41398 Federal Register / Vol. 76, No. 135 / Thursday, July 14, 2011 / Rules and Regulations 

1Section 9(a)(2) of the CEA, 7 U.S.C. 13(a)(2), also 

expressly prohibits false reporting. 

2Rulemaking documents are available at: 

(http://www.cftc.gov/LawRegulation/ 

DoddFrankAct/Rulemakings/23_DFManipulation/ 

index.htm). 

3Prohibition of Market Manipulation, 75 FR 

67657 (Nov. 3, 2010). 

4Section 753 of the Dodd-Frank Act directed the 

Commission to promulgate implementing rules and 

regulations by not later than one year after the date 

of enactment of the Dodd-Frank Act. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 180 

RIN Number 3038–AD27 

Prohibition on the Employment, or 

Attempted Employment, of 

Manipulative and Deceptive Devices 

and Prohibition on Price Manipulation 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final rules. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘CFTC’’ or 

‘‘Commission’’) is adopting final rules 

pursuant to section 753 of the DoddFrank Wall Street Reform and Consumer 

Protection Act (‘‘Dodd-Frank Act’’), to 

implement amended subsections (c)(1) 

and (c)(3) of section 6 of the Commodity 

Exchange Act (‘‘CEA’’). These rules 

broadly prohibit fraud and 

manipulation in connection with any 

swap, or contract of sale of any 

commodity in interstate commerce, or 

contract for future delivery on or subject 

to the rules of any registered entity. 

DATES: Effective Date: These final Rules 

will become effective August 15, 2011. 

FOR FURTHER INFORMATION CONTACT: 

David Meister, Director, Division of 

Enforcement, 202–418–5624, or Mark D. 

Higgins, Counsel, Office of the General 

Counsel, 202–418–5864, 

mhiggins@cftc.gov, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1151 21st Street, NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Act into law. 

Title VII of the Dodd-Frank Act 

amended the CEA to establish a 

comprehensive new regulatory 

framework for swaps and security-based 

swaps. The legislation was enacted to 

reduce risk, increase transparency, and 

promote market integrity within the 

financial system by, among other things: 

(1) Providing for the registration and 

comprehensive regulation of swap 

dealers and major swap participants; (2) 

imposing clearing and trade execution 

requirements on standardized derivative 

products; (3) creating robust 

recordkeeping and real-time reporting 

regimes; and (4) enhancing the 

Commission’s rulemaking and 

enforcement authority with respect to, 

among others, all registered entities and 

intermediaries. 

In the wake of the financial crisis of 

2008, Congress adopted section 753 of 

the Dodd-Frank Act, which provided 

the Commission with additional and 

broad authority to prohibit fraud and 

manipulation. In the following 

paragraphs, the Commission 

summarizes Dodd-Frank Act section 

753’s amendments to CEA section 6(c). 

New section 6(c)(1), the full text of 

which is provided in Section III below, 

broadly prohibits the use or 

employment of, or an attempt to use or 

employ, any ‘‘manipulative or deceptive 

device or contrivance’’ in contravention 

of such rules and regulations as the 

Commission ‘‘shall promulgate no later 

than 1 year after the date of enactment’’ 

of the Dodd-Frank Act. 

As discussed below, final Rule 180.1 

implements the provisions of CEA 

section 6(c)(1) by prohibiting, among 

other things, manipulative and 

deceptive devices, i.e., fraud and fraudbased manipulative devices and 

contrivances employed intentionally or 

recklessly, regardless of whether the 

conduct in question was intended to 

create or did create an artificial price. 

This final Rule will help promote the 

integrity of the markets, and protect 

market participants. 

Section 6(c)(1)(A), a ‘‘Special 

Provision for Manipulation by False 

Reporting,’’ extends the Commission’s 

prohibition against unlawful 

manipulation to include ‘‘delivering, or 

causing to be delivered for transmission 

through the mails or interstate 

commerce, by any means of 

communication whatsoever, a false or 

misleading or inaccurate report 

concerning crop or market information 

or conditions that affect or tend to affect 

the price of any commodity in interstate 

commerce, knowing, or acting in 

reckless disregard of the fact that such 

report is false, misleading or 

inaccurate.’’ 1 Importantly, section 

6(c)(1)(C) provides a ‘‘Good Faith 

Mistakes’’ exception to this prohibition 

such that ‘‘[m]istakenly transmitting, in 

good faith, false or misleading or 

inaccurate information to a price 

reporting service would not be sufficient 

to violate subsection (c)(1)(A).’’ 

Section 6(c)(2) prohibits the making of 

‘‘any false or misleading statement of a 

material fact to the Commission. * * *’’ 

A prohibition regarding false statements 

to the Commission was previously 

included in section 6(c). Dodd-Frank 

Act section 753 expands the prohibition 

against false statements made in 

registration applications or reports filed 

with the Commission to include any 

statement of material fact made to the 

Commission in any context. 

CEA section 6(c)(3), the full text of 

which is provided in Section III below, 

makes it unlawful to ‘‘manipulate or 

attempt to manipulate the price of any 

swap, or of any commodity in interstate 

commerce, or for future delivery on or 

subject to the rules of any registered 

entity.’’ Final Rule 180.2 codifies 

section 6(c)(3). 

Section 753 of the Dodd-Frank Act 

also amends prior CEA section 6(c) to 

provide, in cases of manipulation or 

attempted manipulation in violation of 

sections 6(c) or 9(a)(2), for a civil 

penalty of up to the greater of 

$1,000,000 or triple the monetary gain 

to the person for each such violation; 

and restitution to customers of damages 

proximately caused by violations of the 

person. For other violations, section 

6(c)(10)(C) provides for a civil penalty of 

not more than an amount equal to the 

greater of $140,000 or triple the 

monetary gain for each such violation. 

Finally, section 753 of the DoddFrank Act provides that the abovesummarized amendments to CEA 

section 6(c) ‘‘shall take effect on the date 

on which the final rule promulgated by 

the Commodity Futures Trading 

Commission pursuant to this Act takes 

effect.’’ The final Rules will take effect 

30 days after publication in the Federal 

Register. 

II. The Rulemaking Proceeding Under 

CEA Section 6(c) 

This rulemaking proceeding 2 began 

with the issuance of a Notice of 

Proposed Rulemaking (‘‘NOPR’’) on 

October 26, 2010, which was published 

in the Federal Register on November 3, 

2010.3 Pursuant to CEA section 6(c),4 as 

amended by section 753 of the DoddFrank Act, the Commission proposed to 

add a new Part 180 to Title 17 of the 

Code of Federal Regulations. In the 

NOPR, the Commission solicited 

comments on all aspects of proposed 

Part 180. Twenty-seven parties filed 

comments, representing a variety of 

interested parties, including a member 

of the United States Congress, a law 

professor, economists, industry 

members and trade associations, energy 

news and price reporting organizations, 

designated contract markets 


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5Attachment A contains a list of the 27 parties 

who submitted comments related to this 

rulemaking. 

6 15 U.S.C. 78j(b). Differences between the 

wording of Exchange Act Section 10(b) and CEA 

section 6(c)(1) include, but are not limited to, the 

express prohibition of the ‘‘attempt to use’’ any 

‘‘manipulative or deceptive device or contrivance’’ 

in CEA section 6(c)(1), and the absence of a 

‘‘purchase or sale’’ requirement in CEA section 

6(c)(1). The Commission understands that under 

SEC Rule 10b–5 a plaintiff is not required to prove 

that money was actually invested in a specific 

security. See, e.g., SEC v. Zandford, 535 U.S. 813, 

819–21 (2002). 

7Ernst & Ernst v. Hochfelder, 425 U.S. 185, 201 

(1976). 

8Chiarella v. United States, 445 U.S. 222, 226 

(1980), citing Hochfelder, 425 U.S. at 202, 206. 

9 17 CFR 240.10b–5. 

10See, e.g., Morissette v. United States, 342 U.S. 

246, 263 (1952) (noting that where Congress 

borrows terms of art it ‘‘presumably knows and 

adopts the cluster of ideas that were attached to 

each borrowed word’’); Nat’l Treasury Employees 

Union v. Chertoff, 452 F.3d 839, 857 (DC Cir. 2006) 

(stating that ‘‘[t]here is a presumption that Congress 

uses the same term consistently in different 

statutes’’). 

11Further, by modeling final Rule 180.1 on SEC 

Rule 10b–5, the Commission takes an important 

step toward harmonization of regulation of the 

commodities, commodities futures, swaps and 

securities markets given that new CEA section 

6(c)(1) and Exchange Act Section 10(b) include 

virtually identical prohibitions against ‘‘any 

manipulative or deceptive device or contrivance.’’ 

12See, e.g., United States v. Persky, 520 F.2d 283, 

287 (2d Cir. 1975) (rejecting criminal defendant’s 

argument that Exchange Act section 10(b) and SEC 

Rule 10b–5 are unconstitutionally vague); SEC v. 

Pirate Investor LLC, 580 F.3d 233, 254 (4th Cir. 

2009) (upholding civil judgment and finding that 

‘‘[a]ppellants’ reliance on any ambiguity in the 

[section 10(b)] phrase ‘in connection with’ as a 

reason to employ the canon of constitutional 

avoidance fails in light of the statute’s purpose— 

providing a flexible regime for addressing new, 

perhaps unforeseen, types of fraud’’), cert. denied, 

130 S. Ct. 3506, 2010 U.S. LEXIS 5345 (2010). The 

Federal Energy Regulatory Commission and the 

Federal Trade Commission have relied upon a 

statutory framework largely identical to Exchange 

Act section 10(b) when promulgating rules similar 

to SEC Rule 10b–5. In so doing, both agencies have 

stated their intent to be guided by securities law 

precedent, as appropriate to their unique regulatory 

missions. FERC, Prohibition of Energy Market 

Manipulation, 71 FR 4244, 4250 (Jan. 26, 2006) 

(FERC final anti-manipulation rule); FTC, 

Prohibitions on Market Manipulation, 74 FR 40686, 

40688–89 (Aug. 12, 2009) (FTC final antimanipulation rule). 

(exchanges), a government-sponsored 

enterprise, and members of the public.5

Upon careful review and 

consideration of the entire record in this 

rulemaking and based on its extensive 

market regulation experience, the 

Commission has determined that it is 

appropriate and in the public interest to 

adopt the final Rules, which among 

other things, define for the public the 

statutory prohibition under CEA section 

6(c)(1) against using or employing ‘‘any 

manipulative or deceptive device or 

contrivance’’ in connection with any 

swap, or a contract of sale of any 

commodity in interstate commerce, or 

for future delivery on or subject to the 

rules of any registered entity. Consistent 

with section 6(c)(1), the final Rule 180.1 

prohibits, among other things, fraud and 

fraud-based manipulative schemes, 

employed intentionally or recklessly (as 

discussed below), regardless of whether 

the conduct in question was intended to 

or did create an artificial price. Final 

Rules 180.1 and 180.2 will help to 

promote the integrity of the markets, 

and protect market participants. 

After carefully reviewing the entire 

rulemaking record, the Commission 

finds it unnecessary to change the 

wording of the proposed regulatory text, 

except in one respect: Adding 

‘‘inaccurate’’ to section 180.1(a)(4) 

(‘‘* * * no violation of this subsection 

shall exist where the person mistakenly 

transmits, in good faith, false or 

misleading or inaccurate information to 

a price reporting service.’’). This change 

is necessary to ensure symmetry 

between final Rule 180.1 and CEA 

section 6(c)(1)(C). However, based on 

the public comments, the Commission 

has determined to provide clarification 

and interpretive guidance in this 

Preamble to final Rules 180.1 and 180.2. 

The Commission’s statutory and legal 

basis for promulgating the final Rules, 

their purpose, and the Commission’s 

responses to comments filed in this 

rulemaking, are discussed below. 

III. Statutory Basis for the Final Rules 

CEA section 6(c)(1), entitled 

‘‘Prohibition Against Manipulation,’’ is 

the statutory basis for final Rule 180.1, 

and provides that: 

It shall be unlawful for any person, directly 

or indirectly, to use or employ, or attempt to 

use or employ, in connection with any swap, 

or a contract of sale of any commodity in 

interstate commerce, or for future delivery on 

or subject to the rules of any registered entity, 

any manipulative or deceptive device or 

contrivance, in contravention of such rules 

and regulations as the Commission shall 

promulgate by not later than 1 year after the 

date of enactment of the [Dodd-Frank Act], 

provided no rule or regulation promulgated 

by the Commission shall require any person 

to disclose to another person nonpublic 

information that may be material to the 

market price, rate, or level of the commodity 

transaction, except as necessary to make any 

statement made to the other person in or in 

connection with the transaction not 

misleading in any material respect. 

CEA section 6(c)(3), entitled ‘‘Other 

Manipulation,’’ provides that: 

[I]t shall be unlawful for any person, 

directly or indirectly, to manipulate or 

attempt to manipulate the price of any swap, 

or of any commodity in interstate commerce, 

or for future delivery on or subject to the 

rules of any registered entity. 

CEA section 6(c)(3) and the 

Commission’s general rulemaking 

authority pursuant to CEA section 8a(5) 

provide the statutory basis for final Rule 

180.2. 

