I 

113TH CONGRESS 

1ST SESSION H. R. 3009 

To protect investors in futures contracts. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 2, 2013 

Mr. CAPUANO introduced the following bill; which was referred to the 

Committee on Agriculture 

A BILL 

To protect investors in futures contracts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Futures Investor Pro5 tection Act’’. 

6 SEC. 2. FUTURES INVESTORS PROTECTION FUND. 

7 (a) FUTURES INVESTOR PROTECTION CORPORA8 TION.— 

9 (1) CREATION AND MEMBERSHIP.— 

10 (A) CREATION.—There is established a 

11 nonprofit corporation to be known as the ‘‘Fu12 tures Investor Protection Corporation’’ (in this 


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1 Act referred to as the ‘‘FIPC’’), which shall not 

2 be an agency or establishment of the United 

3 States Government. 

4 (B) MEMBERSHIP.— 

5 (i) MEMBERS OF FIPC.—The FIPC 

6 shall be a membership corporation the 

7 members of which shall be all persons reg8 istered under the Commodity Exchange 

9 Act with the Commission as a futures com10 mission merchant, other than persons 

11 whose principal business, in the determina12 tion of the FIPC, taking into account busi13 ness of affiliated entities, is conducted out14 side the United States and its territories 

15 and possessions. 

16 (ii) COMMISSION REVIEW; ADDITIONAL

17 MEMBERS.—Subparagraphs (B) and (C) of 

18 section 3(a)(2) of SIPA shall apply with 

19 respect to determinations of the FIPC in 

20 the same way the subparagraphs apply 

21 with respect to determinations of the SIPC 

22 and to brokers and dealers referred to in 

23 such subparagraph (D). 

24 (iii) DISCLOSURE.—Section 

25 3(a)(2)(D) of SIPA shall apply to futures 


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1 commission merchants in the same way the 

2 section applies to brokers and dealers re3 ferred to in such section. 

4 (2) POWERS.—The FIPC shall have all the 

5 powers conferred on the SIPC. 

6 (3) BOARD OF DIRECTORS.— 

7 (A) FUNCTIONS.—The FIPC shall have a 

8 Board of Directors which, subject to the provi9 sions of this Act, shall determine the policies 

10 which shall govern the operations of FIPC. 

11 (B) NUMBER AND APPOINTMENT.—The 

12 Board of Directors shall consist of 7 persons as 

13 follows: 

14 (i) 1 director shall be appointed by 

15 the Secretary of the Treasury from among 

16 the officers and employees of the Depart17 ment of the Treasury. 

18 (ii) 1 director shall be appointed by 

19 the Board of Governors of the Federal Re20 serve System from among the officers and 

21 employees of that Board. 

22 (iii) 5 directors shall be appointed by 

23 the President, by and with the advice and 

24 consent of the Senate, as follows: 


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1 (I) 3 directors shall be selected 

2 from among persons who are associ3 ated with, and representative of dif4 ferent aspects of, the futures industry, 

5 not all of whom shall be from the 

6 same geographical area of the United 

7 States. 

8 (II) 2 directors shall be selected 

9 from the general public from among 

10 persons who are not associated with a 

11 futures commission merchant or a 

12 contract market, or similarly associ13 ated with any self-regulatory organi14 zation or other futures industry 

15 group, and who have not had any 

16 such association during the 2 years 

17 preceding appointment. 

18 (C) CHAIRMAN AND VICE CHAIRMAN.—The 

19 President shall designate a Chairman and Vice 

20 Chairman from among those directors ap21 pointed under subparagraph (B)(iii)(II). 

22 (D) TERMS.— 

23 (i) IN GENERAL.—Except as provided 

24 in clauses (ii) and (iii), each director shall 

25 be appointed for a term of 3 years. 


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1 (ii) INITIALLY APPOINTED MEM2 BERS.—Of the directors first appointed 

3 under subparagraph (B)— 

4 (I) 2 shall hold office for a term 

5 expiring on December 31, 2014; 

6 (II) 2 shall hold office for a term 

7 expiring on December 31, 2015; and 

8 (III) 3 shall hold office for a 

9 term expiring on December 31, 2016, 

10 as designated by the President at the time 

11 they take office. The designation shall be 

12 made in a manner which will assure that 

13 no 2 persons appointed under the author14 ity of the same subclause of subparagraph 

15 (B)(iii) shall have terms which expire si16 multaneously. 

