COMMODITY FUTURES TRADING COMMISSION

Performance and

Accountability Report

F i s c a l Y e a r 2008
COMMODITY FUTURES TRADING COMMISSION

Walter L. Lukken

Acting Chairman 

Madge Bolinger Gazzola

Executive Director

Mark Carney

Chief Financial Officer

November 2008

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. 

While permission to reprint this publication is not necessary, the citation should be: 

Commodity Futures Trading Commission, FY 2008 Performance and Accountability Report, Washington, D.C., 20581.

All photographs in this document are proprietary and prior permission from the 

photographer is required for any use or reproduction of the photographs.
Certificate of Excellence in

Accountability Reporting

C OMMODITY F UTURES T RADING C OMMISSION

In recognition of your outstanding efforts in preparing the 

Commodity Futures Trading Commission Performance and 

Accountability Report for the fiscal year ended September 30, 2007

Association of Government Accountants (AGA)Awards the

In recognition of your outstanding efforts in preparing 

the Commodity Futures Trading Commission 

Performance and Accountability Report for the fiscal 

year ended September 30, 2007. Awarded GOLD 

in the Government classification, and received overall 

ranking of 140 out of 3,161 total entries.

Gold 2007 Vision Award

League of American Communications Professionals (LACP) Awards the
II CFTC

Back row from left; Jill E. Sommers, Commissioner; Bart Chilton, Commissioner

Front row from left; Michael V. Dunn, Commissioner; Walter L. Lukken, Acting Chairman

Fiscal Year 2008 Commissioners
CFTC 1

FY 2008 Commissioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II

A Message from the Chairman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

How This Report is Organized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

MANAGEMENT’S DISCUSSION AND ANALYSIS

Commission at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Performance Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Forward Looking – Future Business Trends and Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Inspector General’s FY 2008 Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

PERFORMANCE SECTION

Introduction to the Performance Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Strategic Goal One: Economic Vitality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Strategic Goal Two: Market Users and Public. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Strategic Goal Three: Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Strategic Goal Four: Organizational Excellence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

FINANCIAL SECTION

A Message from the Chief Financial Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Limitations of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Principal Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Report of the Independent Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

OTHER ACCOMPANYING INFORMATION

Summary of Audit and Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Management Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

APPENDIX

FY 2008 Commissioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Enforcement Litigation by Strategic Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

CFTC Information Technology Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Glossary of Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Table of Contents
In the Tradition of Quality Reporting, 

the Commodity Futures Trading Commission 

Proudly Presents the FY 2008 

Performance and Accountability Report 

A Message from

the Chairman

During the last year, the commodity futures and 

option markets continued their rapid growth and 

evolution as credit markets seized and equity 

markets began a steep decline. The fundamental shift in the 

futures and option markets is illustrated by steadily increasing 

volumes, the introduction of new market participants, 

cutting edge technological and product innovation, and 

increased globalization and competition. At the same time, 

commodity prices across the board—from metals, to agricultural, to energy—have been extremely volatile with many 

commodity prices reaching record highs during the year.

While our markets have evolved dramatically in recent 

months and years, the mission of the Commodity Futures 

Trading Commission (CFTC or Commission) has remained 

strong and constant: We are charged with protecting market 

users and the public from fraud, manipulation, and abusive 

practices in the sale of commodity and financial futures and 

options, and fostering open, competitive and financially sound 

futures and option markets. In working to achieve its mission, 

the Commission has been guided by the notion that regulatory evolution and informed responses to changing 

market conditions are the keys to effective market oversight, 

particularly in a global marketplace. This approach requires 

a continual review of internal regulatory processes, consistent application of those processes to the markets, and an 

aggressive enforcement program that prosecutes wrongdoers. I am pleased to report that in Fiscal Year (FY) 2008, 

the CFTC and its regulatory approach have evolved along 

with the futures and option markets we regulate to continue 

to protect our markets, market users, and the public. 

A major step in the Commission’s evolution came in May, 

after years of work and bipartisan effort, when Congress 

Acting Chairman of the Commodity Futures 

Trading Commission Walter Lukken testifies 

before the House Committee on Agriculture on 

Capitol Hill in Washington, Wednesday, Oct. 

15, 2008. The hearing is to reveiw the role of 

credit derivatives in the U.S. economy.

(AP Photo/Lawrence Jackson)
CFTC 3

Commodity Futures Trading Commission (CTFC) Acting 

Chairman Walter Lukken is pictured during a break while 

testifying on Capitol Hill in Washington, Tuesday, June 24, 

2008, before a Senate Homeland Security and Governmental 

Affairs Committee hearing regarding oil speculation. 

(AP Photo/Charles Dharapak)

enacted the CFTC reauthorization legislation as part of the 

Food, Conservation, and Energy Act of 2008 (Farm Bill), 

making critical improvements to the Commodity Exchange 

Act (CEA or the Act) and the Commission’s authority.

Specifically, the new legislation reauthorized the Commission through FY 2013, closed the so-called “Enron 

Loophole” by allowing enhanced Commission oversight of 

exempt commercial markets (ECMs) that trade contracts 

linked to regulated U.S. futures contracts, increased CFTC 

penalties for manipulation, clarified CFTC anti-fraud 

authority for off-exchange principal-to-principal energy 

trades, and clarified CFTC retail foreign currency fraud 

authority. The Commission is thankful for all the hard 

work that went into this legislative effort and is working 

diligently to implement these important new authorities. 

Any assessment of the past year must acknowledge the 

extraordinary rise then fall of commodity prices. The CFTC 

recognizes that a secure, reliable, and sustainable energy 

future is of great importance to the American people, and is 

acutely aware that high commodity prices adversely affect 

all Americans. We have heard concerns that speculative 

activity has been affecting commodity prices and impacting 

the price discovery and risk management roles of the 

markets we regulate. With that in mind, and building upon 

the regulatory model developed as part of the Farm Bill, the 

CFTC has been systematically examining the various satellite markets that complement and compete with the centralized, regulated futures markets. These efforts have been 

designed to increase transparency and to determine whether 

trading on satellite markets—such as ECMs, foreign boards 

of trade (FBOTs) and over-the-counter (OTC) swaps— 

impacts the regulated futures markets.

In order to increase transparency and better inform the 

regulatory responses to the challenges of today’s markets, 

the Commission conducted a number of public hearings 

and meetings over the last year. These included: 1) a public 

hearing concerning oversight of energy and other trading 

on ECMs; 2) two meetings of the Commission’s Agricultural Advisory Committee; 3) two meetings of the Commission’s Global Markets Advisory Committee; 4) the first 

meeting of the newly-formed Energy Markets Advisory 

Committee; and 5) an Agricultural Forum (Webcast to 

2,800 individuals in 38 states and 43 countries) to discuss 

the sudden run-up in agricultural prices in early 2008.

In addition, in FY 2008, the Chairman and senior Commission staff members appeared on Capitol Hill on 14 occasions to provide testimony to various House and Senate 

Committees addressing issues within the Commission’s 

regulatory purview. 

As a result of these public hearings and meetings, the 

Commission focused on a number of critical initiatives, 

including: 1) providing a detailed report to Congress 

recommending legislative changes relating to oversight of 

trading on ECMs (recommendations that were enacted in 

large part as part of the Farm Bill); 2) announcing its 

national crude oil enforcement investigation and its 
4 CFTC

enforcement investigation into the February/March 2008 

price run-up in the cotton futures markets; 3) entering into 

an agreement to receive enhanced data from IntercontinentalExchange (ICE) Futures Europe in London relating to its 

crude oil markets; 4) requiring production of more detailed 

trading information from index traders and swap dealers; 

5) modifying the recognition process for FBOTs to condition direct access to U.S. customers on implementation of 

position and accountability limits on linked contracts; 

6) reviewing whether index traders and swap dealers are 

properly classified for regulatory and reporting purposes; 

and 7) issuing an unprecedented special call for information from commodity swap dealers and index funds trading 

in OTC markets to quantify the amount of this trading and 

evaluate its potential effects on the regulated markets. 

In addition to this comprehensive inward review, the 

Commission has continued to look outward to foster 

important relationships, both domestic and international, 

to assist us in carrying out our mandate. To that end, the 

CFTC formed an interagency working group with the 

Federal Reserve Board, U.S. Department of the Treasury 

(Treasury), U.S. Securities and Exchange Commission 

(SEC), U.S. Department of Energy, U.S. Department of 

Agriculture (USDA), and the Federal Trade Commission 

(FTC) to study investor practices, fundamental supply and 

demand factors, and the role of speculators and index 

traders in the commodity markets. In addition, the CFTC 

signed a ground-breaking mutual cooperation agreement 

with the SEC to establish a closer working relationship 

between the agencies, establish a permanent regulatory 

liaison between the agencies, provide for enhanced information sharing, and establish several key principles guiding 

the agencies’ consideration of novel financial products that 

may reflect elements of both securities and commodity 

futures or options. This agreement led to the expedited, 

coordinated approval of the trading and clearing of several 

novel derivative products (futures and option contracts 

based on shares of an exchange traded fund), an outcome 

expected to enhance legal and regulatory certainty for users 

of these novel products. 

On the international front, the CFTC was tasked to co-chair 

the International Organization of Securities Commissions’ 

(IOSCO) newly-created Task Force on Commodity Markets 

that will examine the current supervisory approaches for 

overseeing commodity markets worldwide. It also reached 

an agreement with the China Securities Regulatory Commission (CSRC) to hold regular meetings to promote enhanced 

cooperation and collaboration to promote investor protection, market integrity, and the supervision of derivatives 

trading occurring on a cross-border basis between China 

and the United States. In addition, the Commission hosted 

an International Regulators Meeting of more than 50 

futures industry regulators from around the world to 

address concerns associated with cross-border clearing, the 

differences between a core principles-based regulatory 

regime and a rules-based regime, the development of international financial centers, and whether OTC instruments 

that are centrally collateralized or cleared should be subject 

to the same or comparable regulatory regimes as economically equivalent exchange-traded instruments. 

The agency’s sweeping regulatory review and regulatory 

outreach is complemented by the efforts of its Division of 

Enforcement (DOE). This year, DOE filed 40 new actions, 

including 13 actions against hedge funds/pool operators/

trading advisors, and cases charging attempted manipulation and/or manipulation in the energy markets involving a 

former gasoline trader for BP Products North America Inc.

and Optiver Holding BV and related companies and 

employees. As a result of these prosecutions, respondents 

and defendants were ordered to pay more than $630 million 

Washington, D.C., March 11, 2008 — Securities and 

Exchange Commission Chairman Christopher Cox and 

Commodity Futures Trading Commission Acting Chairman 

Walter L. Lukken today signed a ground-breaking mutual 

cooperation agreement to establish a closer working 

relationship between their agencies. (SEC Photo)
CFTC 5

in civil monetary penalties, restitution, and disgorgement.

In addition to its investigation and litigation efforts, DOE 

continued to foster relationships with global regulators by 

hosting two enforcement conferences with international 

regulators to share observations of trends in commodities 

markets, including on-exchange, cash, and OTC markets to 

enhance the ability of regulators to work cooperatively 

across borders as we all share the same goals of detecting 

and deterring misconduct affecting commodity prices. 

With the credit crunch and overall market distress over the 

last year, the Division of Clearing and Intermediary Oversight (DCIO) has worked tirelessly to ensure the financial 

integrity of the futures and option clearing systems regulated by the CFTC. This required active daily monitoring of 

and working with exchange self-regulatory organizations 

(SROs) to ensure that futures firms continued to meet their 

customer segregation and capital requirements while 

allowing for the orderly functioning and stability of the 

markets. As part of its effort, DCIO staff were on-site in 

New York during the Lehman Brothers Holdings Inc. bankruptcy proceedings to safeguard customer assets and 

promote the orderly transfer of positions from CFTC regulated futures commission merchant subsidiary, Lehman 

Brothers Inc. DCIO also worked with fellow regulators and 

market participants to advance the development and proper 

oversight of a clearinghouse for credit default swaps and 

other over-the-counter (OTC) instruments. 

The CFTC is dedicated to protecting the public and market 

users from manipulation, fraud, and abusive practices in 

order to ensure that the futures markets are working 

properly. Throughout the year, the agency has sought to 

successfully meet its important oversight mission while 

facing the significant challenge of operating at historically 

low staffing levels. At the same time, agency internal 

controls and accountability have remained among our 

highest priorities. The agency’s financial statements are 

included in this report and we can confirm that that the 

financial and performance data presented in this report are 

fundamentally reliable and complete. Moreover, I am 

pleased to report that in FY 2008, the CFTC again had no 

material weaknesses. On behalf of our Inspector General, 

our auditor, the public accounting firm KPMG, LLP, has 

affirmed that our financial statements are presented fairly 

in all material respects and are in conformity with 

U.S. generally accepted accounting principles (GAAP).

The Financial Section of this report includes greater detail 

about our internal controls and highlights some key 

management assurances. Success in these important areas 

makes it possible for the Commission to operate as effectively as we do. 

The year ahead will be a busy one for the Commission.

In the wake of the financial crisis, Congress will likely turn 

to broad financial reform. Volatility in the energy and agricultural markets will continue to be the focus of policymakers as we work to ensure the proper functioning of our 

price discovery and risk management markets. I am confident that the Commission’s dedicated staff and the flexible 

principles-based authority provided by Congress will help 

this agency to forcefully police these ever-changing markets 

in order to uphold the CFTC’s important mission and the 

public’s trust.