Commenters are overwhelmingly 

supportive of the Commission’s efforts 

to implement clear and fair rules 

designed to protect market participants 

and promote the integrity of the 

markets. In the following sections, the 

Commission summarizes and responds 

to the comments received in this 

rulemaking. 

IV. Discussion of CEA Section 6(c)(1) 

and Final Rule 180.1 

A. Overview 

The language of CEA section 6(c)(1), 

particularly the operative phrase 

‘‘manipulative or deceptive device or 

contrivance,’’ is virtually identical to 

the terms used in section 10(b) of the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’).6 The Supreme Court 

has interpreted these words to ‘‘clearly 

connot[e] intentional misconduct.’’ 7

The Court has also stated that the statute 

was ‘‘designed as a catchall clause to 

prevent fraudulent practices.’’ 8

Based on the language in Exchange 

Act section 10(b), the Securities and 

Exchange Commission (‘‘SEC’’) 

promulgated SEC Rule 10b–5, which 

makes it unlawful for any person: 

(a) To employ any device, scheme, or 

artifice to defraud, 

(b) To make any untrue statement of a 

material fact or to omit to state a material fact 

necessary in order to make the statements 

made, in the light of the circumstances under 

which they were made, not misleading, or 

(c) To engage in any act, practice, or course 

of business which operates or would operate 

as a fraud or deceit upon any person, in 

connection with the purchase or sale of any 

security.9

Given the similarities between CEA 

section 6(c)(1) and Exchange Act section 

10(b), the Commission deems it 

appropriate and in the public interest to 

model final Rule 180.1 on SEC Rule 

10b–5.10 To account for the differences 

between the securities markets and the 

derivatives markets, the Commission 

will be guided, but not controlled, by 

the substantial body of judicial 

precedent applying the comparable 

language of SEC Rule 10b–5.11 Such 

extensive judicial review serves as an 

important benefit to the Commission 

and provides the public with increased 

certainty because the terms of Exchange 

Act Section 10(b) and SEC Rule 10b–5 

have withstood challenges to their 

constitutionality in both civil and 

criminal matters.12


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13Santa Fe Industries v. Green, 430 U.S. 462, 

473–76 (1977); Dirks v. SEC, 463 U.S. 646, 667 n. 

27 (1983) (concluding that ‘‘to constitute a violation 

of Rule 10b–5, there must be fraud’’); Chiarella v. 

United States, 445 U.S. 222, 234–35 (1980) (stating 

that Exchange Act ‘‘section 10(b) is aptly described 

as a catchall provision, but what it catches must be 

fraud’’); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 

199 (1976) (rejecting argument for imposition of 

negligence standard that ‘‘simply ignore[d] the use 

of the words ‘manipulative,’ ‘device,’ and 

‘contrivance’—terms that make unmistakable a 

congressional intent to proscribe a type of conduct 

quite different from negligence. Use of the word 

‘manipulative’ is especially significant. It is and 

was virtually a term of art when used in connection 

with securities markets. It connotes intentional or 

willful conduct designed to deceive or defraud 

investors by controlling or artificially affecting the 

price of securities’’) (internal citations omitted). 

14The extent to which securities law precedent 

should apply is an issue that commenters often 

linked to more specific comments pertaining to the 

interpretation of the statute and proposed rule text. 

As such, the Commission considers commenters’ 

views about securities law precedent in the specific 

contexts in which they arise. 

15Senator Levin Comment Letter at pages 3–4. 

16Better Markets Comment Letter at page 1. 

17Council Comment Letter at pages 1–2. 

18PMAA Comment Letter at page 1. 

19Professor Greenberger Comment Letter at page 

2. 

20CME Group Comment Letter at pages 2–3; CMC 

Comment Letter at page 2. 

21CME Group at page 3; CMC at page 2. 

22Associations Comment Letter at page 9. 

23Associations at page 8. 

24MFA Comment Letter at pages 6–7. 

25API and NPRA Comment Letter at page 3; 

COPE Comment Letter at page 2. 

26API and NPRA at pages 2, 9, and 24. 

27API and NPRA at page 10. 

28ABA Derivatives Committee Comment Letter at 

pages 5 and 11–13. According to the ABA 

Derivatives Committee, ‘‘[a] rule that does not 

require evidence of a specific intent to cause 

artificial market prices as an element of a violation 

would result in a dangerously vague rule * * * 

[which] could expose participants to the threat of 

arbitrary and unfair enforcement.’’ Id. at page 12. 

29ABA Derivatives Committee at page 6. 

Final Rule 180.1 prohibits fraud and 

fraud-based manipulations, and 

attempts: (1) By any person (2) acting 

intentionally or recklessly (3) in 

connection with (4) any swap, or 

contract of sale of any commodity in 

interstate commerce, or contract for 

future delivery on or subject to the rules 

of any registered entity (as defined in 

the CEA). CEA section 6(c)(1) and final 

Rule 180.1, like Exchange Act section 

10(b) and SEC Rule 10b–5 upon which 

they are modeled, focus on conduct 

involving manipulation or deception.13

In the following paragraphs, the 

Commission addresses the comments 

that pertain to final Rule 180.1 in the 

following categories: (1) Scope of 

application of the final Rule; (2) 

disclosure implications of the final 

Rule; (3) operation of the provision 

prohibiting material misstatements and 

omissions; (4) statutory exception for 

good faith mistakes; (5) required 

scienter for a violation of the final Rule; 

(6) scope of the phrase ‘‘in connection 

with’’; and (7) penalty, procedure, effect 

on automated trading systems, and a 

proposal to define manipulation.14

B. The Scope of the Application of Final 

Rule 180.1 

1. Comments 

The Commission received several 

comments on the scope of the 

application of proposed Rule 180.1. 

United States Senator Carl Levin 

(‘‘Senator Levin’’), Chairman of the 

Permanent Subcommittee on 

Investigations, Committee on Homeland 

Security and Governmental Affairs, 

believes that the CFTC and SEC should 

harmonize their regulatory structures for 

combating disruptive and manipulative 

activities.15

Better Markets, a non-profit public 

interest advocacy organization, states 

that the proposed Rules are critical to 

implementing the important expansion 

of the Commission’s enforcement 

capability so that the transparent and 

reliable marketplace envisioned by the 

Dodd-Frank Act can be realized.16

Similarly, the Council of Institutional 

Investors (‘‘Council’’) supports proposed 

Rule 180.1 and believes that it will help 

promote the integrity of the price 

discovery process and fair dealing 

between market participants. The 

Council believes that, if accompanied by 

robust enforcement, the proposed Rule 

would promote investor confidence in 

the markets and contribute to the overall 

safety and soundness of the financial 

system.17 Likewise, the Petroleum 

Marketers Association of America 

(‘‘PMAA’’) believes that proposed Rules 

180.1 and 180.2 will effectively 

implement the statutory and 

Congressional directive to clearly 

delineate and prevent impermissible 

conduct by market participants.18

University of Maryland School of Law 

Professor Michael Greenberger 

(‘‘Professor Greenberger’’) believes that 

proposed Rule 180.1 reflects an effective 

anti-manipulation rule mandated by 

section 753 of the Dodd-Frank Act. 

Professor Greenberger further believes 

that the Commission correctly asserts 

that proposed Rule 180.1 be given a 

broad, remedial reading similar to SEC 

Rule 10b–5.19

The CME Group, Inc. (‘‘CME Group’’) 

and the Commodity Markets Council 

(‘‘CMC’’) believe that proposed Rules 

180.1 and 180.2 are vague and fail to 

provide market participants with 

sufficient notice of whether 

contemplated trading practices run 

afoul of a prohibition.20 Further, CME 

Group and CMC believe that proposed 

Rule 180.1 is susceptible to 

constitutional challenge under the Due 

Process Clause.21

The Futures Industry Association 

(‘‘FIA’’), International Swaps and 

Derivatives Association, Inc. (‘‘ISDA’’), 

and the Securities Industry and 

Financial Markets Association 

(‘‘SIFMA’’) (together, ‘‘the 

Associations’’) believe that the 

Commission should clarify the scope of 

the proposed regulation, the 

Commission’s existing antimanipulation authority under CEA 

section 9(a)(2), and its anti-fraud 

authority under CEA section 4b.22 The 

Associations urge the Commission to 

remove from all subparts of the 

proposed Rule language that prohibits 

an ‘‘attempt’’ to manipulate and to 

clarify that the requirements for 

attempted manipulation remain 

consistent with current law under CEA 

section 6(c).23 The Managed Funds 

Association (‘‘MFA’’) believes that the 

Commission should interpret CEA 

section 6(c)(1) merely to clarify and 

refine the Commission’s authority over 

swaps, and not to create any new 

antifraud authority or to create any new 

duties or obligations.24

The American Petroleum Institute 

(‘‘API’’) together with the National 

Petrochemical and Refiners Association 

(‘‘NPRA’’), and the Coalition of Physical 

Energy Companies (‘‘COPE’’) state that 

Congress intended the scope of section 

753 of the Dodd-Frank Act to address 

only actual fraudulent manipulation of 

the commodities markets.25 Absent a 

manipulative effect on the market, API 

and NPRA believe that there should be 

no liability under proposed Rule 

180.1.26 Further, API and NPRA state 

that the Commission should require 

proof that a party’s deceptive or 

fraudulent conduct caused market 

conditions to deviate materially from 

the conditions that would have existed 

but for that conduct.27 Similarly, the 

Derivatives and Futures Law Committee 

of the Business Law Section of the 

American Bar Association (‘‘ABA 

Derivatives Committee’’) states that any 

Commission rules under CEA section 

6(c)(1) should expressly target 

intentional or extremely reckless 

deceitful conduct specifically intended 

to cause artificial prices by corrupting or 

disabling the integrity of market pricesetting processes and mechanisms 

rather than by a general anti-fraud rule 

patterned on SEC Rule 10b–5.28 The 

ABA Derivatives Committee believes 

that mere unfairness or impermissible 

overreaching without deception does 

not violate section 10(b) or SEC Rule 

10b–5 thereunder.29


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30Freddie Mac Comment Letter at pages 1–5. 31The fair notice argument has been repeatedly 

rejected in the SEC Rule 10b–5 context in a wide 

variety of fact patterns. See, e.g., United States v. 

Carpenter, 791 F.2d 1024 (2d Cir. 1986), aff’g in 

part and rev’g in part United States v. Winans, 612 

F. Supp. 827, 848 (S.D.N.Y. 1985); United States v. 

Newman, 664 F.2d 12, 18–19 (2d Cir. 1981), aff’d 

after remand, 722 F.2d 729 (2d Cir.), cert. denied, 

464 U.S. 863 (1983); United States v. Chiarella, 588 

F.2d 1358, 1369 (2d Cir. 1978); United States v. 

Brown, 555 F.2d 336, 339–40 (2d Cir. 1977); United 

States v. Persky, 520 F.2d 283, 286–88 (2d Cir. 

1975); SEC v. Shapiro, 494 F.2d 1301, 1308 (2d Cir. 

1974). 

32Section 4b of the CEA, 7 U.S.C. 6b, prohibits, 

for example, a person from defrauding another 

person in connection with the making of 

commodity futures contracts for or on behalf of that 

other person. Clayton Brokerage Co. v. CFTC, 794 

F.2d 573, 578 (11th Cir. 1986). Thus, a broker’s 

misrepresentations to his customer about risk may 

subject the broker to liability under CEA section 4b. 

Id. 

33Associations at page 8. 

34The Commission understands that courts 

interpreting the statutory phrase ‘‘any manipulative 

or deceptive device’’ as it is used in Section 10(b) 

of the Exchange Act have deemed it broad enough 

to encompass an attempt. See, e.g., SEC v. Martino, 

255 F. Supp. 2d 268, 287 (S.D.N.Y. 2003) (‘‘[A]n 

attempted manipulation is as actionable as a 

successful one’’). 

35See, e.g., Zandford, 535 U.S. at 819 (where a 

statute has a remedial purpose such as the 

prevention of fraud, the statute should be construed 

‘‘not technically and restrictively, but flexibly to 

effectuate its remedial purposes’’) (internal 

quotation marks and citations omitted). See also 

R&W Technical Servs., Ltd. v. CFTC, 205 F.3d 165, 

173 (5th Cir. 2000) (In 1974, Congress gave the 

CFTC ‘‘even greater enforcement powers in part 

because of the fear that unscrupulous individuals 

were encouraging amateurs to trade in the 

commodities markets through fraudulent 

advertising. Remedial statutes are to be construed 

liberally, and in an era of increasing individual 

participation in commodities markets, the need for 

such protection has not lessened’’). 

36API and NPRA at page 3. 

37By way of non-exclusive example, if an entity 

employed a deceptive device to sell precious metals 

to customers as a way for the customers to speculate 

on the value of such commodities, or if an entity 

employed a deceptive device to sell an agricultural 

commodity to persons seeking to hedge price risk 

in that commodity, depending on the facts and 

circumstances, the Commission would exercise its 

authority against the entity under Section 6(c)(1) 

and final Rule 180.1. 

