 23, 2016, the Commodity Futures Trading Commission’s (“CFTC”) Technology Advisory Committee (“TAC”) convened its first public meeting of the new year.  The meeting included three panel discussions focused on nascent technological issues facing the derivatives industry.  In the first panel, the TAC provided feedback to the CFTC on its proposed regulatory framework for automated trading, known as “Regulation AT.”  The second panel considered ways to ensure greater consistency in swap data reporting.  Finally, the third panel discussed the utilization of “blockchain” technologies in the derivatives market.  read more

Posted in Regulation

U.S. DOE Disclaims Jurisdiction Over Canadian Gas and Authorizes LNG Exports to Non-FTA Nations From Bear Head LNG Project

By Tania Perez and Lamiya Rahman

On February 5, 2016, the U.S. Department of Energy’s Office of Fossil Energy (“DOE/FE”) issued two orders to Bear Head LNG Corporation and Bear Head LNG (USA), LLC (together, “Bear Head LNG”), formally announcing DOE’s comprehensive policy for considering applications involving liquefied natural gas (“LNG”) exports from Eastern Canada to global markets.

The Bear Head LNG proceedings presented legal issues of first impression and “an unusual factual circumstance,” as DOE/FE stated.  Certainly, as discussed below, DOE/FE’s legal determinations in the Bear Head LNG proceedings were significant. However, the legal significance of the Bear Head LNG Orders is dwarfed by the political implications of DOE/FE’s announced policies of (i) adopting a laissez-faire approach to applications for Canadian gas in-transit through the U.S., and (ii) giving the green light to natural gas exports of U.S. natural gas to Canada for liquefaction and export to non-FTA nations.  read more

Posted in DOE, Energy Infrastructure, LNG, Oil & Gas, Regulation

New Year, New Market-Based Rates Regulatory Regime

By Doron EzicksonThomas Millar, and Michael Selig

The new year has brought U.S. electricity markets participants an overhauled regulatory regime for market-based rates under section 205 of the Federal Power Act.  The Federal Energy Regulatory Commission (“FERC” or “Commission”) has adopted the Final Rule on Refinements to Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities (“Order 816”). According to its preamble, Order 816 is “another step in the Commission’s efforts to modify, clarify and streamline certain aspects of its market-based rate (“MBR”) program.”  It reflects the FERC’s sharpened focus on market participants’ accumulation of horizontal market power and potential affiliate abuses as it continues to refine its data collection and analysis capabilities, as also emphasized in the FERC’s 2015 Enforcement Report.  read more

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

REMIT Update – Data Reporting and Enforcement Activities

By Doron Ezickson and Adam Topping

As 2016 begins, energy market participants must prepare for the second and final phase of data reporting under the EU Regulation on wholesale energy market integrity and transparency (“REMIT”). Moreover, the EU Agency for the Cooperation of Energy Regulators (“ACER”) and National Regulatory Authorities (“NRAs”) are demonstrating an increasing willingness to use their respective monitoring and enforcement powers under REMIT, and to share data and intelligence with each other. This all leads to an increased compliance burden on market participants.  read more

Posted in Oil & Gas, Power, Regulation, REMIT