Walter Lukken

Acting Chairman

November 17, 2008 

President Bush center, with, from left, Commodity Futures Trading 

Commission (CFTC) Acting Chairman Walt Lukken, Security and 

Exchange Commission (SEC) Chairman Christopher Cox, Vice 

President Dick Cheney,Treasury Secretary Henry Paulson and Federal 

Reserve Board Chairman Ben Bernanke are seen at the end of a 

meeting with members of the President’s Working Group on Financial 

Markets, Friday, Jan. 4, 2008, in the Roosevelt Room of the White 

House in Washington. (AP Photo/Lawrence Jackson)
6 CFTC

Management’s Discussion and Analysis

The Management’s Discussion and Analysis (MDA) section is an overview 

of the entire report, as supported by and detailed in the Performance 

Section and the Financial Section. The MDA presents performance and 

financial highlights for FY 2008 and discusses compliance with legal and 

regulatory requirements, as well as business trends and events. The MDA 

also includes the Inspector General’s FY 2008 assessment of management 

challenges facing the Commission. For more information on this section, 

please contact Mark Carney, Chief Financial Officer, at 202-418-5477.

Performance Section

The Performance Section compares the Commission’s performance to the 

annual goals as set forth in the 2007-2012 CFTC Strategic Plan. At the 

close of FY 2007, the Commission issued the 2007-2012 CFTC Strategic 

Plan adopting a fourth strategic goal that focuses on assessing and 

measuring organizational and management excellence. The Commission 

is publishing its performance for the fourth strategic goal for the first time 

in this FY 2008 Performance and Accountability Report. For more information on this section, please contact Emory Bevill, Deputy Director for 

Budget and Planning, at 202-418-5187.

Financial Section

The Financial Section is comprised of the Commission’s financial statements and related Independent Auditors’ report. For more information, 

please contact Keith Ingram, Deputy Director for Accounting and Financial 

Systems, at 202-418-5612.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Commission at a Glance .................................................. 9

Performance Highlights .................................................. 18

Financial Highlights ...................................................... 30

Management Assurances ................................................ 34

Forward Looking — Future Business Trends and Events ..... 37

Inspector General’s FY 2008 Assessment .......................... 40

PERFORMANCE SECTION

Introduction to the Performance Section ................45

Strategic Goal One: Economic Vitality ..................46

Strategic Goal Two: Market Users and Public ........56

Strategic Goal Three: Industry ..............................74

Strategic Goal Four: Organizational Excellence ...... 91

FINANCIAL SECTION

A Message from the Chief Financial Officer .........113

Limitations of Financial Statements ....................114

Principal Financial Statements ...........................115

Notes to the Financial Statements ......................120

Report of the Independent Auditors ..................... 131

How This Report is Organized

This document consists of three primary sections and supplemental sections:
CFTC 7

Questions and comments about this report can be directed to Mark Carney, Chief Financial 

Officer, at 202-418-5477 or via email at mcarney@cftc.gov.

An electronic version of the CFTC FY 2008 Performance and Accountability Report is available 

on the Internet at www.cftc.gov/abouthecftc/cftcreports.html. The 2007-2012 CFTC Strategic 

Plan, Keeping Pace with Change, is also available at this Web site.

Other Accompanying Information

Other Accompanying Information provides an update on the Commission’s 

progress in addressing management challenges identified by the Inspector General 

in the FY 2007 Performance and Accountability Report. Also included is the 

Commission’s summary of audit and management assurances. For more information on this section, please contact Mark Carney, Chief Financial Officer, at 

202-418-5477.

Appendix

The Appendix contains the FY 2008 Commissioner’s biographies, summaries of 

filed Enforcement actions addressed in the Performance Section, descriptions of 

CFTC Information Technology systems addressed in the Performance Section, 

and a glossary of abbreviations and acronyms used throughout the report. For 

more information, please contact Lisa Malone, Budget Analyst, Office of Financial 

Management, at 202-418-5184. 138 CFTC

A ppendix

FY 2008 Commissioners .................................................139

Enforcement Litigation by Strategic Goal..........................142

CFTC Information Technology Systems ............................157

Glossary of Abbreviations and Acronyms ..........................158
MANAGEMENT’S DISCUSSION AND ANALYSIS

Commission at a Glance .................................................. 9

Performance Highlights.................................................. 18

Financial Highlights...................................................... 30

Management Assurances ................................................ 34

Forward Looking — Future Business Trends and Events..... 37

Inspector General’s FY 2008 Assessment .......................... 40
CFTC 9

Commodity Futures Industry 

Futures contracts on agricultural commodities have been 

traded in the United States for more than 150 years and 

have been under Federal regulation since the 1920s. At the 

time the Commission was established in 1974, the vast 

majority of futures trading took place on commodities 

in the agricultural sector. These contracts gave farmers, 

ranchers, distributors, and end users of everything from 

corn to cattle an efficient and effective set of tools to hedge 

against price movements.

Over the years, however, the futures industry has become 

increasingly diversified. While farmers and ranchers 

continue to use the futures markets as actively as ever 

to effectively lock in prices for their crops and livestock 

months before they come to market, highly complex 

financial contracts based on interest rates, foreign currencies, Treasury bonds, securities indexes, and other products 

have far outgrown agricultural contracts in trading volume.

The latest statistics show that approximately eight percent 

of on-exchange commodity futures and option trading 

activity occurs in the agricultural sector, while financial commodity futures and option contracts make up 

approximately 79 percent, and other contracts, such as 

those on metals and energy products, make up about 13 

percent. Moreover, the electronic integration of crossborder markets and firms, as well as cross-border alliances, 

mergers, and other business activities, have transformed 

the futures markets and firms into a global industry.

These trillion-dollar futures markets, with massive 

economic force, are expanding steadily in both volume and 

new users and their complexity is rapidly evolving with 

new technologies, cross-border activities, product innovation, and greater competition. 

How the CFTC is Organized and Functions

The CFTC consists of five Commissioners who are 

appointed by the President to serve staggered five-year 

terms. All Commissioners are confirmed by the Senate.

No more than three sitting Commissioners may be from 

the same political party. The President designates one of 

the Commissioners to serve as Chairman, with the advice 

and consent of the Senate.

Commission at a Glance

Mission Statement

The mission of the CFTC is to protect market users and the public

from fraud, manipulation, and abusive practices related to the sale of

commodity futures and options, and to foster open, competitive, 

and financially sound commodity futures and option markets.
10 CFTC

The Commission’s functions are divided between program 

policy and internal management. The Office of the Chairman 

oversees the Commission’s principal divisions and offices that 

administer the policies, regulations, and guidance regarding 

the CEA, as amended. The Office of the Executive Director, 

by delegation of the Chairman, directs the internal management of the Commission, ensuring that funds are responsibly 

accounted for and that program performance is measured and 

improved effectively.

Attorneys at the Commission work on complex and novel 

legal issues in areas such as litigation, regulation, and policy 

development. Among other things, they participate in 

administrative and civil proceedings; assist U.S. Attorneys 

in criminal proceedings involving futures law violations; 

develop regulations governing clearinghouses, exchanges, 

and intermediaries; provide a wide range of analysis, technical assistance, and guidance on regulatory, legislative, and 

supervisory issues; and provide legal advice to the Commission on policy and adjudicatory matters. In recognition of the 

globalization of the futures markets, attorneys represent the 

CFTC internationally in multilateral regulatory organizations, 

bilaterally with individual foreign regulators, and participate 

with country dialogues organized by the Treasury.

Auditors examine records and operations of futures exchanges, 

clearinghouses, and firms for compliance with financial 

requirements, while futures trading specialists perform regulatory and compliance oversight to detect potential fraud, 

market manipulations, and trade practice violations.

Economists evaluate filings for new futures and option 

contracts and amendments to existing contracts, to ensure 

they meet the Commission’s regulatory standards. Economists also analyze the economic effect of various Commission 

and industry actions and events and advise the Commission 

accordingly. In addition, economists monitor trading activity 

and price relationships in futures markets to detect and deter 

price manipulation and other potential market disruptions.

The CFTC is headquartered in Washington, D.C. Regional 

offices are located in Chicago, Kansas City, and New York.

Additional information about the Commission and its history 

can be obtained from the Commission’s Office of External 

Affairs or through its Web site, www.cftc.gov.

Organization and Locations
CFTC 11

MANAGEMENT’S DISCUSSION AND ANALYSIS

Evolving Mission and Responsibilities

Congress created the CFTC in 1974 as an independent 

agency with the mandate to regulate commodity futures 

and option markets in the United States. The Commission’s 

mandate was renewed and/or expanded in 1978, 1982, 

1986, 1992, and 1995. In December 2000, the Commission 

was reauthorized through FY 2005 with passage of the 

Commodity Futures Modernization Act of 2000 (CFMA).

The CFMA repealed the ban on futures contracts based on 

individual securities and narrow-based securities indexes 

and instituted a regulatory framework for such products to 

be administered jointly by the CFTC and the SEC. It codified 

the principal provisions of a new regulatory framework 

adopted earlier by the Commission. It also brought legal 

certainty to the trading done in bilateral, OTC derivatives 

transactions (by decreeing them to be largely outside of the 

Commission’s jurisdiction) and clarified the CFTC’s antifraud authority over retail, off-exchange foreign currency 

(forex) transactions. 

This year, the Commission was again reauthorized as part 

of the Farm Bill. The Farm Bill included other amendments 

to the CEA as well—primarily to increase the Commission’s 

regulatory oversight role with respect to forex transactions 

and significant price discovery contracts traded on electronic trading facilities called ECMs. The Commission 

currently is undertaking the development of rulemakings 

required to implement these new statutory responsibilities.

Although Congress has changed the Commission’s 

approach to regulation over time, the Commission’s 

mission remains the same. The CFTC continues to be 

responsible for fostering the economic vitality of the regulated futures markets by encouraging their competitiveness 

and efficiency; ensuring their integrity; and protecting 

market participants against manipulation, abusive trading 

practices, and fraud. Through effective oversight regulation, 

the CFTC enables the commodity futures and option 

markets better to serve their vital function in the Nation’s 

economy—providing a mechanism for price discovery and 

a means of offsetting price risks.

During the past two years, Congress and Federal financial 

regulators began a re-examination of the financial regulatory structure. The recent economic stress is expected to 

result in heightened Congressional scrutiny of Federal 

financial regulation in the year ahead.

Keeping Pace with Change

The principles-based regulatory approach codified in the 

CFMA represents a flexible and fair approach to regulation.

Since then, the futures industry has experienced unprecedented growth in the amount of money invested, volume, 

new products, trading platforms, and market participants.

However, the phenomenal industry progress carries with it 

new responsibilities, challenges, and opportunities.

The Commission developed its first Strategic Plan in 1997, 

expressing its mission through three strategic goals, each 

focusing on a vital area of regulatory responsibility.

The 1997 Strategic Plan also set the agency on a course to: 

1) modernize regulations affecting trading platforms and 

market intermediaries; 2) permit futures based on single 

securities or narrow-based securities indexes; and 3) provide 

legal certainty for OTC derivatives. The plan also reflected 

the enormous and continuing changes in the markets, 

including rapid growth in volume and globalization, and 

the movement from open outcry trading floors to allelectronic trading from widely dispersed geographic 

locations.

Last year, the Commission issued Keeping Pace with Change, 

its Strategic Plan for FY 2007 through FY 2012. With the 

2007 Strategic Plan, the Commission adopted a fourth 

strategic goal that focuses on assessing and measuring 

organizational and management excellence. Establishing 

this fourth strategic goal allows the Commission to extend 

its performance and management framework, which 

requires the Commission to establish and measure its 

progress in achieving outcome objectives and strategic 

goals, beyond strictly program performance to the performance of the organization itself. Initial performance 

measures for the fourth strategic goal are published in this 

FY 2008 Performance and Accountability Report. 

In a marketplace driven by change, it may be helpful to 

look back at industry and CFTC trends over the past few 

years. The charts that follow reflect many of those changes 

affecting the CFTC: 

■ Industry growth versus staff growth; 

■ Growth in actively traded futures and option contracts; 

■ Enforcement actions to preserve market integrity and 

protection of market users; 
12 CFTC

■ Number of registrants; 

■ Contract markets designated by the CFTC; 

■ Number of derivatives clearing organizations (DCOs) 

registered with the CFTC; 

■ Exempt commercial markets (ECMs); 

■ Exempt boards of trade (XBOTs); and 

■ Amount of customer funds held at futures commission 

merchants (FCMs).

Growth in Volume of Futures & Option Contracts Traded & CFTC Full-time 

Equivalents (FTEs), 1998-2008

Trading volume has increased almost six-fold in the last decade while staffing levels at the Commission have trended 

downward.

Actively Traded Futures & Option Contracts, 1998-2008

The number of actively traded contracts on U.S. exchanges has more than quintupled in the last decade.
CFTC 13

MANAGEMENT’S DISCUSSION AND ANALYSIS

Enforcement Actions to Preserve Market Integrity and Protection of Market Users

Manipulation, Attempted Manipulation, and False Reporting

The CFTC utilizes every tool at its disposal to detect and deter against illegitimate market forces. The Commission uses 

enforcement actions to preserve market integrity and protect market users, demonstrating that it’s authority is significant 

and that the Commission intends to use it.

For example, CFTC enforcement efforts in the energy arena from December 2001 through September 2008 have resulted 

in 43 enforcement actions charging 73 companies and individuals and the assessment of approximately $445 million in 

penalties.

Actions Taken Since December 2001 in Energy Markets Energy Markets

Number of Cases Filed or Enforcement Actions 43

Number of Entities/Persons Charged 73

Number of Dollars in Penalties Assessed

• Civil Monetary Penalties $445,465,000

Commodity Pools, Hedge Funds, Commodity Pool Operators (CPOs), and Commodity Trading Advisors (CTAs)

Investors continue to fall prey to unscrupulous CPOs and CTAs, including CPOs and CTAs operating hedge funds. The 

majority of the Commission’s pool/hedge fund fraud cases are brought against unregistered CPOs and/or CTAs. These 

cases tend to involve Ponzi schemes or outright misappropriation, as opposed to legitimate hedge fund operations. From 

October 2000 through September 2008, the Commission filed a total of 73 enforcement actions alleging misconduct in 

connection with commodity pools and hedge funds.