38 In interpreting Exchange Act section 10(b) and 

SEC Rule 10b–5, the Supreme Court has recognized 

that the interest in preserving the integrity of the 

securities markets was one of the purposes 

animating Exchange Act section 10(b), but rejected 

the notion that section 10(b) is limited to serving 

that objective alone. See Superintendent of Ins. of 

N.Y. v. Bankers Life & Casualty Co., 404 U.S. 6, 11– 

13 (1971). 

39 Id. 

Freddie Mac recommends that the 

Commission strengthen the protection 

of customers by clarifying that CEA 

section 6(c), as amended by section 753 

of the Dodd-Frank Act and implemented 

by proposed Rule 180.1, expressly 

prohibits ‘‘front running’’ and similar 

misuse of customer information by swap 

dealers as a form of fraud-based 

manipulation.30

2. Commission Determination 

Upon review of the entire rulemaking 

record, the Commission determines that 

final Rule 180.1 is in the public interest 

and provides fair, reasonable, and 

adequate notice of the prohibited 

conduct. With respect to comments 

claiming that final Rule 180.1 is 

susceptible to a due process 

constitutional challenge because it 

purportedly does not give market 

participants fair notice of the prohibited 

conduct, the Commission notes that 

final Rule 180.1 is modeled on SEC Rule 

10b–5, which has been subjected to 

extensive judicial review and has 

withstood constitutional challenges, 

including those based on a fair notice 

argument.31

In response to comments requesting 

clarification regarding the relationship 

among final Rule 180.1 and existing 

CEA sections 4b and 9(a)(2), the 

Commission notes that section 753(a) of 

the Dodd-Frank Act makes clear that 

nothing in new CEA section 6(c)(1) 

‘‘shall affect, or be construed to affect, 

the applicability of section 9(a)(2).’’ 

Likewise, the Commission finds nothing 

in CEA section 6(c)(1) or final Rule 

180.1 that affects, or should be 

construed to affect, the applicability of 

CEA section 4b.32 Section 6(c)(1) and 

final Rule 180.1 augment the 

Commission’s existing authority to 

prohibit fraud and manipulation. 

The Commission declines to adopt the 

request of one commenter to remove 

language from proposed Rules 180.1 and 

180.2 that make it a violation to 

‘‘attempt’’ to engage in manipulation.33

The Commission is controlled by the 

language of CEA section 6(c)(1), which 

specifically directs the Commission to 

prohibit the ‘‘attempt[ed]’’ use or 

employment of any manipulative or 

deceptive devices or contrivances.34

The Commission declines to adopt the 

request of certain commenters to 

interpret CEA section 6(c)(1) as merely 

extending the Commission’s existing 

anti-fraud and anti-manipulation 

authority to cover swaps. Such an 

interpretation would be inconsistent 

with the language of CEA section 

6(c)(1), as amended by section 753 of 

the Dodd-Frank Act, under which 

Congress granted the Commission broad 

new authority to prohibit ‘‘any 

manipulative or deceptive device or 

contrivance’’ in connection with any 

swap, or a contract of sale of any 

commodity in interstate commerce, or 

for future delivery on or subject to the 

rules of any registered entity. 

The Commission intends to interpret 

and apply CEA section 6(c)(1) and final 

Rule 180.1 ‘‘not technically and 

restrictively, but flexibly to effectuate its 

remedial purposes.’’35 Comments that 

the Commission’s use of the word 

‘‘commodity’’ in proposed Rule 180.1 

‘‘indicates that the rule will apply to 

virtually every commercial transaction 

in the economy’’ are misplaced.36 The 

final Rule requires a fraud or 

manipulation, or attempted fraud or 

manipulation, and that the fraud or 

manipulation or attempted fraud or 

manipulation, be ‘‘in connection with’’ 

any swap, or contract of sale of any 

commodity in interstate commerce, or 

contract for future delivery on or subject 

to the rules of any registered entity. The 

‘‘in connection with’’ requirement is 

discussed in subsection G. below. And 

although CEA section 6(c)(1) and final 

Rule 180.1 give the Commission broad 

enforcement authority to prohibit fraud 

and manipulation in connection with a 

contract of sale for any commodity in 

interstate commerce, the Commission 

expects to exercise its authority under 

6(c)(1) to cover transactions related to 

the futures or swaps markets, or prices 

of commodities in interstate commerce, 

or where the fraud or manipulation has 

the potential to affect cash commodity, 

futures, or swaps markets or 

participants in these markets.37 This 

application of the final Rule respects the 

jurisdiction that Congress conferred 

upon the Commission and fulfills its 

core mission and the purposes of the 

Act to protect market participants and 

promote market integrity. 

The foregoing should not be 

interpreted, however, to mean that a 

violation of final Rule 180.1 necessarily 

requires proof of a market or price 

effect, as some commenters’ 

recommend. It does not.38 A market or 

price effect may well be indicia of the 

use or employment of a manipulative or 

deceptive device or contrivance; 

nonetheless, a violation of final Rule 

180.1 may exist in the absence of any 

market or price effect.39

In response to comments requesting 

that ‘‘front-running’’ and similar misuse 

of customer information be considered a 

form of fraud-based manipulation under 

final Rule 180.1, the Commission 

declines to adopt any per se rule in this 

regard, but clarifies that final Rule 180.1 

reaches all manner of fraud and 

manipulation within the scope of the 

statute it implements, CEA section 

6(c)(1). 

C. The Disclosure Implications of Final 

Rule 180.1 

1. Comments 

Some commenters express concern 

regarding whether proposed Rule 180.1 


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40See, e.g., Associations at pages 1–5; MFA at 

pages 2–4; CME Group at pages 2–3; CMC at page 

2. The Associations assert, for example, that unlike 

the securities antifraud laws and rules, which are 

designed primarily for investor protection, the 

antifraud provisions in the futures markets are 

focused in large part, although not exclusively, on 

protections against manipulation. Associations at 

page 4. 

41See, e.g., Associations at pages 1–5; MFA at 

pages 2–5; CME Group at pages 2–3; CMC at page 

2; COPE at page 3; CEF Comment Letter at pages 

3 and 8. 

42Associations at page 4; CEF at page 8; MFA at 

pages 2 and 4. 

43ABA Derivatives Committee at page 15. 

44ABA Derivatives Committee at page 15; 

Associations at pages 4–5; MFA at pages 4–5. 

45API and NPRA at page 19. 

46API and NPRA at page 24. 

47CME Group at page 8. 

48Associations at page 5. 

49CME Group at pages 4–5. 

50ABA Derivatives Committee at pages 8–9 

(stating that the fraud-on-the-market theory 

‘‘establishes a rebuttable presumption in private 

rights of action under Exchange Act Section 10(b) 

and SEC Rule 10b-5 that in an efficient market for 

a security a plaintiff can be held to have relied on 

a defendant’s fraudulent misrepresentation or 

omission in connection with the purchase or sale 

of a security—even if the plaintiff was not aware of 

the misrepresentation or omission—by virtue of the 

plaintiff’s reliance on the fact that a security’s price 

reflects the fraudulent misrepresentation and 

omission’’) (citations omitted) (emphasis in 

original). 

51OMEGA Comment Letter at page 3; accord Mr. 

Peter Carini Comment Letter at page 3; Pen Fern Oil 

Co., Inc. Comment Letter at page 3; Scullin Oil Co. 

Comment Letter at page 3. 

52Professor Greenberger at pages 2–4. Professor 

Greenberger further states that the influx of capital 

from retail investors to the commodity markets 

through Exchange Traded Funds has changed the 

dynamics of the futures markets. Id. 

53PMAA at page 1. 

54PMAA at page 2. 

55The derivatives markets are not, however, 

caveat emptor markets. The CEA has many 

provisions designed to protect market participants 

through disclosure requirements applicable to 

Commission registrants. See, e.g., 17 CFR part 155 

(risk disclosure obligations); 17 CFR 4.20–27 (duties 

and disclosure obligations on Commodity Pool 

Operators). Depending on the facts and 

circumstances, violation of such duties could 

constitute a violation of the final Rule. 

56Cf. Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 

17 (1988) (‘‘Silence, absent a duty to disclose, is not 

misleading under [SEC] Rule 10b–5’’). 

would impose new disclosure 

obligations on commodities market 

participants.40 According to the 

Associations, MFA, CME Group, CMC, 

COPE, and the Working Group of 

Commercial Energy Firms (‘‘CEF’’), 

futures, options, swaps, and physical 

commodity markets are different from 

securities markets, which have 

extensive disclosure obligations, and 

nothing in the CEA mandates disclosure 

of market conditions or facts pertaining 

to the markets for commodities.41

The Associations, CEF, and MFA state 

that proposed Rule 180.1 should not 

impose any new duties of disclosure, 

inquiry or diligence between two 

sophisticated parties to a bilateral 

transaction.42 Likewise, the ABA 

Derivatives Committee believes the 

Commission should make clear that the 

anti-manipulation rule under section 

6(c)(l) does not create any new duties of 

inquiry, diligence or disclosure to 

parties to futures, options, swaps or 

cash commodity transactions.43 The 

ABA Derivatives Committee, the 

Associations, and MFA urge the 

Commission to make it explicit that any 

final Rule will be violated only if a party 

violates a pre-existing duty arising 

under contract, common law, or some 

other non-CEA source.44

API and NPRA urge the Commission 

to state explicitly that silence, pure 

omissions (omissions that do not relate 

to explicit representations), and ‘‘no 

comment’’ statements are not 

actionable. They also contend that 

‘‘[t]here should be no affirmative duty to 

convey information to a counterparty in 

the nature of the reporting and 

information requirements as under 

securities law.’’ 45 Similarly, API and 

NPRA recommend that the Commission 

confirm that there is no duty to update 

statements that were truthful at the time 

that they were made.46 CME Group 

states that the duty to correct inaccurate 

statements should be limited to 

circumstances where a futures market 

participant realizes a statement was 

incorrect when the statement was 

made.47

The Associations seek clarification 

that proposed Rule 180.1 will not 

impede the ability of market 

participants to take positions and trade 

on the basis of nonpublic information 

that they obtain legitimately (i.e., not 

through the breach of a pre-existing 

duty to keep such information 

confidential or through another party’s 

similar breach of a pre-existing duty).48

CME Group further states that the 

Commission should not adopt a 

‘‘misappropriation’’ theory of ‘‘insider 

trading’’—that is, where one 

misappropriates confidential 

information for securities trading 

purposes, in breach of a duty owed to 

the source of the information.49 The 

ABA Derivatives Committee 

recommends the Commission make 

clear that securities law doctrines such 

as the prohibition on insider trading and 

the ‘‘fraud-on-the-market’’ theory do not 

apply under the final Rule.50

The West Virginia Oil Marketers & 

Grocers Association (‘‘OMEGA’’) states 

that trading based on inside information 

should be prohibited.51

Responding to other commenters that 

the CFTC should not incorporate the 

standards and case law under SEC Rule 

10b–5, Professor Greenberger states that 

the anti-manipulation rules and 

regulations are not bound by the legal 

frameworks of the two markets. 

Professor Greenberger states that the 

focal point of these anti-manipulation 

rules is to maintain market integrity, 

which is a common goal shared by both 

the securities and futures markets.52

PMAA believes that the Commission, 

in relying on SEC Rule 10b–5, is 

cognizant of and more than capable of 

advancing its distinct regulatory 

responsibilities in ensuring a 

transparent marketplace free from 

manipulation.53 PMAA believes that 

proposed Rule 180.1 will effectively 

implement the statutory and 

Congressional directive to clearly 

delineate and prevent impermissible 

conduct by market participants.54

2. Commission Determination 

As a general matter, the Commission 

does not believe that final Rule 180.1, or 

the statute it implements, are 

problematic or will create uncertainty as 

to the existence of disclosure obligations 

when applied to the markets the 

Commission regulates. This is not to say 

that commenters did not raise valid 

concerns about how securities law 

precedent will be applied in the 

commodities markets with respect to 

disclosure obligations. The Commission 

believes that Congress addressed these 

concerns, however, by enacting CEA 

section 6(c)(1), which provides that ‘‘no 

rule or regulation promulgated by the 

Commission shall require any person to 

disclose to another person nonpublic 

information that may be material to the 

market price, rate, or level of the 

commodity transaction, except as 

necessary to make any statement made 

to the other person in or in connection 

with the transaction not misleading in 

any material respect.’’ To be clear, the 

Commission is not, by this rulemaking, 

imposing any new affirmative duties of 

inquiry, diligence, or disclosure.55

Further, it is not a violation of final 

Rule 180.1 to withhold information that 

a market participant lawfully possesses 

about market conditions. The failure to 

disclose such market information prior 

to entering into a transaction, either in 

an anonymous market setting or in 

bilateral negotiations, will not, by itself, 

constitute a violation of final Rule 

180.1. Therefore, the Commission 

clarifies that silence, absent a preexisting duty to disclose, is not 

deceptive within the meaning of final 

Rule 180.1.56 Similarly, the Commission 

interprets ‘‘no comment’’ statements as 


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57 Id. (internal quotation marks and citation 

omitted). 

58See, e.g., Associations at page 5; MFA at page 

5. 

