Alarming news about derivatives markets from former CFTC Enforcement Chief

https://www.forbes.com/sites/erikakelton/2017/03/29/alarming-news-about-derivatives-markets-from-former-cftc-enforcement-chief/#58a3c48e6332

Big fraud allegations often mean big settlements will follow. But the settlements the Commodity Futures Trading Commission reached with former MF Global CEO Jon Corzine in early January and Igor Oystacher and his Chicago firm, 3Red Trading LLC, in December were surprisingly puny.

Now the reason why they were relatively small — $5 million and $2.5 million, respectively – has been revealed: The CFTC doesn’t have the funds to investigate and litigate many major cases any more.

That is the explanation former CFTC enforcement chief Aitan Goelman gave to Reuters in an interview last week. Taking Corzine, a former US Senator and New Jersey governor, and Oystacher to trial would have absorbed more than half of the enforcement division’s entire operating budget for 2017, Goelman said. That put the CFTC in a very weak position to push for larger settlements.

For those who care about fair and transparent markets, Goelman’s observations about the CFTC’s severe lack of resources are alarming.

Congress gave the CFTC the power of a lion – at least on paper. Under the Dodd-Frank Act, the agency gained the authority to regulate and oversee the $400 trillion-dollar swaps market, which was at the center of the 2008 financial crisis, in addition to its existing authority over the futures and options markets, estimated at $50 trillion.

But the CFTC’s small annual budget – just $250 million the past few years — has weakened the agency so that it is more of a house cat when it comes to enforcement.

Goelman told Reuters that there’s a “massive amount of misconduct in the marketplace we’re just not pursuing.” This includes manipulation, insider trading, front-running and Ponzi schemes. He also said that spoofing is widespread.

When the CFTC makes enforcement decisions, Goelman noted, it has to be “acutely conscious about the limited resources.”

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“Goelman told Reuters that there’s a “massive amount of misconduct in the marketplace we’re just not pursuing.” This includes manipulation, insider trading, front-running and Ponzi schemes. He also said that spoofing is widespread.”

just how they like it..you can have a police force but if they arent financed fully they will not be able to do the correct job..this is the situation here..

“Under the Dodd-Frank Act, the agency gained the authority to regulate and oversee the $400 trillion-dollar swaps market”

they have managed to control the CDS bombs for now..

401

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~ by seeker401 on April 10, 2017.

One Response to “Alarming news about derivatives markets from former CFTC Enforcement Chief”

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