Actions Taken Since October 2000 Pools/Hedge Funds

Number of Cases Filed or Enforcement Actions 73

• Cases/Actions Charging Commission Registrants 24

Number of Dollars in Penalties Assessed $564,127,597

Forex Fraud

The Commission vigorously uses its enforcement authority to combat the problem of forex fraud. Since passage of the 

CFMA in December 2000 through September 2008, the Commission, on behalf of more than 25,000 customers, has 

filed 98 cases. Those efforts have thus far resulted in approximately $453 million in restitution and $562 million in civil 

monetary penalties.

Actions Taken Since Passage of the CFMA in December 2000 Foreign Currency Markets

Number of Cases Filed or Enforcement Actions 98

• Number of Entities/Persons Charged 374

• Number of Customers Affected 25,859

Number of Dollars in Penalties Assessed

• Civil Monetary Penalties $562,241,267

• Restitution $453,675,335
14 CFTC

Number of Registrants

Companies and individuals who handle customer funds, solicit or accept orders, or give trained advice must apply for 

CFTC registration through the National Futures Association (NFA), an SRO with delegated oversight authority from the 

Commission. The Commission regulates the activities of nearly 68,000 registrants.

Registration Category1 Number as of September 30, 2008

Associated Persons (APs) (Salespersons) 53,249

Commodity Pool Operators (CPOs) 1,353

Commodity Trading Advisors (CTAs) 2,534

Floor Brokers (FBs) 7,335

Floor Traders (FTs) 1,446

Futures Commission Merchants (FCMs) 1792

Introducing Brokers (IBs) 1,6473

TOTAL 67,743

Contract Markets Designated by the CFTC, 2003-2008

The following designated contract markets (DCMs) are boards of trade or exchanges that meet the CFTC criteria and CFTC 

Core Principles for trading futures or options by both institutional and retail participants. Currently, 13 DCMs meet CFTC 

criteria and CFTC Core Principles for trading futures and options.

Commodity 

Exchanges4 2003 2004 2005 2006 2007 2008

BTEX

CBOT

CCFE

CFE

CME

CSCE

EPFE

HedgeStreet

ICE US

KCBT

MACE

ME

MGE

NQLX

(continued on next page)

1 A person who is registered in more than one registration category is counted in each category.

2 Includes 16 notice-registered FCMs.

3 Includes 44 notice-registered IBs.

4 Refer to the CFTC Glossary in the Appendix for full names of organizations.
CFTC 15

MANAGEMENT’S DISCUSSION AND ANALYSIS

Commodity 

Exchanges (continued) 2003 2004 2005 2006 2007 2008

NYCE

NYFE

NYMEX (incl. COMEX)

NYSE LIFFE 

OCX

PBOT

USFE

TOTAL 15 18 13 12 12 13

Number of Derivatives Clearing Organizations Registered with the CFTC, 2003-2008

Clearinghouses that provide clearing services for CFTC-regulated exchanges must register as DCOs. Currently, 10 DCOs 

are registered with the Commission.

DCOs5 2003 2004 2005 2006 2007 2008

AE 

BTEX

CBOT

CCorp

CME

EnergyClear

FCOM

GCC

HedgeStreet

ICC

KCBT

LCH

MGE

NYCC/ICE Clear

NYMEX

OCC

ONXCC

TOTAL 14 10 11 11 11 10

5 Refer to the CFTC Glossary in the Appendix for full names of organizations.
16 CFTC

Exempt Commercial Markets, 2003-2008

Electronic trading facilities that execute principal-to-principal transactions between eligible commercial entities in exempt 

commodities may operate as ECMs as set forth under the CEA and the Commission’s regulations. An ECM is subject to 

anti-fraud and anti-manipulation provisions and a requirement that, if performing a significant price discovery function, 

the ECM must provide pricing information to the public. A facility that elects to operate as an ECM must give notice to the 

Commission and comply with certain information, record-keeping, and other requirements. An ECM is prohibited from 

claiming that the facility is registered with, or recognized, designated, licensed or approved by, the Commission. A total 

of 24 ECMs have filed notices with the Commission and 19 were active in FY 2008.

Exempt 

Commercial Markets6 2003 2004 2005 2006 2007 2008

CCX

CDXchange

ChemConnect

EOXLIVE

Flett

GFI (Energy Match)

HSE

ICAP

ICAP ETC

ICAP HYDE

ICE

IMAREX

LiquidityPort 

(Options ATS)

NGX

Nodel

NTP

OPEX

Parity 

SL

TCX

TFS

TFSE

Tradition Coal.Com

TS

TOTAL 11 11 12 17 19 19

6 Refer to the CFTC Glossary in the Appendix for full names of organizations.
CFTC 17

MANAGEMENT’S DISCUSSION AND ANALYSIS

Exempt Boards of Trade, 2003-2008

Transactions by eligible contract participants in selected commodities may be conducted on an XBOT as set forth under 

the CEA and the Commission’s regulations. XBOTs are subject only to the CEA’s anti-fraud and anti-manipulation provisions. An XBOT is prohibited from claiming that the facility is registered with, or recognized, designated, licensed, or 

approved, by the Commission. Also, if it is performing a price discovery function, the XBOT must provide certain pricing 

information to the public. To date, 14 XBOTs filed notices with the Commission and 10 were active in FY 2008.

Exempt Boards of 

Trade7 2003 2004 2005 2006 2007 2008

AE

CME AM

Derivatives Bridge, LLC

GFI ForexMatch

Intrade

IRESE

LiquidityPort

Longitude

MATCHBOXX ATS

Storm

Swapstream

WBOT

WXL

Yellow Jacket

TOTAL 2 3 5 8 8 10

Customer Funds Held in Futures Commission Merchant Accounts, 1998-2008

The amount of customer funds held at FCMs has more than quadrupled in the last decade.

7 Refer to the CFTC Glossary in the Appendix for full names of organizations.
18 CFTC

Performance Highlights

The following table is an overview of the Commission’s strategic mission, statement, strategic goals and outcome objectives.

Mission Statement

The mission of the CFTC is to protect market users and the public

from fraud, manipulation, and abusive practices related to the sale

of commodity futures and options, and to foster open, competitive, 

and financially sound commodity futures and option markets.

Strategic Goal One

Ensure the economic vitality of the commodity futures and option markets.

Outcome Objectives

1. Markets that accurately reflect the forces of supply and demand for the underlying commodity and are free of disruptive 

activity.

2. Markets that are effectively and efficiently monitored to ensure early warning of potential problems or issues that could 

adversely affect their economic vitality. 

Strategic Goal Two

Protect market users and the public.

Outcome Objectives

1. Violations of Federal commodities laws are detected and prevented.

2. Commodities professionals meet high standards.

3. Customer complaints against persons or firms falling within the jurisdiction of the CEA are handled effectively and 

expeditiously.

Strategic Goal Three

Ensure market integrity in order to foster open, competitive, and financially sound markets.

Outcome Objectives

1. Clearing organizations and firms holding customer funds have sound financial practices.

2. Commodity futures and option markets are effectively self-regulated.

3. Markets are free of trade practice abuses. 

4. Regulatory environment is responsive to evolving market conditions. 

(continued on next page)
CFTC 19

MANAGEMENT’S DISCUSSION AND ANALYSIS

Strategic Goal Four

Facilitate Commission performance through organizational and management excellence, efficient use of 

resources, and effective mission support.

Outcome Objectives

1. Productive, technically competent, competitively compensated, and diverse workforce that takes into account current and 

future technical and professional needs of the Commission.

2. Modern and secure information system that reflects the strategic priorities of the Commission.

3. Organizational infrastructure that efficiently and effectively responds to and anticipates both the routine and emergency 

business needs of the Commission.

4. Financial resources are allocated, managed, and accounted for in accordance with the strategic priorities of the 

Commission.

5. Commission’s mission is fulfilled and goals are achieved through sound management and organizational excellence 

provided by executive leadership.

Summary of CFTC Mission Statement, Strategic Goals & Outcomes

The mission of the CFTC is accomplished through four strategic goals, each focusing on a vital area of regulatory responsibility: 1) to ensure the economic vitality of the commodity futures and option markets; 2) to protect market users and 

the public; 3) to ensure market integrity in order to foster open, competitive, and financially sound markets; and 4) to 

facilitate Commission performance through organizational and management excellence, efficient use of resources, and 

effective mission support. Under each of these goals, the Commission has identified several desirable outcome objectives.

To more accurately assess progress towards these outcome objectives, the Commission sets performance targets for various 

measures under each desired outcome objective.

Due to the broad economic functions that the Commission oversees, it is not easy to identify detailed objectives and 

performance metrics that will be accomplished each year. While some measures do reflect specific performance (e.g., the 

number of days to process a reparations complaint), other measures identify conditions that, if present, are indicators that 

the Commission’s activities are contributing successfully to the health of the industry it regulates (e.g., the increase in the 

number of products traded).

Annually, the performance metrics are analyzed to determine the measure of success the program’s activities have achieved 

in accomplishing the Commission’s overall strategic mission. 

Because many of the Commission’s performance metrics are subject to external influences, metrics alone cannot fully 

measure performance. The Commission, therefore, further analyzes the progress of each performance metric using adjectival ratings. On the following page is a summary outline of adjectival ratings used by Lead Program Offices to evaluate 

the results of each performance metric:
20 CFTC

FY 2008 Performance Results

In FY 2008, the Commission met or exceeded, metrically, 83 percent of its 52 performance metrics and rated 81 percent, of 

the 52 performance metrics, as effective or moderately effective. Two percent of the performance metrics did not provide 

sufficient data to rate and 15 percent of the performance metrics that were rated as adequate were mainly located in the 

newly added Strategic Goal 4.

Summary Outline of Adjectival Ratings

EFFECTIVE: Significantly exceeds the standards of performance and achieves noteworthy results.

MODERATELY 

EFFECTIVE: 

Exceeds the standards of performance; although there may be room for improvement in some 

elements, better performance in all other elements more than offsets this.

ADEQUATE: Meets the standard of performance; deficiencies do not substantially affect performance.

MARGINAL: Below the standard of performance; deficiencies require attention and corrective action.

UNSATISFACTORY: Significantly below the standard of performance; deficiencies are serious, may affect overall results, 

urgently require senior management attention, and prompt corrective action.

RESULTS NOT 

DEMONSTRATED: Data is not available to evaluate the performance.

Resource Investment by Strategic Goal

In FY 2008, the Commission invested 30 percent of its resources in economic vitality, 24 percent in protecting market 

users and the public, 23 percent in market integrity, and 23 percent in organizational and management excellence.
CFTC 21

Introduction to Strategic Goal One

The focus of this goal is the marketplace. If U.S. commodity futures and option markets are protected from, and are free of, abusive practices and influences, they will fulfill their vital role in the U.S. market economy, accurately 

reflecting the forces of supply and demand and serving market users by fulfilling an economic need.

Strategic Goal One

 Ensure the economic vitality of the commodity futures and option markets.

Annual Performance Goal One

No price manipulation or other disruptive activities that would cause loss of confidence 

or negatively affect price discovery or risk shifting.

Outcome Objectives and Performance Measures

1.1 Markets that accurately reflect the forces of supply and demand for the underlying commodity and are free of 

disruptive activity.

1.1.1. Percentage growth in market volume.

1.1.2. Percentage of novel or innovative market proposals or requests for CFTC action addressed within six months 

to accommodate new approaches to, or the expansion in, derivatives trading, enhance the price discovery 

process, or increase available risk management tools.

1.1.3. Percentage increase in number of products traded.

1.1.4. Percentage of new exchange and clearinghouse organization applications completed within expedited review 

period.

1.1.5. Percentage of new contract certification reviews completed within three months to identify and correct 

deficiencies in contract terms that make contracts susceptible to manipulation.

1.1.6. Percentage of rule certification reviews completed within three months, to identify and correct deficiencies in 

exchange rules that make contracts susceptible to manipulation or trading abuses or result in violations of law.

1.2 Markets that are effectively and efficiently monitored to ensure early warning of potential problems or issues that could 

adversely affect their economic vitality.

1.2.1 Percentage of derivatives clearing organization applications demonstrating compliance with CFTC Core 

Principles.

1.2.2 Ratio of markets surveilled per economist.

1.2.3 Percentage of contract expirations without manipulation.
22 CFTC

Market Volume

With increased demand realized for products traded on 

exchanges, contract trading volume peaked to almost 3.5 

billion in FY 2008, as shown in the chart Growth in Volume 

of Futures & Option Contracts Traded & CFTC FTEs on page 

12. The FY 2008 actual is driven by changes in economic 

fundamentals, success of newly launched products, new 

participants using these markets, and other changes in the 

marketplace. As such, these factors may impact the precision 

of any prediction of future trading volume.

New Products

The actual percentage of new products offered on the 

exchanges in FY 2008 increased but not above projections.

These results are driven by customer demand for new 

products, exchange innovation, opportunities made 

available by the increasing use of electronic trading, and 

other changes in the marketplace. As such, these factors 

may impact the number of products introduced.

Performance Trends for Goal One

Monitoring market activity represents one of the ways the Commission seeks to protect the economic function of the 

markets. Market surveillance is conducted to detect attempted manipulation and other abusive practices that could 

undermine the capacity of these markets to perform their economic function. The Commission takes preventive measures 

to ensure that market prices accurately reflect fundamental supply and demand conditions, including the routine daily 

monitoring of large trader positions, futures and cash prices, price relationships, and supply and demand factors in order 

to detect threats of price manipulation.
CFTC 23

Introduction to Strategic Goal Two

W hile the United States is the beneficiary of explosive growth in the futures industry, the risk of fraud and manipulation is always present. The trend toward electronic trading platforms and the expanding complexity 

of trading instruments have challenged the Commission to reconfigure its ability to identify, investigate, and take action 

against parties involved in violating applicable laws and regulations. If evidence of criminal activity is found, matters are 

referred to state or Federal authorities for criminal prosecution.