59See, e.g., Dodd-Frank Act section 746, 

amending CEA section 4c(a) (7 U.S.C. 6c(a)). 

60 75 FR at 67658. 

61 In the securities context, ‘‘the ‘fraud-on-themarket’ presumption helps investors who cannot 

demonstrate that they, themselves, relied on fraud 

that reached the market.’’ Stoneridge In v. Partners, 

LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 171 

(2008). 

62See, e.g., Berko v. SEC, 316 F.2d 137, 143 (2d 

Cir. 1963) (finding reliance and injury to private 

shareholders ‘‘legally irrelevant’’ to the SEC’s 

Exchange Act section 10(b) and SEC Rule 10b–5 

claim); see also United States v. Haddy, 134 F.3d 

542 (3d Cir. 1998) (concluding that securities laws 

did not require proof of reliance in an Exchange Act 

section 10(b) action brought by government). 

63COPE at page 5. 

64API and NPRA at page 11. 

65API and NPRA at page 23. 

66Barnard Comment Letter at page 2. 

67API and NPRA at page 11. 

68See discussion in subsection G below. 

69API and NPRA at page 23. 

‘‘generally the functional equivalent of 

silence.’’ 57

The Commission received comments 

regarding hedging or speculating (i.e., 

trading) on the basis of material 

nonpublic information.58 These 

comments use the label ‘‘insider 

trading,’’ which can mean different 

things in different contexts. The 

Commission recognizes that unlike 

securities markets, derivatives markets 

have long operated in a way that allows 

for market participants to trade on the 

basis of lawfully obtained material 

nonpublic information. This final Rule 

does not prohibit trading on the basis of 

material nonpublic information except 

as provided in the following paragraph 

or otherwise prohibited by law.59

Further, the Commission reiterates that 

the final Rule does not create an 

affirmative duty of disclosure (except, as 

provided by section 6(c)(1), ‘‘as 

necessary to make any statement made 

to the other person in or in connection 

with the transaction not misleading in 

any material respect’’). 

Depending on the facts and 

circumstances, a person who engages in 

deceptive or manipulative conduct in 

connection with any swap, or contract 

of sale of any commodity in interstate 

commerce, or contract for future 

delivery on or subject to the rules of any 

registered entity, for example by trading 

on the basis of material nonpublic 

information in breach of a pre-existing 

duty (established by another law or rule, 

or agreement, understanding, or some 

other source), or by trading on the basis 

of material nonpublic information that 

was obtained through fraud or 

deception, may be in violation of final 

Rule 180.1. The Commission believes 

that this application of the final Rule 

would be consistent with our 

responsibility to protect market 

participants and promote market 

integrity and with our statement in the 

NOPR that section 6(c)(1) is a broad 

catch-all provision, reaching any 

manipulative or deceptive device or 

contrivance.’’ 60

The Commission declines to adopt 

comments recommending outright 

rejection of the potential application of 

the ‘‘fraud-on-the-market’’ theory under 

final Rule 180.1.61 The ‘‘fraud-on-themarket’’ theory includes a presumption 

of reliance, which is a required element 

in private rights of action arising under 

SEC Rule 10b–5. Unlike a private 

litigant, however, the government is not 

required to prove reliance in an 

enforcement action under SEC Rule 

10b–5 just as it is not required to 

demonstrate harm to investors.62

Consistent with judicial interpretations 

of Exchange Act section 10(b) and SEC 

Rule 10b–5, the Commission does not 

interpret the final Rule as requiring a 

showing of reliance or harm to market 

participants in a government action 

brought under CEA section 6(c)(1) and 

final Rule 180.1. At the same time, we 

decline to opine on the required 

elements of a private right of action 

under CEA section 6(c)(1) and final Rule 

180.1 as it is beyond the purview of this 

rulemaking. 

D. The Operation of the Provision 

Prohibiting Material Misstatements and 

Omissions 

1. Comments 

COPE states that inclusion of the 

words ‘‘attempt to make’’ any untrue or 

misleading statement of a material fact 

in proposed Rule 180.1(a)(2) is vague 

and confusing. COPE requests that the 

Commission clarify proposed Rule 

180.1(a)(2) to state that the proscribed 

acts must be done with the intent to 

deceive, manipulate, or defraud.63

API and NPRA believe that the 

Commission should clarify that only 

statements and acts pertaining to 

transactions in futures, swaps, or 

commodities markets underlying futures 

or swaps may give rise to liability under 

proposed Rule 180.1.64 API and NPRA 

also believe that the Commission should 

exercise its discretion to exclude 

‘‘partial omissions’’ from any final 

Rule.65

Mr. Chris Barnard (‘‘Barnard’’) 

believes the proposed rules should 

apply to both positive misconduct and 

misconduct by omission given the 

ongoing nature of the rights and 

obligations that may be created in a 

swap agreement.66

2. Commission Determination 

The Commission declines to adopt 

comments recommending deletion of 

the phrase ‘‘or attempt to make’’ in final 

Rule subsection 180.1(a)(2). This phrase 

captures situations where a person 

attempts to employ a manipulative 

device or artifice to defraud. For 

example, when a supervisor attempts to 

have a subordinate make a fraudulent 

material misstatement or omission but 

that subordinate rebuffs the supervisor, 

the phrase ‘‘or attempt to make’’ would 

operate to reach the supervisor’s 

attempted fraud. 

The Commission declines to modify 

the proposed Rule in response to 

comments requesting that only 

statements and acts pertaining to 

‘‘transactions’’ in futures, swaps, or 

commodities markets underlying futures 

or swaps may give rise to liability under 

proposed Rule 180.1.67 Rather, CEA 

section 6(c)(1) prohibits manipulative or 

deceptive devices or contrivances in 

connection with any swap, or a contract 

of sale of any commodity in interstate 

commerce, or for future delivery on or 

subject to the rules of any registered 

entity.68 The Commission also declines 

to make modifications in response to 

comments recommending that the 

Commission exercise its discretion to 

exclude ‘‘partial omissions’’ from the 

final Rule.69 Fraud-by-partial-omission 

or half-truths could violate final Rule 

180.1 if the facts and circumstances of 

a particular case so warrant. Finally, the 

Commission declines to impose any 

restriction on final Rule 180.1(a)(2) to 

misstatements or omissions that distort 

or, in the case of an attempted violation 

of 180.1(a)(2), are likely to distort 

market conditions. Such a restriction 

would be tantamount to requiring a 

price or market effect for a violation of 

final Rule 180.1. As stated above, the 

Commission rejects any such 

requirement for a violation of final Rule 

180.1 because the statute it implements, 

CEA section 6(c)(1), imposes no such 

requirement. 

E. The Statutory Exception for Good 

Faith Mistakes 

1. Comments 

When considering the application of 

final Rule 180.1(a)(2), several 

commenters asked the Commission to 

extend CEA section 6(c)(1)(C)’s 

provision for ‘‘Good Faith Mistakes’’ in 

the mistaken transmission of ‘‘false or 

misleading or inaccurate information to 

a price reporting service’’ to other 


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70API and NPRA at page 25. 

71Platts Comment Letter at pages 4–6; Argus 

Comment Letter at pages 1 and 5–6. 

72Senator Levin at page 4. 

73API and NPRA at page 18. 

74ABA Derivatives Committee at pages 11–13; 

CEF at page 5; MFA at pages 6–7; API and NPRA 

at pages 12–16. API and NPRA also believe that a 

recklessness standard may be appropriate in the 

highly regulated securities context with its 

fiduciary duties and strict disclosure requirements, 

but a recklessness standard in this context would 

increase the costs of complying with a market 

manipulation rule and deter market participants 

from disclosing relevant information that helps 

markets to function more efficiently. 

75API and NPRA at page 17; CMC at page 2; EEI 

Comment Letter at page 4; MFA at page 6; 

Associations at pages 2 and 6–9. 

76COPE at page 7. 

77ABA Derivatives Committee at pages 11–15. 

78CEF at page 7. 

79CEF at page 7. Rather, CEF believes that the 

CFTC should evaluate alleged manipulation on a 

case-by-case basis, taking into consideration the 

facts and circumstances of each case. 

80PMAA at page 2. 

81PMAA at page 2. 

82Townsend Comment Letter at page 1. 

83Professor Greenberger at page 2. 

84Professor Greenberger at page 2 (internal 

quotation marks and citation omitted). Professor 

Greenberger states that the Commission correctly 

proposes that judicial precedent interpreting and 

applying Exchange Act Section 10(b) and SEC Rule 

10b–5 in the context of the securities markets 

should guide application of the scienter standard 

relevant to proposed Rule 180.1 given that proposed 

Rule 180.1 is modeled on SEC Rule 10b–5. Id. In 

Professor Greenberger’s view, such judicial 

precedent ‘‘will provide regulatory certainty and 

will not disrupt the market function.’’ Id. 

85ATA Comment Letter at page 4. 

86See, e.g., SEC v. U.S. Envtl., Inc., 155 F.3d 107, 

111 (2d Cir. 1998) (finding allegation of reckless 

participation in a market manipulation sufficient to 

state a claim of violation of Exchange Act section 

10(b)). 

87 Drexel Burnham Lambert Inc. v. CFTC, 850 

F.2d 742, 748 (DC Cir. 1988); see also Sundstrand 

Corp. v. Sun Chem. Corp., 553 F.2d 1033, 1045 (7th 

Cir. 1977), cert. denied, 434 U.S. 875 (1977) 

(holding that recklessness under SEC Rule 10b–5 

means ‘‘an extreme departure from the standards of 

ordinary care, and which presents a danger of 

misleading buyers or sellers that is either known to 

the defendant or is so obvious that the actor must 

have been aware of it’’) (internal quotation marks 

and citation omitted); SEC v. Platforms Wireless 

Int’l Corp., 617 F.3d 1072, 1093–94 (9th Cir. 2010) 

(‘‘scienter [under SEC Rule 10b–5] requires either 

deliberate recklessness or conscious recklessness, 

and [ ] it includes a subjective inquiry turning on 

the defendant’s actual state of mind’’) (internal 

quotation marks and citations omitted). 

88See, e.g. Hollinger, v. Titan Capital Corp., 914 

F.2d 1564, 1568–96 (9th Cir. 1990) (en banc), cert. 

denied, 111 S. Ct. 1621 (1991). 

violations under CEA section 6(c)(1) and 

proposed Rule 180.1. API and NPRA 

request that the good faith exception be 

expanded to cover ‘‘all public 

statements or reports by a market 

participant or other communications 

covered by the proposed rule.’’ 70 Platts 

seeks extension of CEA section 

6(c)(1)(C)’s good faith mistakes 

exception to proposed Rules 180.1 and 

180.2, and Argus Media, Inc. (‘‘Argus’’) 

asks the Commission to extend CEA 

section 6(c)(1)(C) to CEA section 

9(a)(2).71

2. Commission Determination 

In crafting CEA section 6(c)(1)(C), 

Congress could have extended the 

exception for good faith mistakes to all 

of CEA sections 6(c) and 9(a)(2) but did 

not do so. Following the plain text of 

CEA section 6(c)(1)(C), the Commission 

limited the good faith exception in final 

Rule 180.1 to the mistaken transmission 

of false or misleading or inaccurate 

information to a price reporting service. 

The Commission also makes clear that 

the scienter requirement of final Rule 

180.1, final Rule 180.2, and CEA section 

9(a)(2) functions to ensure that goodfaith mistakes or negligence will not 

constitute a violation of the final Rules 

under any circumstance. Thus, a person 

lacking the requisite scienter cannot be 

found to have engaged in a 

manipulative or deceptive device or 

contrivance within the meaning of CEA 

section 6(c)(1). 

F. The Required Scienter for a Violation 

of Final Rule 180.1 

1. Comments 

Several commenters asked the 

Commission to clarify the standard of 

scienter under proposed Rule 180.1. 