17 (iii) VACANCIES.—A vacancy in the 

18 Board shall be filled in the same manner 

19 as the original appointment was made. Any 

20 director appointed to fill a vacancy occur21 ring prior to the expiration of the term for 

22 which the predecessor of the director was 

23 appointed shall be appointed only for the 

24 remainder of the term. A director may 

25 serve after the expiration of the term for 


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1 which appointed until the successor of the 

2 director has taken office. 

3 (E) COMPENSATION.—All matters relating 

4 to compensation of directors shall be as pro5 vided in the bylaws of the FIPC. 

6 (4) MEETINGS OF BOARD; BYLAWS AND

7 RULES.—Subsections (d) and (e) of section 3 of 

8 SIPA shall apply with respect to the FIPC and the 

9 Commission in the same way the subsections apply 

10 with respect to the SIPC and the Securities and Ex11 change Commission. 

12 (b) FIPC FUND.— 

13 (1) IN GENERAL.—The FIPC shall establish, 

14 and make deposits into and payments from, an 

15 ‘‘FIPC fund’’ (in this Act referred to as the ‘‘fund’’) 

16 in the same manner in which the SIPC has estab17 lished, and is authorized to make deposits into and 

18 payments from, the SIPC fund. 

19 (2) ASSESSMENTS.—The FIPC shall impose on 

20 its members assessments subject to the same rules 

21 that apply to the imposition by the SIPC of assess22 ments on the members of the SIPC. 

23 (c) OTHER PROVISIONS.—Sections 5 through 16 of 

24 the SIPA shall apply with respect to the FIPC and the 

25 members, directors, officers, and employees of the FIPC, 


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1 the Commission, the FIPC fund, futures commission mer2 chants and their affiliates, futures contracts, futures 

3 transactions, customers, and debtors in the same way the 

4 sections apply with respect to the SIPC and the members, 

5 directors, officers, and employees of the SIPC, the Securi6 ties and Exchange Commission, the SIPC fund, persons 

7 registered as brokers or dealers (as defined in section 

8 16(12) of the SIPA) and their affiliates, securities, securi9 ties transactions, customers (as defined in section 16(2) 

10 of the SIPA), and debtors (as defined in section 16(5) of 

11 the SIPA), respectively. 

12 (d) DEFINITIONS.—In this section: 

13 (1) COMMISSION.—The term ‘‘Commission’’ 

14 means the Commodity Futures Trading Commission. 

15 (2) CONTRACT MARKET.—The term ‘‘contract 

16 market’’ means a board of trade designated as a 

17 contract market under the Commodity Exchange 

18 Act. 

19 (3) FUTURES CONTRACT.—The term ‘‘futures 

20 contract’’ means a contract of sale of a commodity 

21 for future delivery, within the meaning of the Com22 modity Exchange Act. 

23 (4) FUTURES COMMISSION MERCHANT.—The 

24 term ‘‘futures commission merchant’’ has the meanVerDate Mar 15 2010 21:22 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3009.IH H3009

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1 ing given the term in section 1a(28) of the Com2 modity Exchange Act. 

3 (5) SIPA.—The term ‘‘SIPA’’ means the Secu4 rity Investors Protection Act of 1970. 

5 (6) SIPC.—The term ‘‘SIPC’’ means the Secu6 rity Investors Protection Corporation. 

7 (7) SIPC FUND.—The term ‘‘SIPC fund’’ 

8 means the fund established under section 4(a)(1) of 

9 the SIPA. 

10 SEC. 3. SUITABILITY RULES. 

11 (a) IN GENERAL.—The Commodity Exchange Act (7 

12 U.S.C. 1 et seq.) is amended by inserting after section 

13 4t the following: 

14 ‘‘SEC. 4u. SUITABILITY RULES. 