Over the years, the Commission has taken action in a number of cases involving manipulation or attempted manipulation 

of commodity prices. A variety of administrative sanctions, such as bans on futures trading, civil monetary penalties, and 

restitution orders, is available to the Commission. The Commission may also seek Federal court injunctions, asset freezes, 

and orders to disgorge ill-gotten gains.

Strategic Goal Two

Protect market users and the public.

Annual Performance Goal Two

To have an effective and efficient market surveillance program.

Outcome Objectives and Performance Measures

2.1 Violations of Federal commodities laws are detected and prevented.

2.1.1. Number of enforcement investigations opened during the fiscal year.

2.1.2. Number of enforcement cases filed during the fiscal year.

2.1.3. Percentage of enforcement cases closed during the fiscal year in which the Commission obtained sanctions, 

e.g., civil monetary penalties, restitution and disgorgement, cease and desist orders, permanent injunctions, 

trading bans, and registration restrictions.

2.1.4. Cases filed by other criminal and civil law enforcement authorities during the fiscal year that included 

cooperative assistance from the Commission.

2.2 Commodity professionals meet high standards.

2.2.1. Percentage of self-regulatory organizations that comply with CFTC Core Principles.

2.2.2. Percentage of derivatives clearing organizations that comply with CFTC Core Principles.

2.2.3. Percentage of professionals compliant with standards regarding testing, licensing, and ethics training.

2.2.4. Percentage of self-regulatory organizations that comply with requirement to enforce their rules.

2.2.5. Percentage of total requests receiving CFTC responses for guidance and advice.

2.3 Customer complaints against persons or firms registered under the Act are handled effectively and expeditiously.

2.3.1.a Percentage of filed complaints resolved within one year of the filing date for Voluntary Proceedings.

2.3.1.b Percentage of filed complaints resolved within one year and six months of the filing date for Summary 

Proceedings.

2.3.1.c Percentage of filed complaints resolved within one year and six months of the filing date for Formal 

Proceedings.

2.3.2. Percentage of appeals resolved within six months.

Performance Trends for Goal Two

An ever larger segment of the population has money at risk in the futures markets, either directly or indirectly through 

pension funds or ownership of shares in publicly held companies that participate in the markets.
24 CFTC

Commission staff work to protect market users and the public by promoting compliance with, and deterring violations of, 

the CEA and Commission regulations. DOE investigates potential misconduct, brings administrative and civil injunctive 

enforcement actions to prosecute such misconduct, seeks sanctions against wrongdoers, and publicly reports the outcome 

of those enforcement actions. The majority of the work in this area involves investigating and prosecuting manipulation, 

attempted manipulation, and fraud. The Commission’s enforcement actions send a message to industry professionals 

and participants about the kinds of conduct that will not be tolerated.

Enforcement Investigation and Litigation

In FY 2008, the Commission filed 40 enforcement actions and DOE staff opened 215 investigations of potential violations 

of the Act and Commission regulations. The Commission obtained near record relief against enforcement action defendants and respondents—monetary penalties imposed during FY 2008 included more than $402 million in restitution and 

disgorgement, and $234 million in civil monetary penalties.

While DOE continues to perform at a high level, current resource constraints continue to have had an adverse impact and 

may affect the precision of any prediction of future performance. Staff are operating at full capacity. Unprecedented market 

activity during FY 2008 shifted resources to investigations. With increased investigation demands, DOE staff may be unable 

to bring actions because of insufficient resources, and other authorities will not be available to step in and fill the void.

SROs can take action only against their own members, and their sanctions cannot affect conduct outside their jurisdiction 

or markets. In addition, other Federal regulators and state regulators have limited jurisdiction and expertise in handling 

futures-related misconduct. Finally, while criminal prosecutions by the U.S. Department of Justice (DOJ) are an important 

adjunct to effective enforcement of the CEA, cooperative enforcement still requires the active use of Commission FTEs to 

assist DOJ in its criminal prosecutions.
CFTC 25

Introduction to Strategic Goal Three

The Commission focuses on issues of market integrity, seeking to protect: 1) the economic integrity of the markets 

so that markets may operate free from manipulation; 2) the financial integrity of the markets so that the insolvency 

of a single participant does not become a systemic problem affecting other market participants; and 3) the operational 

integrity of the markets so that transactions are executed fairly and proper disclosures to existing and prospective customers 

are made.

Strategic Goal Three

Ensure market integrity in order to foster open, competitive, and financially sound markets.

Annual Performance Goal Three

No loss of customer funds as a result of firms’ failure to adhere to regulations. 

No customers prevented from transferring funds from failing firms to sound firms.

Outcome Objectives and Performance Measures

3.1 Clearing organizations and firms holding customer funds have sound financial practices.

3.1.1. Lost funds:

a) Number of customers who lose funds.

b) Amount of funds lost.

3.1.2. Number of rulemakings to ensure market integrity and financially sound markets.

3.1.3. Percentage of clearing organizations that comply with requirement to enforce their rules.

3.2 Commodity futures and option markets are effectively self-regulated.

3.2.1. Percentage of intermediaries who meet risk-based capital requirements.

3.2.2. Percentage of self-regulatory organizations that comply with requirement to enforce their rules.

3.3 Markets are free of trade practice abuses. 

3.3.1. Percentage of exchanges deemed to have adequate systems for detecting trade practice abuses.

3.3.2. Percentage of exchanges that comply with requirement to enforce their rules.

3.4 Regulatory environment is flexible and responsive to evolving market conditions.

3.4.1. Percentage of CFMA Section 126(b) objectives addressed.

3.4.2. Number of rulemakings, studies, interpretations, and guidances to ensure market integrity and exchanges’ 

compliance with regulatory requirements.

3.4.3. Percentage of requests for no-action or other relief completed within six months related to novel market or 

trading practices and issues to facilitate innovation.

3.4.4. Percentage of total requests receiving CFTC responses for guidance and advice.
26 CFTC

Performance Trends for Goal Three

In fostering open, competitive, and financially sound markets, the Commission’s two main priorities are to avoid 

disruptions to the system for clearing and settling contract obligations and to protect the funds that customers entrust to 

FCMs. Clearing organizations and FCMs are the backbone of the clearing and settlement system; together, they protect 

against the possibility that the financial difficulties of one trader may become a systemic problem for other traders.

Commission staff also work with the SROs and NFA to monitor closely the financial condition of FCMs, which must 

provide the Commission, designated SRO, and NFA with various monthly and annual financial reports. The SROs and 

NFA also conduct audits and daily financial surveillance of their respective member FCMs. Part of this financial 

surveillance involves looking at each FCM’s exposure to losses from large customer positions that it carries. As an 

oversight regulator, the Commission not only reviews the audit and financial surveillance work of the SROs and NFA, but 

also monitors the financial strength of FCMs directly, as appropriate. The Commission also periodically reviews clearing 

organization procedures for monitoring risks and protecting customer funds.

Protecting Customer Funds

Staff monitor the operations of registrants in possession of customer funds through a number of financial oversight and 

risk surveillance activities. Staff review monthly financial reports submitted by FCMs, review annual reports of FCMs 

certified by independent public accountants, and conduct onsite examinations of FCMs. In FY 2008, staff processed the 

monthly and annual financial reports filed by approximately 150 FCMs, and performed examinations and onsite reviews 

of several FCMs to test compliance with the Commission’s financial requirements for safekeeping customer funds.

The financial and risk surveillance activities performed by staff have taken on greater importance in recent years due to 

the number of instances of market volatility and their impacts on market intermediaries and the clearing system. During 

FY 2008, staff conducted nearly 40 market move reviews to monitor the potential for, and instances of, market volatility, 

market disruptions, or emergencies that have the potential to impact: 1) the proper capitalization of firms; 2) the proper 

segregation of customer funds; and 3) the ability of financial intermediaries to make payments to a DCO in a timely 

manner. Staff also addressed issues with respect to systemic risk. 

As a result of these and other ongoing financial oversight 

and risk surveillance activities, in FY 2008, there were no 

losses of regulated customer funds as a result of an FCM 

failure or the inability of customers to transfer their funds 

from a failing FCM to a financially sound FCM. The 

performance result indicates that the program’s objectives 

of ensuring sound financial practices of clearing 

organizations and firms holding customer funds, and the 

protection of customer funds are being met.

Oversight of SROs and DCOs

A key aspect of assuring effective self-regulation is oversight by the Commission of futures industry SROs, which include 

exchanges and NFA, to ensure fulfillment of their responsibilities for monitoring and ensuring the financial integrity of 

market intermediaries and the protection of customer funds. Toward this end, Commission staff oversee, review, and 

report to the Commission concerning SRO self-policing programs to evaluate their compliance with applicable 

provisions of the Act and Commission regulations. Commission staff also oversee, review, and report to the 
CFTC 27

MANAGEMENT’S DISCUSSION AND ANALYSIS

Commission concerning DCO’s compliance with CFTC Core Principles, including maintaining adequate arrangements 

and resources for the effective monitoring and enforcement of compliance with their rules. Similar to the approach of 

other Federal financial regulators and certain overseas financial supervisors, the Commission employs a risk-based 

approach to its examination cycles of SROs and DCOs, i.e., both the scheduling and scope of the risk-based reviews are 

based on an analysis of the underlying risks to which an institution is exposed and the controls that it has in place to 

address those risks. 

Substantial staff resources were committed to the examination of selected SROs and DCOs in FY 2008. Staff completed 

examinations of compliance programs of two SROs. One examination focused on an SRO’s financial surveillance 

program, and the second examination focused on another SRO’s program for the oversight of disclosure documents 

issued by CPOs and CTAs. Staff determined that the SROs’ programs were meeting the requirements of the Act and 

Commission regulations. Three other reviews of SROs’ compliance programs were initiated in FY 2008, but completion 

of these reviews will not occur until the next fiscal year. In addition, DCIO staff continued a joint review with DMO to 

assess business continuity plans of six DCOs, and staff initiated reviews of two DCO programs for compliance with 

CFTC Core Principles. All three of these DCO reviews will not be completed until FY 2009. The performance results 

indicate that the Commission’s oversight program objectives of ensuring the financial integrity of market intermediaries 

and the protection of customer funds are being met in FY 2008.
28 CFTC

Introduction to Strategic Goal Four

The Commission introduced a new strategic goal in FY 2008, which focuses on facilitating mission delivery through organizational and management excellence. Under this strategic goal, the role of CFTC program support functions 

becomes more transparent and better aligned with strategic plan priorities. Performance measures provide metrics on 

human capital, technology, and financial management.

Strategic Goal Four

Facilitate Commission performance through organizational and management excellence, 

efficient use of resources, and effective mission support.

Annual Performance Goal Four

Recruit, retain, and develop a skilled and diversified staff to keep pace with attrition and anticipated losses due to retirement.

Outcome Objectives and Performance Measures

4.1 Productive, technically competent, competitively compensated, and diverse workforce that takes into account current 

and future technical and professional needs of the Commission.

4.1.1. Percentage of fiscal year program development objectives met under CFTC pay for performance authority.

4.1.2. Average number of days between close of vacancy announcement and job offer, per Federal standards of 45 

days or less.

4.1.3. Rate of employee turnover, exclusive of retirements.

4.1.4. Percentage of employees in mission-critical positions rating themselves at “extensive” or higher level of 

expertise on Strategic Workforce Planning Survey.

4.1.5. Percentage of underrepresented groups among new hires.

4.2 Modern and secure information system that reflects the strategic priorities of the Commission.

4.2.1. Percentage of CFTC information technology resources directly tied to Commission resource priorities as stated 

in the Strategic Plan.

4.2.2. Percentage of major information technology investments having undergone an investment review within the last 

three years.

4.2.3. Percentage of Customer Support Center inquiries resolved within established performance metrics.

4.2.4. Percentage of employees with network availability.

4.2.5. Percentage of employees who require remote network availability that have it.

4.2.6. Percentage of major systems and networks certified and accredited in accordance with National Technology of 

Standards and Technology (NIST) guidance.

4.2.7. Percentage of information technology E-Government initiatives on target for compliance with implementation 

schedule.

4.2.8. Percentage of network users who have completed annual security and privacy training.

4.3 Organizational infrastructure that efficiently and effectively responds to and anticipates both the routine and emergency 

business needs of the Commission. 

4.3.1. Number of hours required to deploy staff and begin mission essential functions at the Continuity of Operations 

Plan (COOP) site.

4.4 Financial resources are allocated, managed, and accounted for in accordance with the strategic priorities of the 

Commission.

4.4.1. Audit opinion of the Commission’s annual financial statements as reported by the CFTC’s external auditors.

4.4.2. Number of material internal control weaknesses reported in the Performance and Accountability Report.

4.4.3. Number of non-compliance disclosures in audit report.

4.5 Commission’s mission is fulfilled and goals are achieved through sound management and organizational excellence 

provided by executive leadership.

4.5.1. Percentage of 18 Strategic Plan priorities that are on track to completion by FY 2012.
CFTC 29

MANAGEMENT’S DISCUSSION AND ANALYSIS

Performance Trends for Goal Four

The performance metrics for human capital and financial management are relatively straight-forward and as a consequence are 

largely effective. Ensuring that the CFTC can attract and retain the best and the brightest has been a high priority for over six 

years. Moving to a new financial management system, in compliance with laws and regulations, has also been a high priority 

since FY 2006. A chronic lack of funding for technology 

investments is reflected in its performance metrics, which are 

for the most part rated as adequate. Effective performance in 

the technology area is the highest priority items under Goal 

Four.

IT Resources Dedicated to Strategic Priorities

The planning and procurement process tracks planned 

versus actual budgets, and aligns priorities as needed.

Because of tight budget constraints, the CFTC has been 

forced to postpone some infrastructure upgrades.