Senator Levin recommends that the 

Commission shift the burden of proof 

with respect to intent to market 

participants, which would require them 

to show that their conduct was not 

manipulative.72

API and NPRA state that the 

Commission should clarify that scienter 

may not be premised on the collective 

knowledge of an entire company, but 

instead must be based on the knowledge 

of the person participating in the 

deceptive or fraudulent conduct.73

The ABA Derivatives Committee, 

CEF, MFA, API and NPRA disagree with 

the Commission’s proposal to adopt 

recklessness as the scienter requirement, 

believing instead that the language of 

the statute supports a specific intent 

standard.74 In the alternative, API and 

NPRA, CMC, Edison Electric Institute 

(‘‘EEI’’), MFA, and the Associations 

propose a standard of ‘‘extreme 

recklessness.’’ 75 Additionally, 

commenter COPE states that the 

Commission should make clear that the 

type of recklessness contemplated is not 

recklessness in a tort sense, but rather 

a business activity that diverges so 

greatly from rational market behavior as 

to indicate a fraudulent intent.76

The ABA Derivatives Committee 

requests that in cases alleging 

manipulation under final Rule 180.1, 

the Commission must show a specific 

intent to cause an artificial price to 

satisfy the scienter requirement.77

CEF requests that if a recklessness 

standard is adopted, it should not 

extend to violations arising under CEA 

section 9(a)(2).78 In addition, CEF 

suggests that the Commission confirm 

that it will not adopt a scienter 

requirement ‘‘that creates an implied 

presumption that sophisticated traders 

understand and are aware of the effects 

of their actions taken in the normal 

course of business on other commodity 

or securities markets.’’ 79

PMAA supports and encourages the 

Commission to adopt ‘‘recklessness’’ as 

the level of scienter, particularly when 

evaluating issues relating to algorithmic 

market manipulation.80 According to 

PMAA, the Commission’s adoption of a 

‘‘recklessness’’ standard in CEA section 

4c(a)(7) and proposed Rules 180.1 and 

180.2 should impose enhanced duties of 

diligence on those using or employing 

automated trading systems.81

Mr. Clarence Townsend 

(‘‘Townsend’’) believes the standard of 

scienter should be strengthened to 

‘‘reckless manipulation.’’ 82

Professor Greenberger states that 

section 6(c)(1) lowers the standard of 

manipulation from ‘‘knowingly’’ to 

‘‘reckless.’’ 83 Professor Greenberger 

states that CEA section 6(c)(1) was 

designed to empower the Commission 

with ‘‘the same anti-manipulation 

standard employed by the [SEC] for 

more than 75 years, which has been 

upheld and defined in many court 

cases, including the Supreme Court.’’ 84

The Air Transport Association 

(‘‘ATA’’) believes that the scienter 

standard should enable the Commission 

to police and punish a broader array of 

potentially manipulative conduct than 

is reachable under the CEA section 

9(a)(2) anti-manipulation provision.85

2. Commission Determination 

Upon consideration of all the 

comments in this rulemaking record, the 

Commission clarifies that a showing of 

recklessness is, at a minimum, 

necessary to prove the scienter element 

of final Rule 180.1.86 Consistent with 

long-standing precedent under the 

commodities and securities laws, the 

Commission defines recklessness as an 

act or omission that ‘‘departs so far from 

the standards of ordinary care that it is 

very difficult to believe the actor was 

not aware of what he or she was 

doing.’’ 87 Proof of knowledge, however, 

is not required.88 Certain commenter 

requests for a scienter standard of 

‘‘specific intent’’ would unduly limit 

the scope of final Rule 180.1. Likewise, 


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89 75 FR at 67659. 

90Consistent with the Supreme Court’s 

interpretation of Exchange Act section 10(b) in 

Ernst & Ernst v. Hochfelder, 425 U.S. 185, 206 

(1976), the Commission finds no indication in CEA 

section 6(c)(1) that Congress intended anyone to be 

made liable for a violation of final Rule 180.1 unless 

he or she acted other than in good faith. 

91See, e.g., Herman & Maclean v. Huddleston, 

459 U.S. 375, 387–90 (1983), citing SEC v. C. M. 

Joiner Leasing Corp., 320 U.S. 344, 355 (1943). 

92Compare, e.g., United States v. Bank of New 

England, N.A., 821 F.2d 844, 856 (1st Cir. 1987) 

(holding in a corporate criminal liability action 

arising under the Currency Transaction Reporting 

Act, that ‘‘[c]orporations compartmentalize 

knowledge, subdividing the elements of specific 

duties and operations into smaller components. The 

aggregate of those components constitutes the 

corporation’s knowledge of a particular operation 

* * * [and the] corporation cannot plead innocence 

by asserting that the information obtained by 

several employees was not acquired by any one 

individual who then would have comprehended its 

full import’’); City of Monroe Employees Retirement 

System v. Bridgestone Corp., 387 F.3d 468, 690 (6th 

Cir. 2004) (finding that plaintiffs adequately 

pleaded securities fraud claims against a corporate 

defendant even though the complaint failed to 

allege that the corporate agent whose scienter was 

imputed to the corporation ‘‘played any role in 

drafting, reviewing, or approving’’ the allegedly 

false representations or ‘‘that he was, as a matter of 

practice, or by job description, typically involved in 

the creation of such documents’’); with Nordstrom 

Inc. v. Chubb & Son Inc., 54 F. 3d 1424, 1435 (9th 

Cir. 1995) (‘‘there is no case law supporting an 

independent ‘collective scienter’ theory,’’ i.e., the 

theory ‘‘that a corporation’s scienter could be 

different from that of an individual director or 

officer’’); Southland Sec. Corp. v. INSpire Ins. 

Solutions Inc., 365 F.3d 353, 364–65 (5th Cir. 2004) 

(quoting In re Apple Computer Inc., 243 F. Supp. 

2d 1012, 1023 (N.D. Cal. 2002)) (‘‘ ‘A defendant 

corporation is deemed to have the requisite scienter 

for fraud only if the individual corporate officer 

making the statement has the requisite level of 

scienter * * * at the time he or she makes the 

statement’ * * * [T]he required state of mind must 

actually exist in the individual making the 

misrepresentation and may not simply be imputed 

to that individual on general principles of agency’’), 

cited with approval in Makor Issues & Rights, Ltd. 

v. Tellabs Inc., 513 F.3d 702, 708 (7th Cir. 2008); 

United States v. Sci. Applications Int’l Corp., 626 

F.3d 1257, 1274–75 (DC Cir. 2010) (holding a 

‘‘collective knowledge’’ jury instruction 

inconsistent with the scienter requirement under 

the False Claims Act and expressing doubt, in dicta, 

regarding the use of ‘‘collective knowledge’’ to 

establish corporate scienter in non-FCA cases). 

93Better Markets at page 2. Better Markets notes 

that the SEC employed the language in connection 

with the ‘‘offer, purchase or sale’’ of any securitybased swap, and also targeted a specific 

characteristic of swaps—the ongoing payments or 

deliveries between the parties throughout the life of 

the security-based swap in accordance with their 

rights and obligations. 

94CME Group at pages 9–10. 

95CEF at pages 3–4. 

96Senator Levin at pages 5–6. 

97Senator Levin at pages 5–6. 

98SEC v. Zandford, 535 U.S. 813 (2002). 

in response to comments calling for a 

bifurcated approach to scienter under 

6(c)(1) and final Rule 180.1, that is, 

specific intent to effect a price or price 

trend that does not reflect legitimate 

forces of supply and demand for nonfraud based manipulations, and 

‘‘extreme recklessness’’ in fraud-based 

manipulations, the Commission states, 

as it did in the NOPR, that it will be 

guided, but not controlled by, judicial 

precedent interpreting and applying 

scienter under Exchange Act section 

10(b) and SEC Rule 10b–5.89 At the 

same time, the Commission makes clear 

that final Rule 180.1 does not reach 

inadvertent mistakes or negligence. 

Final Rule 180.1 will not affect market 

participants engaged in legitimate 

market activity undertaken in good 

faith.90 Under final Rule 180.1, the 

plaintiff bears the burden of proving the 

violation by a preponderance of the 

evidence.91

With respect to comments requesting 

clarification that scienter may not be 

premised on the collective knowledge of 

an entire company, the Commission 

notes that there is disagreement among 

the circuits on the collective knowledge 

theory—that is, the courts disagree on 

whether the conduct of one corporate 

agent can be aggregated with another 

corporate agent’s state of mind in 

holding a corporation liable for fraud.92

The judicial decisions on the 

applicability of the collective 

knowledge theory under Exchange Act 

section 10(b) involve only private 

securities litigation; the Commission is 

unaware of any judicial decision 

applying the so-called collective 

knowledge theory under Exchange Act 

section 10(b) where the government is 

the plaintiff. Further, the Supreme Court 

has not spoken to the issue under 

Exchange Act section 10(b) or any other 

similar fraud-based prohibition. 

Given that the collective knowledge 

theory of alleging and proving scienter 

against corporate defendants is 

permissible in certain circuits, and 

because the Commission finds the 

policy rationale underlying the theory to 

be in the public interest (i.e., that it 

creates incentives for the corporate 

entity to create and maintain effective 

internal communications and controls 

to prevent wrongful and harmful 

conduct), the Commission declines to 

adopt comments requesting that the 

Commission foreclose the collective 

knowledge theory in any case. Rather, 

the Commission intends to follow the 

law of the various circuits and, in all 

cases, consider the totality of the facts 

and circumstances of a particular case 

before deciding whether enforcement 

action is appropriate and in the public 

interest. 

G. The Scope of the Phrase ‘‘In 

Connection With’’ 

1. Comments 

In response to the NOPR, Better 

Markets requested the Commission 

interpret the ‘‘in connection with’’ 

language of Proposed Rule 180.1 

broadly to include not only the 

transaction giving rise to a swap 

agreement, but also all of the continuing 

performance obligations under such 

agreement.93

CME Group states that the 

Commission should interpret the ‘‘in 

connection with’’ standard to require a 

‘‘nexus’’ between transactions (or offers 

to transact) subject to CFTC jurisdiction 

and prohibited fraudulent or deceptive 

conduct.94 CEF expressed concern that 

a broad interpretation of the phrase ‘‘in 

connection with’’ may result in 

conflicting or duplicative regulation 

with other agencies, including the 

Federal Energy Regulatory Commission 

(‘‘FERC’’), SEC, Federal Trade 

Commission (‘‘FTC’’) and the Public 

Utility Commission of Texas.95

Senator Levin believes the 

Commission should employ its new 

authority under CEA section 6(c) to 

prevent manipulative and disruptive 

activities even where the impacts may 

only be felt in other markets—including 

markets regulated by the SEC.96 Senator 

Levin expresses concern that, as 

currently drafted, the proposed rules 

may not allow the CFTC to effectively 

regulate market activity that is intended 

to or actually does artificially change 

prices in another market or product.97

2. Commission Determination 

Upon careful consideration of the 

entire rulemaking record, the 

Commission finds it unnecessary to 

alter the text of final Rule 180.1. The 

Commission interprets the words ‘‘in 

connection with’’ broadly, not 

technically or restrictively. Section 

6(c)(1) and final Rule 180.1 reach all 

manipulative or deceptive conduct in 

connection with the purchase, sale, 

solicitation, execution, pendency, or 

termination of any swap, or contract of 

sale of any commodity in interstate 

commerce, or contract for future 

delivery on or subject to the rules of any 

registered entity. Accordingly, final 

Rule 180.1 covers conduct including, 

but not limited to, all of the payment 

and other obligations arising under a 

swap. 

While broad, the elasticity of the ‘‘in 

connection with’’ language is not 

limitless. In this regard, the Commission 

finds the Supreme Court’s decision in 

Zandford interpreting SEC Rule 10b–5’s 

‘‘in connection with’’ language 

particularly instructive.98 In its opinion, 

the Court gave the following example to 


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99 Id. at 825 n. 4. The holding of Zandford is 

consistent with judicial interpretations of the 

phrase ‘‘in or in connection with’’ in the anti-fraud 

provisions of the CEA, particularly section 4b(a), 

which prohibits any person from defrauding 

another person ‘‘in or in connection with’’ a 

commodity futures transaction. For example, in R 

& W Tech. Servs. Ltd., v. CFTC, 205 F.3d 165 (5th 

Cir. 2000), cert. denied, 531 U.S. 817 (2000), the 

Fifth Circuit, in affirming the liability of a 

defendant for defrauding another person, refused to 

construe ‘‘in or in connection with’’ and 4b(a) 

narrowly. Id. at 171–74. Rather, the court endorsed 

the Commission’s position that fraud in the sale of 

investment advice will be ‘‘in connection with’’ the 

sale of a commodities futures contract ‘‘if the fraud 

relates to’’ the risk of trading and the primary 

purpose of the advice is to execute trades. Id. at 

172–73. As a general matter, the Supreme Court has 

stated that anti-fraud and anti-manipulation 

provisions of the CEA are to be construed broadly. 

See, e.g., CFTC v. Schor, 478 U.S. 833, 836 (1986) 

(‘‘The CEA broadly prohibits fraudulent and 

manipulative conduct in connection with 

commodity futures transactions.’’). 

100Zandford, 535 U.S. 813 (2002); see also Merrill 

Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 

U.S. 71, 85 (2006) (holding that the ‘‘in connection 

with’’ language of SEC Rule 10b–5 requires a nexus 

between fraudulent conduct and a securities 

transaction). 

101 7 U.S.C. 2(a)(1)(A). 

102API and NPRA at pages 10–11. 103CEF at page 8. 104API and NPRA at page 27. 105EEI at pages 2–4; CEF at pages 4–5. 106 Greenberger at page 4. 107PMAA at pages 1–2. 108Brattle Group economists Comment Letter at 

page 6. 

109Brattle Group economists at pages 6–7. 

110A list of all external meetings held on DoddFrank Act section 753 is available at: http:// 

www.cftc.gov/LawRegulation/DoddFrankAct/ 

ExternalMeetings/index.htm. 

111Similarly, the Commission has ample 

experience enforcing the predecessor provisions of 

final Rule 180.2. 

highlight the limits of SEC Rule 10b–5 

applicability: 

If * * * a broker embezzles cash from a 

client’s account or takes advantage of the 

fiduciary relationship to induce his client 

into a fraudulent real estate transaction, then 

the fraud would not include the requisite 

connection to a purchase or sale of securities. 

