Office of the 

Inspector General 

TO: 

FROM: 

DATE: 

SUBJECT: 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-51 10 

Facsimile: (202) 418-5522 

MEMORANDUM 

David Meister, Division of Enforcement 

A. Roy Lavik, Office of the Inspector General ()_ (( ~ 

September 4, 2012 

INSPECTION #12-01-Division of EnforcementDisposition of Preliminary Investigations Records 

The Office of the Inspector General (OIG) initiated tllis inspection to ascertain whether the 

Division of Enforcement (DOE), during the review period, retained closed Preliminary 

Investigation files as required under the CFTC records retention policy previously approved by 

the National Archives and Records Administration (NARA). 

SUMMARY 

• In a randomly selected sample of closed Preliminary Investigation matters, the Inspection 

team found no instance of a Preliminary Investigation file that was destroyed prior to the 

CFTC designated and NARA approved 3 year disposal date. 

• The Inspection team randomly selected 174 out of 1722 total Preliminary Investigation 

matters stored in DOE's exclusive electronic database for review. The inspection team 

confirmed that the database reflected all matters received, reviewed by DOE staff, and 

closed during the review period. The inspection team confirmed the closed status of the 

174 selected matters and found that all 174 closed Preliminary Investigation matters (in 

the randomly selected sample) are present in the DOE database. Thus none of the 174, 

randomly selected, closed Preliminary Investigation matters were destroyed prior to their 

CFTC designated and NARA approved destruction date. 

• The Inspection team confirmed by interviews that DOE staff is periodically informed of 

the CFTC records retention policy for DOE matters. 

End 
BACKGROUND 

The Office of the Inspector General initiated an inspection of the Division of Enforcement's 

policies and practice for handling the disposition of Preliminary Investigation matters. 

Preliminary Investigation matters are documents and artifacts received by DOE which allege a 

potential violation of the Commodity Exchange Act. The objective of this inspection was to 

ascertain whether DOE had adhered to the CFTC records disposition schedule approved by 

NARA. 1 

The approved records retention schedule for closed Preliminary Investigations matters requires 

that all relevant documents remain accessible for three calendar years. All CFTC employees 

must manage records in accordance with Federal laws and regulations.2 Premature destruction 

of Preliminary Investigation materials may reduce the Division of Enforcement's ability to 

efficiently use its database of prior leads to undertake investigations. 

We planned and conducted this inspection by following the Council of Inspectors General on 

Integrity and Efficiency (CIGIE) Quality Standards for Inspection and Evaluations (January 

2012). 

OBJECTIVE 

To ascertain whether the Division of Enforcement retained closed Preliminary Investigation 

matters for the requisite three year period stated in Section 405 of the CFTC's records retention 

schedule and approved by NARA in 2002. 

SCOPE and METHODOLOGY 

We interviewed DOE senior management and staff responsible for acquiring, compiling, and 

retaining documents received from the public and other sources. We accessed DOE's Practice 

Manager Electronic Database and randomly3 inspected 174 out of 1722 total closed cases over 

the period January 1, 2008 to August 1, 2011. According to senior managers in DOE, the 

division on October I, 2006 adopted Practice Manager as the sole repository for all matters4 

received by DOE. The Practice Manager database had sufficient capacity5 to retain and store all 

relevant documents during the review period. Electronic access controls also restricted deletion 

of documents in the database. Testing of access controls was not included in this inspection. 

1 The CFTC records retention schedule was approved by the Archivist of the United States on May 7, 2002. 

2 CFTC Records Management Directive (Rev. July 21, 2004) and 44 U.S.C. Chapters 21, 29, 31, 33, 101 and 36 

CFR Parts 1220-1238. 

3 The inspection team created a random number generator for selecting individual cases 

4 A matter consists of paper, audio, photo, video, and electronic items. 

s We confirmed this by inteviews with the Information Technology staff. 

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FINDINGS 

1. We were able to confirm with NARA6 that the CFTC's records retention schedule was 

approved by NARA and is currently applicable to DOE documents. 

2. We were able to confirm that the Divison of Enforcement does inform staff of the NARA 

approved records retention policies 7

• 

3. This inspection primarily focused on the disposition of matters classified as Preliminary 

Investigations (covered under Section 405 of the CFTC records retention policies) which 

must be retained for three years. Consequently, we sought to identify any Preliminary 

Investigative matters that were closed and disposed prior to the three year NARA 

approved retention deadline-we found none, zero. According to NARA approved records 

retention schedule, matters under a full Investigation must be retained for five years and 

so were beyond the scope (time frame) of this inspection. 

4. DOE utilizes an electronic database for capturing, storing, and managing all matters 

received by the division from all sources. In the electronic database the team examined a 

sample of all matters received during the review period by DOE. The inspection team 

visually inspected 174 randomly selected8 closed cases out of a total of 1722 closed cases 

in Practice Manager-the division's database. With the assistance of the Practice Manager 

Database administrator we supervised conducting computer queries to ascertain the status 

of the 17 4 Preliminary Investigations stored in the system. In the sample the team found 

no evidence of any matter excluded from the database during the review period. 

5. Current management controls in place restrict the ability of staff attorneys to alter and/or 

purge data captured by the system. The division locked down Practice Manager on 

September 21, 2011 so that the Inspection team could examine Practice Manager's 

contents. 

ADDITIONAL FINDINGS 

1. During this Office of the Inspector General inspection a communication error at the 

contracted records storage firm led to the accidental destruction of fifty-eight cartons9 of 

material that should have been retained (in case the OIG requested specific information). 

This accidental destruction did not impact any ongoing or potential investigation. The 

physical documents in the fifty-eight cartons exceeded their designated retention date. 

However, to accommodate this inspection the scheduled destruction was delayed by the 

CFTC Records Officer in case the Office of the Inspector General needed to examine the 

documents. This accidental destruction did not impact the inspection results. 

End 

6 Specifically, the inspection team spoke directly with the Chief Records Officer for the US Government. 7 CFTC DOE Electronic Records Management and Document Control January 1, 2010 page 5. 

8 We used a random number generator to select each of the 174 Preliminary Investigation files for review. 

9 See letter from Iron Mountain Inc. to Mr. Roberson Contracting Officer at the CFTC dated January 5, 2011. 

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