IT Infrastructure

The CFTC continues to upgrade its network to meet the 

growing needs of the CFTC. In the past, the CFTC has been 

forced to cut back on infrastructure upgrades due to budget 

constraints. 

Continuity of Operations Readiness

An evaluation tool that tested the agency’s compliance with 

elements defined in Federal Continuity Directive 1, Federal 

Executive Branch Continuity Program and Requirements 

found that, of the 13 communications requirements 

assessed for headquarters, the CFTC fully complied with 

six, partially complied with two, and did not comply with 

five. For the agency’s continuity facility, the CFTC fully 

complied with nine requirements and did not comply with 

four. The CFTC was rated as 72 percent compliant with 

critical requirements and 94 percent compliant with 

operational and implementation requirements.
30 CFTC

Financial Highlights

The following chart is an overview of the Commission’s financial position, preceding a discussion of the agency’s financial highlights for FY 2008.

2008 2007

Condensed Balance Sheet Data

Fund Balance with Treasury $ 27,666,831 $ 19,507,914 

Property, Equipment, and Software, Net 2,810,441 2,850,911 

Accounts Receivable 11,534 126,276 

Prepayments 461,552 131,142 

Other (Custodial) 1,721,526 620,311 

Total Assets $ 32,671,884 $ 23,236,554 

FECA Liabilities $218,888 $223,003 

Payroll, Benefits and Annual Leave 8,029,377 7,415,622 

Contingent & Deposit Fund Liabilities — 357,563 

Other Deferred Lease Liabilities 3,294,324 3,169,541 

Accounts Payable 2,496,958 2,960,373 

Custodial Liabilities 1,721,526 620,311 

Other 9,957 10,001 

Total Liabilities 15,771,030 14,756,414 

Cumulative Results of Operations (5,224,895) (5,700,823)

Unexpended Appropriations 22,125,749 14,180,963 

Total Net Position 16,900,854 8,480,140 

Total Liabilities and Net Position $ 32,671,884 $ 23,236,554 

Condensed Statements of Net Cost

Total Cost $ 105,583,743 $ 101,824,806 

Net Revenue (67,479) (91,763)

Total Net Cost of Operations $ 105,516,264 $ 101,733,043 

Net Cost by Strategic Goal

Goal One - Economic Vitality $ 31,654,879 $ 30,519,913 

Goal Two - Market User and Public 25,323,903 24,415,930 

Goal Three - Industry 24,268,741 23,398,600 

Goal Four - Organizational Excellance 24,268,741 23,398,600 

 $ 105,516,264 $ 101,733,043 
CFTC 31

MANAGEMENT’S DISCUSSION AND ANALYSIS

Financial Discussion and Analysis

The CFTC prepares annual financial statements in 

accordance with GAAP for Federal government entities and 

subjects the statements to an independent audit to ensure 

their integrity and reliability in assessing performance.

Management recognizes the need for performance and 

accountability reporting, and fully supports assessments of 

risk factors that can have an impact on its ability to do so.

Improved reporting enables managers to be accountable 

and supports the concepts of the Government Performance 

and Results Act (GPRA), which requires the Commission to: 

1) establish a strategic plan with programmatic goals and 

objectives; 2) develop appropriate measurement indicators; 

and 3) measure performance in achieving those goals.

The financial summary as shown on the preceding page 

highlights changes in financial position between September 

30, 2008 and September 30, 2007. This overview is 

supplemented with brief descriptions of the nature of each 

required financial statement and its relevance. Certain 

significant balances or conditions featured in the graphic 

presentation are explained in these sections to help clarify 

their relationship to Commission operations. Readers are 

encouraged to gain a deeper understanding by reviewing 

the Commission’s financial statements and notes to the 

accompanying audit report presented in the Financial 

Section of this report.

Understanding the Financial Statements

The CFTC presents financial statements and notes in the 

format required for the current year by Office of Management 

and Budget (OMB) Circular A-136, Financial Reporting 

Requirements, which is revised annually by OMB in 

coordination with the U.S. Chief Financial Officers Council.

The CFTC’s current year and prior year financial statements 

and notes are presented in a comparative format.

Balance Sheet

The balance sheet presents, as of a specific point in time, 

the economic value of assets and liabilities retained or 

managed by the Commission. The difference between 

assets and liabilities represents the net position of the 

Commission.

For the year ended September 30, 2008, the balance sheet 

reflects total assets of $32.7 million. This reflects a 41 

percent increase from FY 2007. The Commission’s fund 

balance with the Treasury was $7.2 million more in 

FY 2008 than it was at the end of FY 2007. A majority of 

the increase was attributable to information technology 

(IT) investments. Although these funds have been 

obligated, the majority of equipment and services will be 

received in FY 2009.

The CFTC litigates against defendants for alleged violations 

of the CEA and Commission’s regulations. Violators may 

be subject to a variety of sanctions including civil monetary 

penalties, injunctive orders, trading and registration bars 

and suspensions, and orders to pay disgorgement and 

restitution to customers. When collectible custodial 

receivables (non-entity assets) are high, the civil monetary 

penalties that have been assessed and levied against 

businesses for violation of law dominate the balance sheet.

Custodial accounts receivable balances increased to $1.7 

million. In FY 2008, approximately $1.2 million in net 

custodial receivables was attributable to new civil monetary 

penalties. This balance is largely explained by the timing 

of civil monetary penalty collections. In FY 2008, two 

collections in the amount of $125 million from BP 

Products North America and $10 million from Energy 

Transfer Partners were processed and transferred into the 

Treasury’s general fund at year-end. For FY 2007, $264 

thousand in net custodial receivables was attributable to 

civil monetary sanctions. In addition, the net value of 

general property, plant, and equipment decreased by $40 

thousand, as the Commission added $893 thousand in 

capitalized assets and depreciated $593 thousand of 

internally-developed software for the eLaw Program. 

As should be expected from a small regulatory agency, 

payroll, benefits, and annual leave make up the majority of 

CFTC liabilities. Several factors influenced the change in 

the Commission’s net position, during FY 2008. This, as 

noted above, includes the timing of prior year write-offs of 

old debt, and the overall case management and analysis of 

debt by the Commission’s DOE.
32 CFTC

Statement of Net Cost

This statement is designed to present the components of 

the Commission’s net cost of operations. Net cost is the 

gross cost incurred less any revenues earned from 

Commission activities. The statement of net cost is categorized by the Commission’s strategic goals. A fourth strategic 

goal measuring organizational and management excellence, efficient use of resources, and effective mission 

support was added in FY 2008. The comparative presentation in the financial statements uses an allocation to reclassify FY 2007 to conform to the FY 2008 presentation.

The Commission experienced a 3.71 percent increase in 

the total net cost of operations during FY 2008. This is not 

consistent with the 13.6 percent budget increase the 

Commission received for its appropriation. The difference 

reflects unexpended obligations for $5 million for an IT 

equipment refresh and $6 million for IT support and 

advisory services. Therefore, these costs will be reflected in 

the FY 2009 Statement of Net Cost.

Strategic Goal One, which tracks activities related to market 

oversight, continues to require a significant share of 

Commission resources at 30 percent of net cost of operations, in FY 2008. The $31.7 million reflects a substantial 

effort over the summer months to address market volatility, which includes 4,000 work hours applied towards 

collecting and assembling data for staff reports on swap 

dealers and index traders. 

Strategic Goal Two is representative of efforts to protect 

market users and the public. In FY 2008, the net cost of 

operations for this goal was $25.3 million or 24 percent.

This funding level was primarily impacted by the DOE, 

which conducted a very high level of enforcement investigations in response to unusual market activity in FY 2008, 

including price volatility in energy and agricultural 

commodities. Another key DOE initiative was the formation of a forex team, which was publicly announced in the 

last quarter of the fiscal year.

Strategic Goal Three is representative of efforts to ensure 

market integrity. In FY 2008, the net cost of operations for 

this goal was $24.3 million or 23 percent. Productivity 

improvements continued to be achieved through the use 

of automated audit and reporting tools. For example, 

Commission staff completed examinations of compliance 

programs of two SROs. One examination focused on an 

SRO’s financial surveillance program, and the second 

examination focused on another SRO’s oversight of disclosure documents issued by CPOs and CTAs. In addition, 

staff continued a joint assessment of business continuity 

plans for six clearing operations and initiated two other 

reviews for compliance with CFTC Core Principles.

Moreover, the Commission was increasingly called upon 

to register overseas clearinghouses to approve complex 

cross-border trading and clearing linkages and to perform 

effective ongoing supervision. 

Strategic Goal Four is representative of efforts to achieve 

organizational excellence and accountability over human 

capital efforts, financial management, and technology. In 

FY 2008, the net cost of operations for this goal was $24.3 

million or 23 percent. This is the first year that the 

Commission has measured this goal. The costs are reflective of the planning and execution of human capital and 

technology initiatives. For example, the Commission fully 

implemented a new pay for performance system, ramped 

up hiring, and performed in-depth acquisition planning 

for information technology. 

Statement of Budgetary Resources

This statement provides information about the provision 

of budgetary resources and its status as of the end of the 

year. Information in this statement is consistent with 

budget execution information and the information 

reported in the Budget of the U. S. Government, FY 2008.

The $112.0 million appropriation level received in FY 2008 

represented a significant increase for the Commission. As 

a consequence, even with a $784 thousand enacted reduction, the level was 13.6 percent higher than the enacted 
CFTC 33

MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2007 level of $98 million. This permitted the 

Commission, for the first time in over five years, to do 

more than maintain a “steady state” and fund benefits and 

compensation, lease expenses, printing, and services to 

support systems users, telecommunications, operations, 

and maintenance of IT equipment. In FY 2008, gross 

outlay was not in line with the net cost increase because 

hiring and technology spending was delayed until the end 

of the fiscal year due to the funding restrictions from the 

FY 2008 Continuing Resolution. 

Statement of Custodial Activity

This statement provides information about the sources and 

disposition of non-exchange revenues. Non-exchange 

revenue at the CFTC is primarily represented by fines, 

penalties, and forfeitures assessed and levied against businesses and individuals for violations of the CEA. Other 

non-exchange revenues include registration, filing, appeal 

fees, and general receipts. The statement of custodial 

activity reflects total non-exchange revenue collected (cash 

collections) in the amount of $141.8 million and a transfer 

of the collections to the Treasury in the same amount.

Historical experience has indicated that a high percentage 

of custodial receivables prove uncollectible. The methodology used to estimate the allowance for uncollectible 

amounts related to custodial accounts is that custodial 

receivables are considered 100 percent uncollectible unless 

otherwise noted in the judgment. An allowance for uncollectible accounts has been established and included in the 

accounts receivable on the balance sheet. The allowance is 

based on past experience in the collection of accounts 

receivables and an analysis of outstanding balances.

Accounts are re-estimated quarterly based on account 

reviews and a determination that changes to the net realizable value are needed. The re-estimate can cause wide 

swings in the statement line that reports change in accounts 

receivable.
34 CFTC

Management Assurances

Management Overview

The CFTC is committed to management excellence 

and recognizes the importance of strong financial 

systems and internal controls to ensure accountability, integrity, and reliability. This operating philosophy has permitted the Commission to make significant progress in 

documenting and testing its internal controls over financial reporting for next year, as prescribed in OMB Circular 

A-123, Management’s Responsibility for Internal Control. The 

graph below depicts all five components of the internal 

control process that must be present in an organization to 

ensure an effective internal control process.

Control Environment is the commitment to encourage 

the highest level of integrity and personal and professional 

standards, and promotes internal control through leadership philosophy and operation style.

Risk Assessment is the identification and analysis of risks 

associated with business processes, financial reporting, 

technology systems, and controls and legal compliance in 

the pursuit of agency goals and objectives.

Control Activities are the actions supported by management policies and procedures to address risk, e.g., performance reviews, status of funds reporting, and asset management reviews.

Monitoring is the assessment of internal control performance to ensure the internal control processes are properly 

executed and effective.

Information and Communication ensures the agency’s 

control environment, risks, control activities, and performance results are communicated throughout the agency.

The Commission relies on its performance management 

and internal control framework to:

■ Ensure that its divisions and mission support offices 

achieve their intended results efficiently and effectively; 

and

■ Ensure the maintenance and use of reliable, complete, 

and timely data for decision-making at all levels.
CFTC 35

MANAGEMENT’S DISCUSSION AND ANALYSIS

The Commission strongly believes that the rapid 

implementation of audit recommendations is essential 

to improving its operations. Integration of Commission 

strategic, budget, and performance data permits 

management to make individual assurance statements with 

confidence. Moreover, data-driven reporting provides the 

foundation for Commission staff to monitor and improve 

its control environment.

Statement of Assurance

“CFTC management is responsible for establishing and maintaining effective internal control and financial management 

systems that meet the objectives of the Federal Managers’ Financial Integrity Act (FMFIA). The CFTC conducted its 

assessment of the internal control over effectiveness and efficiency of operations, and compliance with applicable laws 

and regulations, in accordance with OMB Circular A-123, Management’s Responsibility for Internal Control. Based 

on the results of this evaluation, the CFTC can provide reasonable assurance that its internal control over operations, 

and compliance with applicable laws and regulations, as of September 30, 2008 was operating effectively and no 

material weaknesses were found in the design or operation of the internal controls. 

In addition, the CFTC conducted its assessment of the effectiveness of internal control over financial reporting, 

which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the 

requirements of Appendix A of OMB Circular A-123. Based on the results of this evaluation, the CFTC can provide 

reasonable assurance that its internal control over financial reporting as of June 30, 2008 was operating effectively and 

no material weaknesses were found in the design or operation of the internal control over financial reporting.” 

Walter L. Lukken

Acting Chairman

November 17, 2008

Statement of Assurances

The Statement of Assurance is required by the Federal Managers’ Financial Integrity Act (FMFIA) and OMB Circular 

A-123, Management’s Responsibility for Internal Control. The 

assurance is for internal controls over operational effectiveness (we do the right things to accomplish our mission) 

and operational efficiency (we do things right).