Likewise if the broker told his client he was 

stealing the client’s assets, that breach of 

fiduciary duty might be in connection with 

a sale of securities, but it would not involve 

a deceptive device or fraud.99

The Commission intends to be guided 

by this and other precedent interpreting 

the words ‘‘in connection with’’ in the 

securities context.100

As to comments regarding crossmarket manipulation, the Commission 

intends to apply final Rule 180.1 to the 

fullest extent allowed by law when 

determining whether conduct in one 

market is ‘‘in connection with’’ an 

activity or product subject to the 

jurisdiction of the Commission. Further, 

where the Commission’s jurisdiction is 

not exclusive,101 the Commission will, 

to the extent practicable and consistent 

with its longstanding practice, 

coordinate its enforcement efforts with 

other federal or state law enforcement 

authorities. 

H. Penalty, Procedure, Effect on 

Automated Trading Systems, and a 

Proposal To Define Manipulation 

1. Comments 

With regard to the penalty for 

violating final Rule 180.1, API and 

NPRA state that if the Commission 

chooses to promulgate a catch-all antifraud rule without regard to whether the 

conduct had a manipulative purpose or 

effect (a proposal that API and NPRA 

submit would exceed the Commission’s 

authority), then the Commission should 

clarify that the enhanced sanctions in 

section 753 of the Dodd-Frank Act apply 

only to cases of manipulation or 

attempted manipulation, and not to 

every alleged violation of the rule.102

CEF seeks clarification that, in a case of 

a false reporting violation under CEA 

section 6(c)(1)(A), the Commission is 

not permitted to impose a penalty of an 

amount equal to the greater of $1 

million or treble damages pursuant to 

CEA section 6(c)(10)(C)(ii).103

On the subject of implementation, API 

and NPRA ask that any final rule adopt 

a 180-day effective date to enable the 

industry to design and implement 

comprehensive compliance 

programs.104 EEI and CEF recommend 

that the CFTC implement its new 

authority in a cooperative manner with 

FERC and further recommend that it 

hold a workshop, before the final Rule 

is issued, on a variety of subjects related 

to interpretation and application of the 

final Rule.105 Professor Greenberger 

believes that the Commission correctly 

states in the NOPR that market 

participants should already have 

constructed and implemented 

procedures to guard against their 

employees’ and agents’ attempts at 

manipulation. As such, Professor 

Greenberger believes that there should 

not be any additional cost to the existing 

market participants.106

On the issue of use or employment of 

algorithmic or automated trading 

systems, the PMAA requests that the 

Commission establish standards 

governing the use of algorithmic trading 

technology by requiring internal 

controls such as logs and specific 

notification protocols, directed to the 

trading entity, when significant code 

modification of its algorithm takes 

place, including interpretation by the 

algorithm of digitized news and social 

networking sources.107

Finally, the Brattle Group economists 

state that the Commission should adopt 

its proposed definition of manipulation: 

‘‘Manipulation is engaging in 

anomalous price-making behavior 

intended to alter a price in order to 

profit in affected price-taking 

transactions.’’ 108 The Brattle Group 

economists contend that manipulation 

thus defined can be interpreted as a 

form of fraud whereby anomalous 

behavior (non-economic, stand-alone 

transactions for the actor) injects false or 

misleading information into a market 

and consequently impairs its 

integrity.109

2. Commission Determination 

With respect to penalties, the 

Commission will follow CEA section 

6(c)(10)(C)(ii), which states that the 

Commission may assess ‘‘in any case of 

manipulation or attempted 

manipulation in violation of [CEA 

section 6(c)] or section 9(a)(2), a civil 

penalty of not more than an amount 

equal to the greater of—(I) $1,000,000; 

or (II) triple the monetary gain to the 

person for each such violation.’’ CEF’s 

request that the penalties for 

manipulation not apply to violations of 

CEA section 6(c)(1)(A) is declined 

because such an outcome would conflict 

with the plain language of the statute. 

False or misleading or inaccurate 

reporting is a type of unlawful 

manipulation specifically prohibited by 

CEA section 6(c)(1)(A). Accordingly, 

where section 6(c)(1)(A) applies, the 

Commission may assess a penalty of an 

amount equal to the greater of $1 

million or treble damages under CEA 

section 6(c)(10)(C)(ii) for each such 

violation. 

The Commission declines to adopt 

comments recommending that it 

conduct further technical conferences 

on this rulemaking. The Commission 

has provided notice and opportunity to 

comment and has met with numerous 

groups to discuss this rulemaking.110

Further, as noted above, there is 

extensive case law interpreting SEC 

Rule 10b–5 upon which final Rule 180.1 

is modeled.111

The Commission declines to adopt 

comments requesting heightened 

supervision of algorithmic and 

automated trading systems as beyond 

the scope of this rulemaking. 

Nevertheless, as a general matter, a 

supervisory failure may be one of the 

facts and circumstances that the 

Commission considers in determining 

whether a violation of the final Rule 

exists. 

The Commission declines to adopt 

comments proposing a new economicsbased definition of manipulation. 

Instead, as stated above, all relevant 


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112 75 FR at 67658. 

113CME Group at page 11. CME Group states that 

the Commission also should clarify how to 

determine whether a price has been affected by 

illegitimate factors. CME Group at pages 11–12. 

114 75 FR at 67660–61. 

115 In the Matter of Cox, [1986–1987 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) P 23,786 at 

34,060–61 (CFTC July 15, 1987). 

116COPE at pages 6–7; EEI at page 6. 

117EEI at page 6. 

118EEI at page 7. 

119Associations at page 10 referring to In re Di 

Placido, 2008 WL 4831204 (CFTC 2008), affd in 

pertinent part, Di Placido v. CFTC, 364 Fed Appx. 

657, 2009 WL 3326624 (2d Cir. 2009), cert. denied, 

130 S. Ct. 1883 (Mar. 22, 2010). 

120CMC at pages 2–3. 

121CMC at pages 2–3; MFA at pages 7–8. 

122Associations at page 11; MFA at pages 7–8. 

123MFA at pages 7–8. 

124Professor Greenberger at page 4. 

125Professor Greenberger at page 4. 

126ATA at page 1. 

127ATA at page 4. 

128 In re Indiana Farm Bureau Cooperative Assn., 

Inc., [1982–1984 Transfer Binder] Comm. Fut. L. 

Rep. (CCH) ¶ 21,796 (CFTC Dec. 17, 1982), citing 

Volkart Bros., Inc. v. Freeman, 311 F.2d 52 (5th Cir. 

1962); In re Hohenberg Bros. Co., [1975–1977 

Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶ 20,271 

(CFTC Feb. 18, 1977). 

129 In re Cox [1986–1987 Transfer Binder], Comm. 

Fut. L. Rep. (CCH) ¶ 23,786, 1987 CFTC LEXIS 325, 

at *9, 1987 WL 106879, at *3 (CFTC July 15, 1987). 

In cases of attempted manipulation under section 

9(a)(2), the CFTC is required to show: (1) An intent 

to affect the market price; and (2) some overt act 

in furtherance of that intent. See In re Hohenberg 

Bros. Co., ¶ 20,271 at 21,477. 

facts and circumstances must be 

considered in determining whether a 

violation of final Rule 180.1 exists. 

V. Discussion of CEA Section 6(c)(3) 

and Final Rule 180.2 

The Commission proposed Rule 180.2 

under its general rulemaking authority, 

CEA section 8a(5) and its statutory 

authority to prohibit manipulation 

under new CEA section 6(c)(3). 

Proposed Rule 180.2 mirrors the text of 

new CEA section 6(c)(3), by stating that 

‘‘[i]t shall be unlawful for any person, 

directly or indirectly, to manipulate or 

attempt to manipulate the price of any 

swap, or of any commodity in interstate 

commerce, or for future delivery on or 

subject to the rules of any registered 

entity.’’ In the NOPR, the Commission 

proposed to continue ‘‘interpreting the 

prohibition on price manipulation and 

attempted price manipulation to 

encompass every effort to improperly 

influence the price of a swap, 

commodity, or commodity futures 

contract.’’ 112

A. Comments 

The CME Group believes that the 

Commission should employ a brightline test under final Rule 180.2 that 

distinguishes prohibited manipulative 

conduct from legitimate competitive 

trading activities. To that end, CME 

Group urges the Commission to clarify 

what factors or types of activity the 

Commission considers to be ‘‘intended 

to interfere with the legitimate forces of 

supply and demand.’’ 113 The CME 

Group believes the Commission’s 

statement in the NOPR that ‘‘an illegal 

effect on price can often be conclusively 

presumed from the nature of the 

conduct in question and other factual 

circumstances not requiring expert 

economic analysis’’ 114 is tantamount to 

a ‘‘we-know-it-when-we-see-itapproach’’ that impermissibly collapses 

the third and fourth elements of the 

traditional framework for manipulation 

outlined in Cox.115

COPE and EEI believe that the 

provisions in proposed Rule 180.1 are 

the same as proposed Rule 180.2 and 

thus the latter should be deleted.116 EEI 

recommends that if the Commission 

chooses not to delete proposed Rule 

180.2, it should carve this section out of 

the current rulemaking initiative and 

issue a separate and more detailed 

NOPR for public comment.117

EEI requests that the Commission 

affirm in regulatory text that the scienter 

requirement for proposed Rule 180.2 is 

specific intent under the Commission’s 

four-prong test.118 This four-part test is 

described in subsection B below. 

Likewise, the Associations believe that 

the Commission should not use CEA 

section 6(c)(3) as a mechanism to lower 

the specific intent standard traditionally 

required in manipulation cases. Instead, 

the Commission should issue clarifying 

guidance that conforms to the 

traditional framework of enforcement, 

including the theory of liability set forth 

in the Di Placido matter.119

With respect to the scope of 

application of proposed Rule 180.2, 

CMC recommends the Commission 

clarify that CEA section 6(c)(3) does not 

confer any additional enforcement 

authority beyond the holding in the Di 

Placido matter.120

CMC and MFA recommend that the 

Commission make clear that proposed 

Rule 180.2 does not create a 

presumption that a price is artificial 

merely because one or more isolated 

transactions are deemed uneconomic 

without proof of a specific intent to 

move prices.121 The Associations and 

MFA believe that the Commission’s 

statement in the NOPR ‘‘that prices [are] 

affected by a factor not consistent with 

normal forces of supply and demand 

will often follow inescapably from proof 

of the actions of the alleged 

manipulator’’ is an overly aggressive 

reading of judicial precedent like Di 

Placido. 122 MFA believes that the 

Commission should not create a 

‘‘conclusive presumption’’ that a price 

is artificial without proof of specific 

intent to move prices.123

Professor Greenberger states that 

although the Commission has already 

interpreted the ‘‘prohibition on price 

manipulation and attempted price 

manipulation to encompass every effort 

to influence the price of a swap, 

commodity, or commodity futures 

contract that is intended to interfere 

with the legitimate forces of supply and 

demand in the marketplace,’’ it is 

important to reaffirm the relevance of 

that legal interpretation.124 Professor 

Greenberger believes that Commission 

precedent supports the position that 

illegal effect on price can often be 

conclusively presumed from the nature 

of the conduct in question and other 

factual circumstances not requiring 

expert economic analysis.125

ATA believes that the Commission 

should consider whether its complete 

reliance on past precedent in 

interpreting manipulation under 

proposed Rule 180.2 needlessly narrows 

the potential reach of the amended antimanipulation provision of section 

6(c)(3), anchoring its interpretation to a 

past standard that has proven 

remarkably difficult to enforce.126 ATA 

notes that section 6(c)(3) as amended is 

broader than both its prior version and 

section 9(a)(2) by its inclusion of the 

word ‘‘indirectly,’’ making it unlawful 

to indirectly manipulate or attempt to 

manipulate prices.127

B. Commission Determination 

In response to the comments received 

regarding this matter, the Commission 

reiterates that, in applying final Rule 

180.2, it will be guided by the 

traditional four-part test for 

manipulation that has developed in case 

law arising under 6(c) and 9(a)(2): (1) 

That the accused had the ability to 

influence market prices; (2) that the 

accused specifically intended to create 

or effect a price or price trend that does 

not reflect legitimate forces of supply 

and demand; 128 (3) that artificial prices 

existed; and (4) that the accused caused 

the artificial prices.129

The Commission reaffirms the 

requirement under final Rule 180.2 that 

a person must act with the requisite 

specific intent. In other words, 

recklessness will not suffice under final 

Rule 180.2 as it will under final Rule 

180.1. The Commission finds this level 

of intent necessary to ensure that 

legitimate conduct is not captured by 

final Rule 180.2, which covers nonfraud based manipulation. Given the 


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130 75 FR at 67660 (emphasis added). 

131 75 FR at 67660. 

132 7 U.S.C. 19(a). 133 75 FR at 67661. 134See note 2 for access to public comment file. 

135API and NPRA at pages 4 and 8. 

136API and NPRA at page 8. 

137API and NPRA at pages 12–17. 

138API and NPRA at page 22. 

139MFA at pages 3–4. 

140Associations at pages 1 and 4. 

141CME at page 3. 