15 ‘‘(a) IN GENERAL.— 

16 ‘‘(1) RECOMMENDATIONS MUST BE SUITABLE

17 FOR THE CUSTOMER.—A futures commission mer18 chant shall not recommend a transaction or invest19 ment strategy involving a contract of sale of a com20 modity for future delivery, unless the futures com21 mission merchant has a reasonable basis to believe 

22 that the transaction or investment strategy is suit23 able for the customer, based on the information ob24 tained through the reasonable diligence of the fu25 tures commission merchant to ascertain the cusVerDate Mar 15 2010 21:22 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3009.IH H3009

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1 tomer’s investment profile. A customer’s investment 

2 profile includes, but is not limited to, the customer’s 

3 age, other investments, financial situation and 

4 needs, tax status, investment objectives, investment 

5 experience, investment time horizon, liquidity needs, 

6 risk tolerance, and any other information the cus7 tomer may disclose to the futures commission mer8 chant in connection with the recommendation. 

9 ‘‘(2) SAFE HARBOR IN CERTAIN CASES.—A fu10 tures commission merchant is deemed to comply 

11 with paragraph (1) in the case of a customer with 

12 an institutional account, if— 

13 ‘‘(A) the futures commission merchant has 

14 a reasonable basis to believe that the customer 

15 is capable of evaluating investment risks inde16 pendently, both in general and with regard to 

17 particular transactions and investment strate18 gies involving a contract of sale of a commodity 

19 for future delivery; and 

20 ‘‘(B) the customer affirmatively indicates 

21 that it is exercising independent judgment in 

22 evaluating the recommendations of the futures 

23 commission merchant. 

24 ‘‘(b) APPLICABILITY WITH RESPECT TO CERTAIN

25 AGENTS.—If a customer with an institutional account has 


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1 delegated decisionmaking authority to an agent, sub2 section (a) shall be applied with respect to the agent. 

3 ‘‘(c) INSTITUTIONAL ACCOUNT DEFINED.—In this 

4 section, the term ‘institutional account’ means the account 

5 of— 

6 ‘‘(1) a bank, savings and loan association, in7 surance company or registered investment company; 

8 ‘‘(2) an investment adviser registered with the 

9 Securities and Exchange Commission under section 

10 203 of the Investment Advisers Act or with a State 

11 securities commission (or any agency or office per12 forming like functions); or 

13 ‘‘(3) any other person (whether a natural per14 son, corporation, partnership, trust or otherwise) 

15 with total assets of at least $50,000,000. 

16 ‘‘(d) PENALTIES.—The Commission may impose 1 or 

17 more of the following sanctions on a person found by the 

18 Commission to have violated this section or to have ne19 glected or refused to comply with an order issued by the 

20 Commission under this section: 

21 ‘‘(1) Censure. 

22 ‘‘(2) A fine. 

23 ‘‘(3) Expulsion of the person from, or revoca24 tion of the membership of the person in, a registered 

25 entity. 


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1 ‘‘(4) Suspension for a definite period or a pe2 riod contingent on the performance of a particular 

3 act, or revocation, of the registration of the person 

4 under this Act with the Commission as a futures 

5 commission merchant. 

6 ‘‘(5) Suspension or bar of the person from asso7 ciation with any other futures commission merchant. 

8 ‘‘(6) A temporary or permanent cease and de9 sist order against the person. 

10 ‘‘(7) Any other fitting sanction.’’. 

11 (b) EFFECTIVE DATE.—Within 6 months after the 

12 date of the enactment of this Act, the Commodity Futures 

13 Trading Commission shall issue regulations for the imple14 mentation of the amendment made by subsection (a). 

15 SEC. 4. REVIEW OF PROOF OF CLAIMS RULES. 

16 (a) IN GENERAL.—The Commodity Futures Trading 

17 Commission shall review the guidelines for establishing ac18 count classes and determining the basis for pro rata 

19 shares under, and the sample claim form set forth in, part 

20 190 of title 17, Code of Federal Regulations, and consider 

21 the desirability of allowing use of a set date for valuation 

22 purposes rather than the date of actual liquidation of posi23 tions. 

24 (b) REPORT TO THE CONGRESS.—Within 1 year after 

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1 tures Trading Commission shall submit to the Congress 

2 a written report that contains the findings of the Commis3 sion with respect to the matters referred to in subsection 

4 (a), and includes such changes to the regulations in such 

5 part as the Commission deems appropriate. 

Æ 


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