During FY 2008, in accordance with the FMFIA, and using 

the guidelines of OMB, the Commission reviewed key 

components of its management and internal control 

system.

The objectives of the Commission’s internal controls are to 

provide reasonable assurance that:

■ Obligations and costs are in compliance with applicable 

laws;

■ Assets are safeguarded against waste, loss, unauthorized 

use, or misappropriation;

■ Revenues and expenditures applicable to Commission 

operations are properly recorded and accounted for to 

permit the preparation of accounts and reliable financial 

and statistical reports and to maintain accountability 

over assets; and

■ All programs are efficiently and effectively carried out 

in accordance with applicable laws and management 

policy.

The efficiency of the Commission’s operations is continually evaluated using information obtained from reviews 

conducted by the Government Accountability Office 

(GAO) and the Office of Inspector General (OIG), specifically requested studies, or observations of daily 

operations. 
36 CFTC

These reviews ensure that the Commission’s systems and 

controls comply with the standards established by FMFIA.

Moreover, managers throughout the Commission are 

responsible for ensuring that effective controls are implemented in their areas of responsibility. Individual assurance statements from division and office heads serve as a 

primary basis for the Chairman’s assurance that management controls are adequate. The assurance statements are 

based upon each office’s evaluation of progress made in 

correcting any previously reported problems, as well as 

new problems identified by the OIG, GAO, other management reports, and the management environment within 

each office.

Commission organizations that have material weaknesses 

are required to submit plans for correcting those weaknesses. The plans, combined with the individual assurance 

statements, provide the framework for continually monitoring and improving the Commission’s management and 

internal controls. The agency strengthened internal controls 

during FY 2008 by addressing the following: 

■ Implementing pay and benefits authority under Section 

10702 of the Public Law 107-171, Farm Security and 

Rural Invest Act of 2002;

■ Meeting information security requirements under 

the Federal Information Security Management Act 

(FISMA);

■ Remediating a significant deficiency identified in the 

FY 2007 independent auditor’s report of the agency’s 

financial statements and related internal controls;

■ Conducting management control reviews with the 

express purpose of assessing internal controls;

■ Developing and implementing the CFTC’s Property 

Management Information System to record and 

monitor the agency’s assets; and

■ Participating in the U.S. Department of Transportation’s 

(DOT) annual review on system security controls over 

Delphi, which was conducted in compliance with the 

American Institute of Certified Public Accountants’ 

Statement on Auditing Standards (SAS) 70.

Summary of Material Weaknesses (FMFIA § 2)

In FY 2008, the Commission has no declared material 

weaknesses under FMFIA in the area of financial reporting 

that hinders preparation of timely and accurate financial 

statements. The Commission did not declare any material 

weaknesses in FY 2007.

Summary of Non-Conformances (FMFIA § 4)

During FY 2008 and FY 2007, the Commission declared 

that no systems were in nonconformance under FMFIA.

The independent auditors’ report for FY 2008 and FY 2007 

disclosed no instances of noncompliance or other matters 

that were required to be reported under Government Audit 

Standards and OMB Bulletin 07-04, Audit Requirements for 

Federal Financial Statements. 
CFTC 37

Forward Looking – 

Future Business Trends and Events

The futures industry has undergone enormous 

growth and change during the last 20 years from 

the products that are traded to the platforms on which they 

are traded. As the Commission looks ahead, it expects that 

technology, globalization, and innovation will continue to 

drive growth in the markets it regulates. Due to the current 

economic stress, Congress may examine and consider 

revising the existing regulatory structures of the financial 

services sector. The Commission and the entities within its 

oversight could be affected by such Congressional action.

During this period of rapid change, the Commission 

expects to continue losing many experienced career staff, 

primarily through retirement. During FY 2006, the 

Commission experienced its first wave of these retirements.

From a resources perspective, the Commission has struggled to operate at the level needed to do the job expected 

of it by Congress, the Administration, and the public. The 

Commission has found itself repeatedly having to make 

difficult choices about how to use its limited resources to 

fulfill its statutory mission. 

During FY 2008, the Commission was able for the first 

time in several years, to replenish its staff. The new hires, 

while needed and welcomed, did not return the 

Commission to the peak staffing level it reached a number 

of years ago when the futures industry was smaller than it 

is today. The Commission needs to continue to increase 

staffing levels to counter attrition and to have staff needed 

to effectively oversee today’s larger and more complex 

markets.

Without a staffing increase, Commission efforts will be 

scaled back to the extent increased productivity cannot 

offset resource deficits. As noted in the discussion of the 

net cost of operations, the Commission attempts to balance 

its investment in four strategic goals, each focusing on a 

vital area of regulatory responsibility. To continue to be an 

effective regulator, the Commission will need to place 

greater reliance on risk management. It will also need to 

continue to leverage systems and data maintained by other 

Federal agencies and, where possible, by SROs. The 

Commission will also need to confront the jurisdictional 

challenges created by innovation and the expansion of 

futures and option markets on a worldwide basis. These 

challenges coupled with a wide array of new surveillance 

issues, are expected to significantly change the way the 

Commission uses and allocates resources across its performance goals.

Technology

■ Technology makes it possible for market participants 

to trade globally 24 hours a day on a multitude of 

newly designed platforms. This presents a challenge 

to the Commission to maintain a robust, yet flexible, 

regulatory framework as market participants have an 

increasing number of choices available to them as to 

where, when, and how to trade.
38 CFTC

■ The expansion of electronic trading requires an increase 

in Commission staff trained to carry out oversight of 

more technologically driven markets and self-regulatory 

systems.

■ With electronic trading of commodity futures and 

option contracts on Commission-regulated exchanges 

becoming the norm, the Commission must continue 

to upgrade its own technology and infrastructure 

in order to deter and prevent manipulation and 

other disruptions to the integrity of the markets the 

Commission regulates.

■ The continuing shift of market volume to the electronic 

trading environment poses new data processing 

challenges to the CFTC. Because this medium 

allows exchanges to gather and transmit much more 

information about trading activity, the CFTC must 

increase its capacity for processing and storage. In 

addition to the significant increase in the amount of 

information transmitted to the CFTC, there has been 

a large increase in the number of contracts traded.

To meet these challenges, the Commission’s Office 

of Information and Technology Services (OITS) will 

continue to improve its computational performance.

A variety of projects are underway that address specific 

CFTC business needs using the data and market 

information the Commission receives.

■ Commission work continues on Project eLaw, an effort 

that provides law office automation and modernization 

to the Commission’s DOE, Office of the General Counsel 

(OGC), and Office of Proceedings. Project eLaw is a 

Commission-wide initiative that seamlessly integrates 

technology and work processes to support managers 

and staff across the Commission in their investigative, 

trial, and appellate work. In FY 2008, the eLaw program 

implemented several major enhancements. A new 

litigation support model was introduced to provide 

attorneys and investigators with the maximum benefit 

from the new technology. Electronic trial support was 

implemented to support the trial teams in the new 

electronic court rooms. The case management solution 

(Practice Manager) continued to be customized to 

further meet the needs and evolving requirements 

of the users. Advancement continued in computer 

forensics, and audio analytics technology is being 

evaluated to further support the DOE’s investigation 

and litigation work. In addition, the Commission’s 

attorneys began complying with court-mandated 

eDiscovery practices. The eLaw program will continue 

to support the Commission’s legal practice in the areas 

of case planning, case management, litigation support, 

and document management.

■ In FY 2009, the Commission will continue to maintain, 

support, and enhance the eLaw solution and consider 

expansion into other areas of the Commission that 

would benefit from the automated technology. 

■ The Commission continues to implement a new Trade 

Surveillance System (TSS), which replaces its older 

trade surveillance system. The old system was designed 

for open outcry trading and has not been significantly 

upgraded since its inception in the mid-1980s. TSS will 

give the Commission the ability to deter and prevent 

manipulation and other disruptions to the integrity of 

the markets the Commission regulates. Specifically, 

TSS will enhance staff’s ability to effectively detect and 

deter trade practice violations in a rapidly changing 

environment, especially with respect to electronic 

trading data. Trade violation detection software will 

perform sophisticated pattern recognition and data 

mining to automate basic trade practice surveillance, and 

detect novel and complex abusive practices in today’s 

high-speed, high-volume global trading environment.

TSS also will fill a vacuum in inter-market surveillance 

that only the Commission can address, e.g., trading of 

the same or similar contracts on different exchanges. 

■ Technology improvements will continue to empower 

the Commission by increasing the availability of its 

most critical resource: time. Through technology 

improvements, executive management may spend 

additional time on policy analysis and decision-making 

rather than on processing and compiling key data.

The Commission will increasingly leverage business 

processes, services, and systems of larger agencies for 

internal operations, while externally relying more 

on exchange databases when conducting reviews and 

investigations. 
CFTC 39

MANAGEMENT’S DISCUSSION AND ANALYSIS

Globalization

■ The futures and option markets continue to become 

more globalized through electronic linkages and 

strategic alliances and mergers. The Commission has 

received an increasing number of requests to participate 

in U.S. government initiatives with economically 

important jurisdictions and to provide technical 

assistance to developing markets. The agency requires 

additional experienced staff to meet these demands.

■ In an integrated global marketplace, market disruptions 

in one jurisdiction could result in global market systemic 

concerns. The trading of economically linked contracts 

in different jurisdictions raises significant surveillance 

issues. Because no one regulator will have all of the 

needed information or jurisdiction over markets, firms, 

and persons to ensure customer and market protections, 

the Commission’s challenge will be to coordinate with 

global regulators.

Marketplace

■ Development and growth of renewable energy sources 

(i.e., biofuels) could impact existing energy markets.

■ Disruption of oil exports to the United States may 

disrupt energy markets.

■ A significant portion of the power grids may be disabled 

for an extended period of time, crippling markets.

■ Changes in the structure of the futures and options 

industry, such as the conversion of exchanges from 

member-owned entities to publicly-owned corporations, 

exchange mergers, and the introduction of new 

derivative contracts will mean that the Commission 

will require more staff to review novel and increasingly 

complex legal and regulatory issues.

■ Convergence of products and markets and new 

Congressional grants of anti-manipulation authority 

requires increased interagency coordination with 

the SEC, FTC, and the Federal Energy Regulatory 

Commission. This coordination can address areas of 

mutual interest related to cross-jurisdictional issues, 

such as those presented by credit event products, 

commodity exchange-traded funds, and potential 

manipulation in the energy markets.

■ Expansion of these markets results in strong competition 

for employees with the skills the Commission requires 

to meet its mission, continually challenging the agency 

to offer competitive compensation.

Government

■ Congress could pass new legislation impacting the 

markets and the role of the Commission.

■ Congress might require an investigation of certain 

markets.

■ Congress might not appropriate adequate funds for 

the Commission to effectively discharge its statutorilymandated and mission-critical functions.

■ Prompt implementation of enhanced E-Government 

business processes is a continual challenge with limited 

staff and financial resources.

Human Capital 

■ The agency continues to emphasize the strategic 

management of human capital, building the staff 

resources necessary to support its mission by planning 

for the competencies required, leveraging existing 

resources, and making effective use of contractor 

support.

■ Competition to hire and retain staff is intense in a job 

market where scarce mission-critical skills command 

premium compensation levels. Even at “pay parity” 

salaries, the Commission must continually seek to 

improve the work environment so it can attract, 

engage, and retain a workforce that is equal to the 

evolving challenges of market oversight and customer 

protection.

Management

■ Compliance with the future demands and uncertainties 

of Homeland Security Presidential Directives 12 and 20, 

as well as Pandemic Influenza preparedness, requires 

additional management and staff focus to ensure 

that the agency is ready to continue mission essential 

functions in an emergency.
40 CFTC

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5110

Facsimile: (202) 418-5522

Office of the

Inspector General

MEMORANDUM

TO: Walter Lukken

Acting Chairman

FROM: A. Roy Lavik

Inspector General

DATE: NNovember 14, 2008

SUBJECT: Inspector General’s Assessment Of The Most Serious Management 

Challenges Facing the Commodity Futures Trading Commission (CFTC, 

Agency)

Introduction 

The Reports Consolidation Act of 2000 (RCA) authorizes the CFTC to provide financial and 

performance information in a more meaningful and useful format for Congress, the President, 

and the public, through publication of the Performance and Accountability Report (PAR). The 

RCA requires the Inspector General to summarize the “most serious” management and 

performance challenges facing the CFTC and to assess the CFTC’s progress in addressing those 

challenges, all for inclusion in the PAR. This memorandum fulfills our duties under the RCA. 

In order to identify and describe the most serious management challenges, as well as the CFTC’s 

progress in addressing them, we have relied on data contained in the CFTC financial statement 

audit and PAR, as well as our knowledge of industry trends and CFTC operations. Since 

Congress left the determination and threshold of what constitutes a most serious challenge to the 

discretion of the Inspector General, we applied the following definition in preparing this 

statement: 

Serious management challenges are mission critical areas or programs that have the potential for 

a perennial weakness or vulnerability that, without substantial management attention, would 

seriously impact Agency operations or strategic goals. 

This memorandum summarizes the results of the CFTC’s current financial statement audit, 

describes the Agency’s progress on last year’s management challenges, and finally discusses the 

Inspector General’s FY 2008 Assessment
CFTC 41

MANAGEMENT’S DISCUSSION AND ANALYSIS

2

most serious management challenges that we have identified: Modernization of Electronic 

Market Surveillance, and Efficient Acquisition and Integration of Skilled Human Capital. 

 

CFTC Financial Statement Audit Results

In accordance with the Accountability of Tax Dollars Act, CFTC, along with numerous other 

federal entities, is required to submit to an annual independent financial statement audit by the 

Inspector General, or by an independent external auditor as determined by the Inspector General. 