142Argus at page 1. 

differences in scope of application 

between the final Rules, the 

Commission declines requests to 

consolidate them. 

The Commission declines requests to 

limit the application of final Rule 180.2 

to the circumstances set forth in the 

commenters’ analysis of particular 

cases, including the Di Placido matter. 

Likewise, the Commission’s statement 

in the NOPR that an artificial price may 

be ‘‘conclusively presumed’’ under 

certain facts and circumstances does not 

mean that an artificial price may be 

conclusively presumed in all cases. For 

example, where, as in Di Placido, a 

trader violates bids and offers in order 

to influence the volume-weighted 

average settlement price, an artificial 

price will be a ‘‘reasonably probable 

consequence’’ of the trader’s intentional 

misconduct. Moreover, the Commission 

in the proposed Rule did not say that an 

artificial price will be conclusively 

presumed in the absence of any 

evidence, only that ‘‘extensive economic 

analysis may not be necessary’’ to prove 

that an artificial price existed.130 To be 

clear, in some cases the conclusion that 

prices were affected by a factor not 

consistent with normal forces of supply 

and demand will require economic 

analysis, but in other cases, such a 

showing may, as the Commission stated 

in the proposed Rule, ‘‘follow 

inescapably from proof of the actions of 

the alleged manipulator.’’ 131 This is 

unsurprising given the fact and 

circumstance specific nature of 

manipulation cases. Accordingly, the 

Commission is not, as some commenters 

state, collapsing the third and fourth 

elements of the traditional four-part test 

for manipulation under section 6(c)(3) 

and final Rule 180.2. 

The Commission interprets the terms 

‘‘directly or indirectly’’ as describing the 

level of involvement necessary to 

establish a violation of final Rule 180.2. 

In this context, the Commission 

interprets ‘‘indirectly’’ to include the 

circumstance where a person uses a 

third party (e.g., an executing broker) to 

execute trades designed to manipulate, 

so it will be no defense that the person 

did not himself execute the transaction. 

Notwithstanding the fact that final 

Rule 180.2 mirrors the text of CEA 

section 6(c)(3), the Commission deems it 

appropriate and in the public interest to 

promulgate this rule and, in so doing, 

provide the above clarifications to the 

manner in which the Commission 

interprets and intends to apply final 

Rule 180.2. 

V. Administrative Compliance and 

Cost-Benefit Considerations 

CEA section 15(a) 132 requires the 

Commission to consider the costs and 

benefits of its actions before 

promulgating a regulation under the 

CEA. By its terms, CEA section 15(a) 

does not require the Commission to 

quantify the costs and benefits of a rule 

or to determine whether the benefits of 

the regulation outweigh its costs; rather, 

it requires the Commission to 

‘‘consider’’ the costs and benefits of its 

actions. CEA section 15(a) further 

specifies that the costs and benefits 

shall be evaluated in light of five broad 

areas of market and public concern: (1) 

Protection of market participants and 

the public; (2) efficiency, 

competitiveness and financial integrity 

of futures markets; (3) price discovery; 

(4) sound risk management practices; 

and (5) other public interest 

considerations. The Commission may in 

its discretion give greater weight to any 

one of the five enumerated areas and 

could in its discretion determine that, 

notwithstanding its costs, a particular 

rule is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or 

accomplish any of the purposes of the 

CEA. 

In the NOPR, the Commission stated 

that the proposed rules would enhance 

the authority of the Commission to 

ensure fair and equitable markets, and 

that market participants and the public 

will substantially benefit from such 

enhanced prevention and deterrence of 

manipulation. With respect to costs, the 

Commission also stated that participants 

in the markets should already have 

policies and procedures in place to 

ensure that their employees, affiliates 

and agents will refrain from attempting 

to manipulate the markets. The 

Commission invited public comment on 

its cost-benefit considerations.133

Below, we summarize and respond to 

those comments.134 Both in the 

response to comments and in the 

preamble, we address the areas of 

market and public concern for 

consideration of costs and benefits 

under CEA section 15(a). 

API and NPRA commented that the 

potentially significant compliance costs 

and legal uncertainty must be weighed 

against the limited benefits of the 

proposed rules. Specifically, API and 

NPRA believe that it is problematic to 

expand the scope of the Commission’s 

enforcement authority to cover routine 

cash market transactions in all areas of 

the economy, as it would potentially 

create inconsistencies with existing 

statutory and common law standards 

and would place a tremendous burden 

on the Commission’s resources.135

Further, API and NPRA comment that 

the risk of inconsistent standards with 

federal and state enforcement 

authorities may exacerbate market 

participants’ regulatory and compliance 

risk and burden.136 API and NPRA also 

believe that a recklessness standard 

under Section 753 would increase the 

costs of complying with a market 

manipulation rule and deter market 

participants from engaging in legitimate 

business activities and disclosing 

relevant information that helps markets 

to function more efficiently as price 

discovery venues.137 API and NPRA 

contend that where market participants 

seek to comply with an omissions rule 

by disclosing more information, 

companies will have an incentive to 

exercise great caution to ensure that no 

affirmative statement may be 

subjectively considered misleading 

through any omission.138

MFA is concerned that ambiguity 

with respect to legal standards would 

increase transaction costs and chill 

legitimate trading practices, in turn 

decreasing market depth and 

liquidity.139 The Associations state that 

no new duties of disclosure, inquiry, or 

diligence should be imposed between 

two sophisticated parties to a bilateral 

transaction. Any such new duties may 

discourage legitimate trading activities, 

increase transaction costs, and, as a 

result, reduce liquidity and market 

depth.140 CME and Argus make similar 

comments as to the potential effects on 

markets as a whole, but do not express 

their concerns in terms of costs. The 

CME comments that the Commission 

must provide greater clarity as to the 

scope of prohibited conduct to maintain 

and promote fair and efficient markets 

and to protect market liquidity, price 

discovery, and the risk management 

functions of futures markets.141 Argus 

states that absent clarification from the 

Commission, the proposed rules may 

unnecessarily chill the voluntary 

submission of transaction related data 

by market participants to compilers of 

price indices which, in turn, hinders the 

Dodd-Frank Act’s goal of market 

transparency.142 CEF comments that 


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Federal Register / Vol. 76, No. 135 / Thursday, July 14, 2011 / Rules and Regulations 41409 

143CEF at pages 2–3. 

144CEF at page 4. 

145CEF at page 7. 

146Barnard at page 2. 

147Professor Greenberger at page 4. 

148See, e.g., Chemical Bank v. Arthur Andersen 

& Co., 726 F.2d 930, 943 (2d Cir. 1984) (‘‘The 

purpose of § 10(b) and Rule 10b–5 is to protect 

persons who are deceived in securities 

transactions—to make sure that buyers of securities 

get what they think they are getting * * *.’’) 

(Friendly, J.); Laird v. Integrated Res., 897 F.2d 826, 

831 at n.10 (5th Cir. 1990), quoting 3 Fletcher 

Cyclopedia of Corporations, section 900.3 (perm. 

ed. 1986) (‘‘The general purpose and intent of the 

broad anti-fraud provisions of Section 10(b) and 

Rule 10b–5 is to protect investors, to prevent 

inequitable and unfair practices and to insure 

fairness in securities transactions generally 

* * *’’). 

market participants will face 

substantially more uncertainty with 

respect to their activities in energy 

markets and significant costs in 

attempting to comply with multiple 

regulatory regimes, thereby likely 

reducing participation in energy 

markets.143 CEF also comments that 

jurisdictional overlap of agencies will 

result in increased litigation costs, 

depletion of scarce resources, and 

uncertainty for both the Commission 

and market participants.144 CEF states 

the false reporting provision will place 

a heavy burden on all market 

participants as they attempt to comply 

with the new reporting requirements 

proposed by the Commission pursuant 

to the Act.145

In contrast, Barnard believes the 

implementation costs of the proposed 

rules should be minimal.146 Professor 

Greenberger believes that the 

Commission correctly states that market 

participants should already have 

constructed and implemented 

procedures to guard against their 

employees’ and agents’ attempts at 

market manipulation. As such, Professor 

Greenberger believes that there should 

not be any additional costs to existing 

market participants.147

The Commission has carefully 

considered the concerns expressed by 

some of the commenters that the final 

Rules could substantially increase costs 

on market participants, reduce market 

liquidity or chill legitimate market 

activity. However, commenters provide 

no quantification of the potential costs 

or reliable data as a basis for 

conclusions that substantial costs will 

be incurred as a result of the final Rules. 

Furthermore, commenters have not 

shown how such rules have negatively 

impacted comparable markets that trade 

comparable instruments and operate 

under comparable anti-manipulation 

rules. 

Specifically, regarding the comments 

received by API, NPRA, MFA, CME, 

Argus, and the Associations as to how 

the new rules may directly increase 

transaction costs, reduce market 

liquidity and depth, and hinder risk 

management functions of markets 

subject to the Commission’s 

jurisdiction, the Commission notes that 

final Rule 180.1 is modeled on SEC Rule 

10b–5. Many derivatives products in 

securities markets are traded on national 

securities exchanges under SEC 

regulation (e.g., equity options, stock 

index options, and stock index 

exchange-traded funds (‘‘ETFs’’)) and 

are therefore subject to the SEC antimanipulation rule. 

Many of these SEC-regulated 

derivatives products exhibit high and 

growing volumes, narrow bid-ask 

spreads, and high levels of market 

depth. SEC-regulated stock index ETFs 

and stock-index options are 

economically similar to CFTC-regulated 

stock index futures and options on those 

futures and, like these CFTC-regulated 

derivatives, serve primarily as riskshifting instruments rather than 

instruments for capital formation. Any 

argument that the SEC’s anti-fraud and 

anti-manipulation regime has negatively 

affected the growth of SEC-regulated 

derivatives lacks a basis in fact and 

contradicts the generally accepted 

purpose of the SEC’s anti-fraud and 

anti-manipulation rules, which is to 

protect investors and to promote market 

integrity.148 Moreover, the FERC also 

promulgated a rule modeled on SEC 

Rule 10b–5 for FERC-jurisdictional 

markets in natural gas and electricity 

following the enactment of the Energy 

Policy Act of 2005. The FTC 

promulgated a comparable prohibition 

for petroleum markets. In the absence of 

any facts that anti-fraud and antimanipulation rules negatively affect 

markets, the Commission does not find 

such assertions persuasive. 

As to the concerns of API and NPRA 

regarding increased costs from the 

Commission’s purported expansion of 

its authority to cover a plethora of 

routine cash market transactions in all 

areas of the economy, with respect to 

the scope of final Rule 180.1, as 

discussed above, the Commission 

intends to exercise its authority under 

6(c)(1) to cover transactions related to 

the futures or swaps markets, or prices 

of commodities in interstate commerce, 

or where the fraud or manipulation has 

the potential to affect cash commodities, 

futures, or swaps markets or 

participants in these markets. Thus, 

concerns about purported increased 

costs are misplaced in that they rest on 

an incorrect assumption about the scope 

of the Commission’s expanded 

authority. 

In response to comments from CEF, 

the Commission re-iterates that the final 

Rules do not contain any requirement to 

create, retain, submit, or disclose any 

information. The final Rules impose no 

recordkeeping or related data retention 

or disclosure requirements on any 

person, including small businesses. 

Given that the final Rules impose no 

affirmative duties, it is unlikely that the 

final Rules will impose any additional 

ongoing costs beyond the existing costs 

associated with ensuring that behavior 

and statements are not fraudulent or 

manipulative. In that regard, the 

Commission believes that it will not be 

necessary for firms that currently have 

adequate compliance programs to hire 

additional staff or significantly upgrade 

their systems to comply with the new 

Rules. Firms may incur some one-time 

costs such as costs associated with 

training traders and staff in the new 

Rules. 

The Commission believes the 

comments from API, NPRA, and CEF 

regarding increased costs pertaining to 

compliance, litigation, and uncertainty 

with respect to inconsistent standards 

with other regulatory agencies are 

misplaced. To the contrary, the 

Commission believes that market 

participants and the public will benefit 

from enhanced regulatory certainty that 

will arise from the Commission’s 

adoption of an anti-manipulation rule 

that is more harmonized with existing 

anti-manipulation rules of the SEC, 

FERC, and FTC. 

In the NOPR, the Commission stated, 

and re-iterates here, that with respect to 

benefits, the proposed rules would 

enhance the authority of the 

Commission to ensure fair and equitable 

markets. The Commission stated, inter 

alia, that market participants and the 

public will benefit substantially from 

enhanced prevention and deterrence of 

manipulation. In light of public 

considerations under CEA section 15(a) 

in promulgating this rule, the 

Commission concludes that market 

participants and the public will benefit 

substantially from increased protection 

through the prevention and deterrence 

of fraud and manipulation. The final 

Rules will help ensure the efficiency, 

competitiveness, and financial integrity 

of derivatives markets. Markets free 

from fraud and manipulation function 

better as venues for price discovery and 

risk management. 

A. Paperwork Reduction Act 

As discussed above, the provisions of 

Commission Regulations Part 180 would 

not result in new recordkeeping 


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41410 Federal Register / Vol. 76, No. 135 / Thursday, July 14, 2011 / Rules and Regulations 

149 5 U.S.C. 601. 

