There is no evidence that the Commodity Futures Trading Commission (CFTC) acted in a potentially criminal manner when establishing its position limits rule to curb speculation in energy markets, according to a report of a preliminary investigation conducted by the agency’s Office of Inspector General (OIG).

“We found no evidence to sustain a preliminary finding of wrongdoing by any individual connected with position limits and large swaps trader rulemakings. No witness presented evidence of corruption or violations of law in connection with the drafting of the position limits rule by the team lead or any other person who worked on the rule,” the OIG report said.

The CFTC OIG initiated the investigation after it received two anonymous communications last August alleging misconduct in connection with the speculative position limits rule, which the agency issued last October. It establishes limits on traders’ speculative positions in 28 core physical commodity contracts, four of which are energy contracts: Nymex Henry Hub Natural Gas, Nymex Light Sweet Crude Oil, Nymex New York Harbor Gasoline Blendstock and Nymex New York Harbor Heating Oil. (see Daily GPI, Oct. 19, 2011).

“The allegations were that the team leader for the position limits rulemaking ‘sneakily’ got himself appointed team lead and thereafter removed from the team the most experienced members in order to use only newer CFTC employees that he could manipulate (presumably in order to improperly influence the substance of the rule). The team leader was also alleged to have engaged in improper communications with external entities while working on the rule,” the report said.

The anonymous sources also alleged that the position limits rule would be “unworkable” because it was not compatible with the large trader reporting rule. “While vague, the allegations encompassed potentially criminal activity in a recent mission-critical undertaking required under the Dodd-Frank Act because they generally alleged dishonest conduct and corruption.”

However, the CFTC OIG dismissed the allegations after conducting interviews with 14 original members of the large swaps trader and position limits rulemaking team and with one additional team member later added.

“Due to the uniform quality of information received from CFTC employees and management, we did not take steps to refer this matter for further investigation,” the OIG report said.

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