In 2004, the Office of the Inspector General (OIG) selected KPMG LLP, an independent public 

accounting firm, to conduct the required audit. Since then, KPMG LLP has annually conducted 

an audit of the CFTC’s financial statements on the OIG’s behalf and has rendered an opinion on 

the statements. The results of the KPMG audit are discussed in the PAR, and I am pleased to 

state that, for fiscal year 2008, the financial statement audit resulted in an unqualified audit 

opinion. 

CFTC’s Progress on Last Year’s Challenges 

Last year we identified the two most serious management challenges: Modernization of 

Electronic Market Surveillance, and Expansion of CFTC Oversight into New Markets. Events in 

2008 have reinforced our prior assessment of the serious management challenges facing the 

CFTC. During the past year, the Agency has expended approximately $11 million dollars (more 

than 10% of its FY 2008 budget) to update its antiquated electronic surveillance systems. In 

addition Congress, with the passage of the Farm Bill in May 2008,1

 codified and expanded the 

Agency’s responsibilities over the Exempt Commercial Market with Significant Price Discovery 

Contracts (ECM-SPDC). The passage of this legislation addressed the FY 2008 Assessment of 

the Agency’s Most Serious Management Challenges. Nonetheless, we remain concerned about 

two areas that are an extension of last year’s Management Challenges. 

Most Serious Management Challenges for Fiscal Year 2009 

During the past year, the industry has continued its inexorable march towards a completely 

electronic marketplace. For example, the Minneapolis Grain Exchange will close its trading 

floor on December 19, 2008. Thus, we will restate our concern about Modernization of 

Electronic Market Surveillance. Our second concern is the Efficient Acquisition and Integration 

of Skilled Human Capital to address expanding Congressional mandates. 

Modernization of Electronic Market Surveillance 

Prices for exchange traded commodities directly affect the global economy. Effective market 

surveillance techniques necessary to detect and prevent trading and price distortions are therefore 

essential to the CFTC’s mission. While market surveillance has always been an integral part of 

CFTC operations, the past years have witnessed the transformation of futures trading from an 

open outcry trading floor based system to an electronic system. And in 2008, electronic trading 

 

1

 The formal name of the Farm Bill is the “Food, Conservation, and Energy Act of 2008,” which is HR 2419. The 

citation is Public Law 110-234, 122 Stat. 923. The CFTC Provisions are in Title XIII of the legislation, titled the 

“CFTC Reauthorization Act of 2008.”
42 CFTC

3

continued to expand, accounting for over 84%2of total exchange traded derivatives. This 

structural change demands that the Agency redefine its market surveillance techniques. 

Although the Agency has dramatically expanded its financial commitment to modernizing its 

electronic surveillance systems, we are not convinced that it has strategically evaluated its 

market surveillance mission. Thorough analysis of evolving oversight markets, mission and 

resources can enhance the development of updated surveillance techniques. Enhanced 

surveillance techniques, coupled with the efficient allocation of Agency resources, will serve the 

mission of protecting the financial marketplace against artificial prices for global commodities. 

Our review of the Agency’s fiscal year 2009 budget revealed that the Agency will increase its 

spending on information technology to nearly $26 million. We look forward to monitoring the 

Agency’s efforts in this area to assure that taxpayer funds will be prudently and efficiently 

allocated to protect the integrity of the marketplaces under the oversight of the CFTC. 

Efficient Acquisition and Integration of Skilled Human Capital 

Recent economic turbulence has stimulated an interest in applying the historically successful 

centralized clearing mechanism to the bilateral and complex swap markets. It has also stirred 

debate about the current financial market regulatory structure. Should Congress elect to assign 

the CFTC a specific oversight role for the financial swaps markets, we are skeptical that the 

Agency currently has the human capital sufficient to monitor these complex markets. Moreover, 

reorganization of the financial market regulators could result in additional challenges. 

Our evaluations of Congressional statements indicate that, presuming CFTC does not undergo 

significant change, the Agency may be allocated additional budgetary resources that may expand 

its full time equivalent (FTE) staff by nearly 23 percent over the fiscal year 2008 level of 448 

FTE. The complexity of the derivatives marketplace may demand reevaluation of existing hiring 

procedures (flexibility). It may also require astute evaluation of potential employees in order to 

develop a workforce that can significantly aid the Agency in addressing additional 

responsibilities granted by Congress and the significant complexity of the markets under CFTC 

oversight. 

We view the possibility of a dramatic increase in new employees, as well as the possible 

restructuring of the financial market regulatory agencies, as potentially significant management 

challenges. 

Conclusion 

This year’s activities in the derivatives markets have stimulated members of Congress, the 

Government Accountability Office, and average citizens all to increase their awareness of the 

CFTC. As a result, both the OIG and the Agency have received numerous requests for 

information and assistance. So far, this Office has responded to all the queries it has received 

 

2 Electronic futures and options trading on all domestic exchanges accounted for 74% of trading volume during 2007 

(through August 2007), compared with 64% last year [2006]. Source: Inspector General’s Assessment Of The Most 

Serious Management Challenges Facing the Commodity Futures Trading Commission (CFTC) November 15, 2007.
CFTC 43

MANAGEMENT’S DISCUSSION AND ANALYSIS

4

with fact based and independent analyses that seek to address all concerns posed by these and 

other stakeholders. In fiscal year 2009, we look forward to additional questions and stand ready 

to offer an independent assessment of the operational status of the Agency. The OIG takes its 

mission and authority seriously and remain committed to promote integrity, accountability and 

transparency at the CFTC. 
P E R F O R MANCE SECTION

Introduction to the Performance Section................45

Strategic Goal One: Economic Vitality ..................46

Strategic Goal Two: Market Users and Public ........56

Strategic Goal Three: Industry..............................74

Strategic Goal Four: Organizational Excellence...... 91
Introduction to the Performance Section

This section includes details of Commission efforts to meet its strategic and 

performance goals. The Commission scrutinizes performance measures to 

ensure that the metrics adequately challenge the programs to reach the 

desired results, ensure accountability, and provide information that can be 

used to make financial decisions and develop future budgets.

Photo above is of staff from the CFTC Headquarters located in Washington, D.C.
46 CFTC

Strategic Goal One: Economic Vitality

Goal One: Ensure the economic vitality of the commodity futures and option markets.

Outcome Objective 1.1: Futures and option markets that accurately reflect the forces 

of supply and demand for the underlying commodity and are free of disruptive activity.

n Annual Performance Goal 1.1: No price manipulation or other disruptive activities 

that would cause loss of confidence or negatively affect price discovery or risk 

shifting. 

Outcome Objective 1.2: Markets are effectively and efficiently monitored to ensure 

early warning of potential problems or issues that could adversely affect their economic 

vitality.

n Annual Performance Goal 1.2: To have an effective and efficient market surveillance program.

Photo above is of staff from the CFTC Regional Office located in Chicago.
CFTC 47

P ERF O RMANCE SECTION

Performance Measure 1.1.1 Percentage growth In market volume.

Measurement: Percentage

Status: Effective

Data Source: Exchange’s Trading 

Volume Data.

Verification: Exchange Data compared 

to Futures Industry 

Association (FIA) Report.

Lead Program Office 

Division of Market Oversight (DMO)

Performance Analysis & Review 

Growth in the futures markets continued in FY 2008 with 

increased demand for products traded on the exchanges.

The actual FY 2008 number is driven by changes in 

economic fundamentals, success of newly launched 

products, the number of new participants using these 

markets, and other changes in the marketplace.

Performance Highlights

Growth in the volume and complexity of trading in energy 

futures markets, including trading in related OTC and 

foreign markets, has been met by expanded data collection, enhanced IT capabilities, more detailed analyses of 

transaction data, reassignment of current economists to 

energy market surveillance, and additional hires of economists for energy market surveillance.
48 CFTC

Performance Measure 1.1.2 Percentage of novel or innovative proposals or requests for CFTC action 

addressed within six months to accommodate new approaches to, or the expansion in, derivatives trading, enhance the 

price discovery process, or increase available risk management tools.

Measurement: Percentage

Status: Effective

Data Source: Formal filings and signed 

letter responses by the 

Commission.

Verification: Formal filing and 

disposition dates 

maintained in internal 

tracking system.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

DMO handled a number of proposals or requests for 

Commission action during the fiscal year that included 

newer approaches to derivatives trading or enhancements 

to the price-discovery process. The items, which included 

innovative products and exchange processes, were all 

addressed within six months of formal receipt.

Performance Highlights

DMO was responsible for two particular actions that 

dramatically increased the availability of risk-management 

tools. On August 20, 2008, DMO issued a no-action relief 

letter to the Oslo-based Nord Pool ASA to make its electronic trading and order matching system available to Nord 

Pool members in the United States and U.S. customers that 

qualify as eligible contract participants (as defined in 

Section 1a (12) of the CEA) without obtaining contract 

market designation or registration as a derivatives transaction execution facility (DTEF) pursuant to Sections 5 and 

5a of the Act. The relief letter enabled U.S.-based traders to 

directly access Nord Pool’s products, including various 

electricity and carbon-based futures and options contracts.

DMO also issued on September 26, 2008 a similar 

no-action relief letter to Bovespa S.A.—Bolsa de Valores, 

Mercadorias e Futuros (BM&F), a Sao Paolo, Brazil-based 

futures exchange. BM&F received permission to allow 

direct access by its U.S.-based trading members to trade 

various agricultural, metal currency and equity under 

futures products.
CFTC 49

P ERF O RMANCE SECTION

Performance Measure 1.1.3 Percentage increase in number of products traded.

Measurement: Percentage

Status: Effective

Data Source: Exchanges submit data on 

trading volume, open 

interest, delivery notices, 

exchange of futures and 

prices for all products 

traded.

Verification: Data is validated by internal 

program edits and quality 

checks in central database.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

The growth in the number of new products offered on the 

exchanges continued in FY 2008. The actual FY 2008 

number is driven by customer demand for new products, 

exchange innovation, opportunities made available by the 

increasing use of electronic trading, and other changes in 

the marketplace. As such, these factors may not be foreseeable with high precision.

Performance Highlights

The number of products traded grew by approximately 

11.4 percent in FY 2008, as futures innovation of energy 

products, security futures products (SFPs), and weather 

derivative products continued at a rapid pace. 
50 CFTC

Performance Measure 1.1.4 Percentage of new exchange or clearinghouse organization applications 

completed within expedited review period.

Measurement: Percentage

Status: Effective

Data Source: New exchange(s) and DCO 

application(s).

Verification: Filings and Actions automated 

database tracks and calculates 

processing time from receipt 

date through to date of 

designation or registration. 

Agency files containing 

applications, staff reviews, 

memoranda to the Commission, and proposed Orders.

Lead Program Offices 

Division of Clearing and Intermediary Oversight 

Division of Market Oversight

Performance Analysis & Review 

The normal processing time for an application is 90 days.

DMO staff reviewed one DCM application in less than 90 

days. Two DCO applications were filed in the fourth 

quarter of FY 2008, therefore, staff reviews of the two DCO 

applications will not be completed until FY 2009. 

Performance Highlights

DMO staff reviewed several draft filings by applicants, 

including one that stayed its application, and also provided 

responsive feedback to other entities working on draft 

applications.
CFTC 51

P ERF O RMANCE SECTION

Performance Measure 1.1.5 Percentage of new contract certification reviews completed within three months to 

identify and correct deficiencies in contract terms that make contracts susceptible to manipulation.

Measurement: Percentage

Status: Effective

Data Source: Exchange certification 

filings, certified rule 

amendments, and agency 

memoranda.

Verification: Filings and Actions 

automated database 

tracks and calculates 

processing time from 

receipt date through to 

date of designation or 

registration.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

In FY 2008, as in the previous fiscal year, an unusually large 

proportion of new contract certifications concerned 

weather indexes and SFPs. Those contracts typically are 

easier to review than other contracts and, thus, the 

percentage of completed reviews for contracts certified in 

FY 2008 was significantly higher than anticipated. 

U.S. exchanges continued to innovate in FY 2008.

OneChicago requested approval of a SFP based on the 

streetTracks Gold Trust exchange traded fund (ETF). This 

contract raised issues with respect to the jurisdictional 

boundary between the CFTC and the SEC. The New York 

Mercantile Exchange and the Chicago Climate Exchange 

expanded their product lines of pollution allowances, 

including contracts based on the Regional Greenhouse Gas 

Initiative (RGGI). RGGI is a cap-and-trade program among 

10 Northeastern and Mid-Atlantic States designed to reduce 

greenhouse gas emissions from power plants. The Chicago 

Mercantile Exchange certified a futures contract based on 

the three-month Overnight Index Swap that is designed to 

closely replicate OTC swap contracts. It is reasonable to 

expect that exchanges will continue to introduce novel and 

complex products in the future.

Performance Highlights

Commission staff: 1) completed reviews of nearly 600 new 

contract certifications, 2) approved one commodity-based 

ETF SFP, 3) identified several exchange-certified SFPs 

that were based on securities that failed to meet listing 

standards, and 4) identified contract design flaws in several 

other contracts. In addition, Commission staff completed 

economic reviews of 20 foreign stock index futures 

contracts to ensure that the contracts meet the 

Commission’s cash-settlement price standards, are not 

readily susceptible to manipulation, and are based on 

broad-based stock indexes.
52 CFTC

Performance Measure 1.1.6 Percentage of rule change certification reviews completed within three months, to 

identify and correct deficiencies in exchange rules that make contracts susceptible to manipulation or trading abuses or 

result in violations of law.

Measurement: Percentage

Status: Effective

Data Source: Exchange certification 

filings and agency 

memoranda.

Verification: Filings and Actions 

automated database 

tracks and calculates 

processing time from 

receipt date through to 

date of designation or 

registration.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

The percentage of trading rule amendment certification 

reviews completed within three months of receipt by the 

Commission increased slightly over last year. This increase 

in performance is mainly due to the support this year of a 

temporary intern.