150 Id. 

151API and NPRA at page 27. 

requirements within the meaning of the 

Paperwork Reduction Act of 1995. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act 149

requires that agencies consider whether 

the rules they propose will have a 

significant economic impact on a 

substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis respecting such 

impact.150 The final Rules will not have 

a significant economic impact on a 

substantial number of small entities. As 

explained above, legitimate market 

participants should already have 

procedures in place to prevent their 

employees and agents from 

manipulating the markets. The 

Chairman, on behalf of the Commission, 

hereby certifies, pursuant to 5 U.S.C. 

605(b), that the final Rules will not have 

a significant impact on a substantial 

number of small entities. 

C. Effective Date 

API and NPRA ask the Commission to 

adopt a 180-day delay in the effective 

date of the final Rules to enable the 

industry to design and implement 

comprehensive compliance 

programs.151 The Commission declines 

this request. A 180-day delayed effective 

date would unduly limit the Agency’s 

responsibility to protect market 

participants and promote the integrity of 

the markets. Rather, consistent with 

Dodd-Frank Act section 753(d) and 

Administrative Procedure Act section 

553(d), 5 U.S.C. 553(d), the final Rules 

will take effect 30 days after they are 

published in the Federal Register. 

List of Subjects in 17 CFR Part 180 

Commodity futures. 

Authority and Issuance 

For the reasons stated in the 

preamble, the Commodity Futures 

Trading Commission adds a new 17 CFR 

Part 180 as set forth below: 

PART 180—PROHIBITION AGAINST 

MANIPULATION 

Sec. 

180.1 Prohibition on the employment, or 

attempted employment, of manipulative 

and deceptive devices. 

180.2 Prohibition on price manipulation. 

Authority: 7 U.S.C. 6c(a), 9, 12(a)(5) and 

15, as amended by Title VII of the DoddFrank Wall Street Reform and Consumer 

Protection Act, Pub. L. 111–203, 124 Stat. 

1376 (2010); 5 U.S.C. 552 and 552(b), unless 

otherwise noted. 

§ 180.1 Prohibition on the employment, or 

attempted employment, of manipulative and 

deceptive devices. 

(a) It shall be unlawful for any person, 

directly or indirectly, in connection 

with any swap, or contract of sale of any 

commodity in interstate commerce, or 

contract for future delivery on or subject 

to the rules of any registered entity, to 

intentionally or recklessly: 

(1) Use or employ, or attempt to use 

or employ, any manipulative device, 

scheme, or artifice to defraud; 

(2) Make, or attempt to make, any 

untrue or misleading statement of a 

material fact or to omit to state a 

material fact necessary in order to make 

the statements made not untrue or 

misleading; 

(3) Engage, or attempt to engage, in 

any act, practice, or course of business, 

which operates or would operate as a 

fraud or deceit upon any person; or, 

(4) Deliver or cause to be delivered, or 

attempt to deliver or cause to be 

delivered, for transmission through the 

mails or interstate commerce, by any 

means of communication whatsoever, a 

false or misleading or inaccurate report 

concerning crop or market information 

or conditions that affect or tend to affect 

the price of any commodity in interstate 

commerce, knowing, or acting in 

reckless disregard of the fact that such 

report is false, misleading or inaccurate. 

Notwithstanding the foregoing, no 

violation of this subsection shall exist 

where the person mistakenly transmits, 

in good faith, false or misleading or 

inaccurate information to a price 

reporting service. 

(b) Nothing in this section shall be 

construed to require any person to 

disclose to another person nonpublic 

information that may be material to the 

market price, rate, or level of the 

commodity transaction, except as 

necessary to make any statement made 

to the other person in or in connection 

with the transaction not misleading in 

any material respect. 

(c) Nothing in this section shall affect, 

or be construed to affect, the 

applicability of Commodity Exchange 

Act section 9(a)(2). 

§ 180.2 Prohibition on price manipulation. 

It shall be unlawful for any person, 

directly or indirectly, to manipulate or 

attempt to manipulate the price of any 

swap, or of any commodity in interstate 

commerce, or for future delivery on or 

subject to the rules of any registered 

entity. 

Issued in Washington, DC, on July 7, 2011, 

by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Appendices to Prohibition on the 

Employment, or Attempted 

Employment, of Manipulative and 

Deceptive Devices; Prohibition on Price 

Manipulation—Commission Voting 

Summary and Statements of 

Commissioners 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Gensler and 

Commissioners Dunn, Sommers, O’Malia and 

Chilton voted in the affirmative; no 

Commissioner voted in the negative. 

Appendix 2—Statement of Chairman 

Gary Gensler 

I support the final rulemaking to enhance 

the Commission’s ability to protect against 

manipulation. Effective regulation requires 

an effective enforcement program. The DoddFrank Act enhances the Commission’s 

enforcement authorities in the futures 

markets and expands them to the swaps 

markets. This rule implements new DoddFrank authorities to police against fraud and 

fraud-based manipulative schemes, based 

upon similar authority that the Securities and 

Exchange Commission, Federal Energy 

Regulatory Commission and Federal Trade 

Commission have for securities and certain 

energy commodities. 

In the past, the CFTC had the ability to 

prosecute manipulation, but to prevail, it had 

to prove the specific intent of the accused to 

create an artificial price. Under the new law 

and one of the rules before us today, the 

Commission’s anti-manipulation reach is 

extended to prohibit the reckless use of 

fraud-based manipulative schemes. This 

closes a significant gap, as it will broaden the 

types of cases we can pursue and improve 

the chances of prevailing over wrongdoers. 

The rule also implements the Dodd-Frank 

Act’s price-based manipulation authority to 

police against corners and squeezes. These 

new authorities expand the CFTC’s arsenal of 

enforcement tools and strengthen the 

Commission’s ability to effectively deal with 

threats to market integrity. We will use these 

tools to be a more effective cop on the beat, 

to promote market integrity and to protect 

market participants. 

I thank Senator Maria Cantwell for her 

work to secure this important authority for 

the CFTC. As Senator Cantwell explained in 

proposing that this authority be included in 

the Commodity Exchange Act, ‘‘It is a strong 

and clear legal standard that allows 

regulators to successfully go after reckless 

and manipulative behavior.’’ 

Attachment A 

Parties filing comments: 

Air Transport Association (ATA) 


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Federal Register / Vol. 76, No. 135 / Thursday, July 14, 2011 / Rules and Regulations 41411 

American Bar Association, Derivatives and 

Futures Law Committee, Business Law 

Section (ABA Derivatives Committee) 

American Petroleum Institute (API) and 

National Petrochemical and Refiners 

Association (NPRA) 

Argus Media, Inc. (Argus) 

Barnard, Chris (Barnard) 

Better Markets 

Brattle Group Economists (Brattle Group) 

Carini, Peter* 

CME Group, Inc. (CME Group) 

Coalition of Physical Energy Companies 

(COPE) 

Commodity Markets Council (CMC) 

Council of Institutional Investors (Council) 

Edison Electric Institute (EEI) 

Freddie Mac 

Futures Industry Association, International 

Swaps and Derivatives Association, Inc. 

(ISDA) and Securities Industry and 

Financial Markets Association (SIFMA) 

(together, the Associations) 

Managed Funds Association (MFA) 

Pen Fern Oil Co., Inc.* 

Petroleum Marketers Association of America 

(PMAA) 

Platts 

Scullin Oil Co.* 

Townsend, Clarence (Townsend) 

U.S. Senator Carl Levin (Senator Levin) 

University of Maryland School of Law, 

Professor Michael Greenberger (Professor 

Greenberger) 

Weir, Bix 

West Virginia Oil Marketers & Grocers 

Association (OMEGA)* 

Working Group of Commercial Energy Firms 

(CEF) 

Zwack, Joseph 

* Denotes commenters filing identical 

comments which were consolidated. 

[FR Doc. 2011–17549 Filed 7–13–11; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF THE INTERIOR 

Office of Surface Mining Reclamation 

and Enforcement 

30 CFR Part 948 

[WV–117–FOR; OSM–2011–0006] 

West Virginia Regulatory Program 

AGENCY: Office of Surface Mining 

Reclamation and Enforcement (OSM), 

Interior. 

ACTION: Interim rule; effective date. 

SUMMARY: On June 29, 2011, OSM 

published an interim rule approving a 

program amendment submitted by the 

West Virginia Department of 

Environmental Protection (WVDEP). 

The interim rule provided an 

opportunity for public comment and 

gave the comment due date and 

tentative hearing date. The summary 

and preamble to the interim rule 

specified that it was effective upon 

publication; however, the DATES section 

of the rule failed to list an effective date. 

This final rule corrects that omission by 

providing an effective date. 

DATES: The interim final rule published 

at 76 FR 37996 is effective July 14, 2011. 

ADDRESSES: You may submit comments 

on the interim rule WV–117–FOR (76 

FR 37996; June 29, 2011) by any of the 

following two methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. The rule has been 

assigned Docket ID OSM–2011–0006. If 

you would like to submit comments 

through the Federal eRulemaking Portal, 

go to http://www.regulations.gov and 

follow the instructions. 

• Mail/Hand Delivery: Mr. Roger W. 

Calhoun, Director, Charleston Field 

Office, Office of Surface Mining 

Reclamation and Enforcement, 1027 

Virginia Street, East, Charleston, West 

Virginia 25301. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Roger W. Calhoun, Director, Charleston 

Field Office, Telephone: (304) 347– 

7158. E-mail: chfo@osmre.gov. 

SUPPLEMENTARY INFORMATION: On June 

29, 2011, we published an interim rule 

with request for comments at 76 FR 

37996. The interim rule announced 

receipt of a proposed amendment to the 

West Virginia permanent regulatory 

program under the Surface Mining 

Control and Reclamation Act of 1977. 

On May 2, 2011, the WVDEP submitted 

a program amendment to OSM that 

included both statutory and regulatory 

revisions. West Virginia submitted 

proposed permit fee revisions to the 

Code of West Virginia as authorized by 

House Bill 2955 that passed during the 

State’s regular 2011 legislative session. 

In addition, West Virginia amended its 

Code of State Regulations (CSR) to 

provide for the establishment of a 

minimum incremental bonding rate as 

authorized by Senate Bill 121. The 

changes, due to the passage of House 

Bill 2995, will increase the filing fee for 

the State’s surface mining permit to 

$3,500 and establish various fees for 

other permitting actions. Senate Bill 121 

authorizes regulatory revisions which 

includes, among other things, the 

establishment of a minimum 

incremental bonding rate of $10,000 per 

increment at CSR 38–2–11.4.a.2. 

Because the West Virginia revisions 

have an effective date of June 16, 2011, 

we approved the permit fees and the 

minimum incremental bonding rate on 

an interim basis. Our regulations at 30 

CFR 732.17(h)(12) state that ‘‘[a]ll 

decisions approving or not approving 

program amendments must be 

published in the Federal Register and 

will be effective upon publication 

unless the notice specifies a different 

effective date.’’ Because our approval 

was published on June 29, 2011, and the 

notice did not specify a different 

effective date, for purposes of the West 

Virginia Regulatory Program, we 

consider the State’s provisions approved 

effective June 29, 2011. Please see the 

Federal Register document published at 

76 FR 37996 on June 29, 2011, for more 

details. 

List of Subjects in 30 CFR Part 948 

Intergovernmental relations, Surface 

mining, Underground mining. 

Dated: July 5, 2011. 

Michael K. Robinson, 

Acting Regional Director, Appalachian 

Region. 

[FR Doc. 2011–17336 Filed 7–13–11; 8:45 am] 

BILLING CODE 4310–05–P 

POSTAL SERVICE 

39 CFR Part 111 

Group E Post Office Box Service 

AGENCY: Postal ServiceTM. 

ACTION: Final rule. 

SUMMARY: The Postal ServiceTM is 

revising the Mailing Standards of the 

United States Postal Service, Domestic 

Mail Manual (DMM®) 508.4.6 to clarify 

eligibility, simplify the standards, and 

facilitate uniform administration for 

Group E (free) Post OfficeTM (PO) box 

service. 

DATES: Effective Date: September 6, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Laurence Welling at 202–268–7792, Ken 

Hollies at 202–268–3083, or Richard 

Daigle at 202–268–6392. 

SUPPLEMENTARY INFORMATION: On 

November 24, 2010, the Postal Service 

published a Federal Register proposed 

rule (75 FR 71642–71643) to clarify 

eligibility, simplify the standards, and 

facilitate uniform administration for 

Group E (free) PO BoxTM service. The 

Postal Service received several 

comments in response to this proposed 

rule that are summarized later in this 

notice. 

Group E PO Box service is provided 

free, with restrictions, to customers 

whose physical addresses are not 

eligible for any form of USPS carrier 

delivery service. This service is 

consistent with the USPS responsibility 

to provide universal mail delivery. This 

final rule simplifies and clarifies some 

of the language related to administering 

Group E PO Box service. 

For this final rule, the Postal Service 

removes the descriptive term, ‘‘business 


wreier-aviles on DSKGBLS3C1PROD with RULES