Commissioner Bart Chilton of the Commodity Futures Trading Commission (CFTC) Tuesday called on Congress to give the agency the authority to pursue criminal prosecution of fraud and manipulation in commodity futures markets.

“If the CFTC were to be given criminal prosecution authority, I think it would significantly enhance the deterrent effects of the existing regulatory scheme. The likelihood of criminal prosecution would increase and wrongdoers would have to raise their concern about the potential consequences of criminal conviction and penalties,” Chilton told the Agricultural Roundtable of the Brookings Institution in Washington, DC.

“Other financial regulators around the world, including the Financial Services Authority in the United Kingdom and the regulator in Australia, already have such criminal authorities. I’ve spoken recently with several of my colleagues, current and former commissioners, Republicans and Democrats. This proposal makes sense to them and I’m hopeful that it will be considered by Congress,” he said.

“When people violate the law and fleece folks out of their money, they should go to jail. We should have the ability to do more than simply [assess] civil penalties. I think the American people are sick and tired of letting swindlers get away without proper punishment.”

The CFTC currently can investigate and prosecute administrative and civil violations of the Commodity Exchange Act (CEA). However, only the Department of Justice (DOJ) has the authority to prosecute criminal violations of the act. This “bifurcation of civil and criminal authority between the CFTC and DOJ creates obstacles to effective enforcement,” Chilton said.

He noted that violations of the CEA often involve highly technical and complicated trading schemes. “Because of the complexity of cases under the CEA, DOJ prosecutors have been reluctant to take on these matters or have required that CFTC staff be assigned to assist DOJ prosecutors,” Chilton said.

And since “DOJ prosecutors are responsible for a broad array of cases, including violent crime and money laundering, it is difficult to get them to commit scarce resources to prosecute complicated financial fraud and manipulation cases.”

Chilton also urged Congress to allocate more funds for the CFTC so it can hire 150 new investigators and for increased computing technology. He noted that several senators joined together two weeks ago to call for increased resources for the Securities and Exchange Commission, which has about 3,450 employees, “while the CFTC struggles with about 450 staffers.”

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