Clifford Chance Discusses the CFTC’s Claim of Authority to Prosecute “Reckless” Market Manipulation

The U.S. Commodity Futures Trading Commission (“CFTC”) has taken a highly questionable view of its authority to pursue price manipulation charges against traders whose bona fide open market trading recklessly distorts market prices.  Rather than proving that a trader, whose genuine trades were otherwise lawful, had the specific intent to distort prices, as required by the CFTC itself and the courts prior to the passage of the Dodd-Frank Act (“DFA”),[1] the CFTC has asserted that, under a regulation it promulged in 2011 to implement a new DFA-added Commodity Exchange Act (“CEA”) statutory provision,[2] proof of mere recklessness will … Read more