In spite of DMO’s accomplishments, for much of FY 2008 

the Division was understaffed relative to the volume of 

reviews it is required to accomplish. At times completion 

of certain rule amendment reviews, for example, those 

regarding contracts with very low trading volume, was 

delayed to allow staff to focus on more important matters, 

such as rule changes that created less risk to the markets. It 

is unlikely, given the submission of complex contracts and 

multifaceted trading rule submissions, and in light of the 

additional review responsibilities included in the Farm 

Bill, that performance will improve in the absence of 

increased staffing.

Performance Highlights

Commission staff completed reviews of 119 product 

rule amendments and 224 substantive trading rule 

amendments.
CFTC 53

P ERF O RMANCE SECTION

Performance Measure 1.2.1 Percentage of derivatives clearing organization applications demonstrating 

compliance with CFTC Core Principles.

Measurement: Percentage

Status: Results Not Demonstrated

Data Source: DCO applications(s) for 

registration.

Verification: Agency files containing 

applications, staff reviews, 

memoranda to the 

Commission, and 

proposed Orders.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

Two DCO applications were filed in the fourth quarter of 

FY 2008. The normal processing time for a DCO application is 90 days. Therefore, staff reviews of the two DCO 

applications will not be completed until FY 2009.

Consequently, data is insufficient to evaluate performance 

this fiscal year.

Performance Highlights

None to report.

9 No applications for registration as a DCO were received in FY 2006 or FY 2007.
54 CFTC

Performance Measure 1.2.2 Ratio of contracts surveilled per economist.

Measurement: Ratio

Status: Adequate

Data Source: Exchanges submit data to 

the Commission on all 

traded contracts, which 

are maintained in the 

Commission’s database.

Verification: Data is validated by 

internal program edits and 

quality checks in central 

database.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

The target ratio of contracts surveilled per economist is 

above ideal levels. For this reason, an “Adequate” Status of 

Performance Result has been selected in spite of the fact 

that the actual number of contracts surveilled per economist did meet expectations. To increase the efficiency of 

DMO’s surveillance efforts, similar contracts on the same 

underlying commodity are generally analyzed together.

Even though the number of contracts increased during the 

year, the increase was mostly due to additional products 

on existing commodities. These additional products may 

not materially add to the economists’ surveillance burden.

Thus, they were not counted as distinct contracts for the 

purpose of arriving at the relevant ratio. 

Performance Highlights

The ratio of contracts surveilled per economist is too high 

to ensure full surveillance coverage of all futures markets.

The efficiency and productivity of surveillance economists 

are very high, but they are being stretched too thin, with 

consequential effects on the adequacy of surveillance 

coverage for some markets.
CFTC 55

P ERF O RMANCE SECTION

Performance Measure 1.2.3 Percentage of contract expirations without manipulation.

Measurement: Percentage

Status: Effective

Data Source: Surveillance reports and 

large trader position 

reports.

Verification: Economists daily track 

and monitor futures 

expirations and economic 

fundamentals.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

This measurement examines the number of contract expirations without manipulation compared to the total 

number of futures and option expirations. The total 

number of expirations may vary throughout the year as 

different contracts enter and exit the market.

Performance Highlights

Surveillance of energy markets has been the greatest challenge during FY 2008. During this year, DMO has 

enhanced its data collection, information processing, and 

surveillance analyses to keep pace with the rapidly growing 

and changing energy markets. Special calls were issued to 

IntercontinentalExchange to obtain daily large trader 

reports on this OTC market. DMO started to receive and 

analyze daily NYMEX transaction data to detect possible 

manipulative schemes. Software enhancements were made 

to Integrated Surveillance System10 (ISS) to better display 

and analyze positions in deferred futures months.

10 Refer to the CFTC Information Technology Systems in the Appendix for a description of functionality.
56 CFTC

Strategic Goal Two: Market Users and Public

Goal Two: Protect market users and the public.

Outcome Objective 2.1: Violations of Federal commodities laws are detected and 

prevented.

n Annual Performance Goal 2.1: Violators have a strong probability of being 

detected and sanctioned. 

Outcome Objective 2.2: Commodity professionals meet high standards.

n Annual Performance Goal 2.2: No unregistered, untested, or unlicensed 

commodity professionals. 

Outcome Objective 2.3: Customer complaints against persons or firms registered 

under the Act are handled effectively and expeditiously.

n Annual Performance Goal 2.3: Customer complaints are resolved within one 

year from the date filed and appeals are resolved within six months.

Photo above is of staff from the CFTC Regional Office located in New York.
CFTC 57

P ERF O RMANCE SECTION

Performance Measure 2.1.1 Number of enforcement investigations opened during the fiscal year.

Measurement: Number

Status: Effective

Data Source: Agency documentation 

and reports maintained in 

the Practice Manager 

litigation management 

system.

Verification: Internal reports on 

investigations and 

litigation documented and 

maintained in internal 

Enforcement systems.

Lead Program Office 

Division of Enforcement

Performance Analysis & Review 

DOE met the performance target for FY 2008. Commencing 

in 2002, the complexity of Commission’s investigations 

has increased substantially over prior fiscal years (e.g., the 

Commission’s investigation of alleged energy market 

manipulation). As a result of these investigations, the 

complexity of the Commission’s cases filed and litigated 

also has increased substantially since FY 2002.

The Commission’s FY 2008 Plan target for this performance measure took into account both these factors and 

DOE’s FTE constraints. Despite these factors and 

constraints, the Commission exceeded its target for this 

performance measure, in part due to the unprecedented 

market conditions during FY 2008.

Performance Highlights

Although the Commission ordinarily conducts enforcement investigations on a confidential basis, in light of the 

unprecedented market conditions during FY 2008, the 

Commission took the unusual step of publicly disclosing 

the existence of several ongoing investigations of market 

misconduct including:

■ Silver Market Investigation. In September 2008, the 

Commission confirmed that DOE has been investigating complaints of misconduct in the silver market.

■ Cotton Futures Market Investigation. In June 2008, the 

Commission announced that DOE has been conducting 

an ongoing investigation of the February/March 2008 

price run-up in the cotton futures markets.

■ National Crude Oil Investigation. In May 2008, the 

Commission announced that in December of 2007, 

DOE launched a nationwide crude oil investigation 

into practices surrounding the purchase, transportation, storage, and trading of crude oil and related derivative contracts.

The specifics of these ongoing investigations remain confidential. All Commission enforcement inquiries are focused 

on ensuring that the markets are properly policed for 

manipulation and abusive practices.
58 CFTC

Performance Measure 2.1.2 Number of enforcement cases filed during the fiscal year.

Measurement: Number

Status: Effective

Data Source: Agency documentation and 

reports maintained in the 

Practice Manager litigation 

management system.

Verification: Final complaints for each 

litigation are recorded in 

internal Enforcement system 

and made public via the 

Commission’s Web site.

Lead Program Office 

Division of Enforcement

Performance Analysis & Review 

DOE met the performance target for FY 2008. Commencing 

in 2002, the complexity of Commission investigations has 

increased substantially over prior fiscal years (e.g., the 

Commission’s investigation of alleged energy market 

manipulation). As a result of these investigations, the 

complexity of the Commission’s cases filed and litigated 

also has increased substantially since FY 2002.

The Commission’s FY 2008 Plan target for this performance measure took into account both these factors and 

the Division’s FTE constraints.

Performance Highlights

Among the significant enforcement actions filed by the 

Commission during FY 2008 are the following:

■ CFTC v. Optiver US, LLC

On July 24, 2008, the Commission charged Optiver 

Holding BV, two of its subsidiaries (Optiver US, LLC 

(Optiver) and Optiver VOF), and three employees 

(Christopher Dowson (head trader of Optiver), Randal 

Meijer (head of trading and supervisor of Optiver and 

Optiver VOF) and Bastiaan van Kempen (Chief 

Executive Officer of Optiver)) with manipulation and 

attempted manipulation of NYMEX Light Sweet Crude 

Oil, New York Harbor Heating Oil, and New York 

Harbor Gasoline futures contracts during March 2007.

The complaint further charges Optiver and van Kempen 

with concealing the manipulative scheme and making 

false statements in response to an inquiry from NYMEX.

CFTC v. Optiver US, LLC, No. 08 CIV 6560 (S.D.N.Y.

filed July 24, 2008)

■ In re Kelly

On October 25, 2007, the Commission found that Paul 

K. Kelly, a former gasoline trader for British Petroleum 

(BP) Products North America Inc. attempted to manipulate the price spread between the November and 

December 2002 NYMEX unleaded gasoline futures 

contracts traded on October 31, 2002, the last day of 

trading for the November 2002 unleaded gasoline 

futures contract. Sanctions assessed included a civil 

monetary penalty ($400,000), and an order to comply 

with certain undertakings, including not applying for 

registration with the Commission. In re Kelly, CFTC 

Docket No. 08-01 (CFTC filed Oct. 25, 2007)
CFTC 59

P ERF O RMANCE SECTION

■ CFTC v. Lake Shore Asset Management Limited

On February 19, 2007, the Commission charged Philip 

J. Baker and the companies he controlled, registered 

CPO and CTA Lake Shore Asset Management Limited, 

the Lake Shore Group of Companies Inc., Ltd., Hanford 

Investments Ltd., and at least 12 commodity pools 

controlled by Baker, which operated as a common 

enterprise under variations of the name Lake Shore 

Alternative Financial Asset Fund; alleging that the 

defendants defrauded hundreds of commodity pool 

participants who collectively invested at least $300 

million to trade commodity futures contracts on U.S.

futures markets. CFTC v. Lake Shore Asset Management 

Limited, No. 07 C 3598 (N.D. Ill. amended Feb. 19, 

2007)

■ CFTC v. Hudgins

On May 13, 2008, the Commission charged George D.

Hudgins with fraud in connection with his operation 

of a commodity pool, which traded exchange-traded 

commodity futures and option contracts. Hudgins’s 

false representations included a declaration that the 

pool had an investment portfolio of approximately 

$80 million, when, in fact, the net value of the accounts 

associated with the pool was negative $100,199.38; i.e., 

the accounts were operating at a loss; the accounts 

associated with the pool suffered losses of more than 

$25 million from 2005 through 2007. CFTC v. Hudgins, 

No. 608CV187 (E.D. Tex. filed May 13, 2008)

■ CFTC v. Sentinel Management Group, Inc., et al.

On April 28, 2008, the Commission charged registered 

FCM Sentinel Management Group, Inc. and its president and chief executive officer, Eric A. Bloom, and 

former senior vice-president, Charles K. Mosley, with 

fraud and segregation violations involving their 

handling of $562 million in commodity customer 

segregated funds. CFTC v. Sentinel Management Group, 

Inc., et al., No. 08CV2410 (N.D. Ill. filed April 28, 

2008)

■ In re MF Global Inc.

On December 26, 2007, the Commission found that 

MF Global Inc. (MFG), a registered FCM, and Thomas 

Gilmartin, a registered AP of MFG, committed supervision and record-keeping violations arising out of their 

mishandling of hedge fund accounts that were carried 

by MFG and managed by Paul Eustace and the 

Philadelphia Alternative Asset Management Company, 

LLC (PAAM) that sustained net losses of approximately 

$133 million. Sanctions assessed included civil 

monetary penalties (MFG $2 million; and Gilmartin 

$250,000), and an order that Gilmartin comply with 

certain undertakings, including agreeing to never apply 

for registration or claim exemption from registration 

with the CFTC in any capacity. In re MF Global Inc., 

CFTC Docket No. 08-02 (CFTC filed Dec. 26, 2007) 

■ In re Karvellas

On April 8, 2008, the Commission found that Steven 

Karvellas, a registered floor broker and former board 

member of the NYMEX, diverted profitable NYMEX 

natural gas futures trades that had been filled for 

customers to his own account and also found that 

Karvellas ordered the destruction of an order ticket to 

conceal his involvement in the scheme. Sanctions 

included a cease and desist order, permanent trading 

ban, order to never apply for registration with the 

Commission, and a $375,000 civil monetary penalty.

In re Karvellas, CFTC Docket No. 08-08 (CFTC filed 

April 8, 2008)
60 CFTC

Performance Measure 2.1.3 Percentage of enforcement cases closed during the fiscal year in which the 

Commission obtained sanctions (e.g. civil monetary penalties, restitution and disgorgement, cease and desist orders, 

permanent injunctions, trading bans, and registration restrictions).

Measurement: Percentage

Status: Effective

Data Source: Agency documentation and 

reports maintained in the 

Monthly Status Report, 

Practice Manager litigation 

management system, 

Commission Proceedings 

Bulletin, and press releases.

Verification: Final orders for each litigation 

recorded in internal Enforcement system.

Lead Program Office 

Division of Enforcement

Performance Analysis & Review 

Performance target was almost met for FY 2008. During 

the FY 2008, DOE closed a total of 66 enforcement cases.

In all but two of these closed cases, the Commission 

obtained sanctions (e.g., civil monetary penalties, restitution and disgorgement, cease and desist orders, permanent 

injunctions, trading bans, and registration restrictions) 

against one or more of the respondents/defendants.

The two cases closed without sanctions involved adverse 

rulings on the Commission’s jurisdiction over certain forex 

transactions. The recent legislation reauthorizing the CFTC 

provides the agency with enhanced authority with respect 

to off-exchange retail foreign currency. 

Staff are required to submit all final orders for each litigation as part of closing activities for their files. These orders 

are recorded in internal Enforcement systems (Practice 

Manager).

Performance Highlights

Among the significant enforcement actions filed by the 

Commission during FY 2008 are the following:

■ CFTC v. BP Products North America Inc. 

On October 25, 2007, the court approved a consent 

order of permanent injunction and other relief settling 

charges brought by the Commission against BP for 

manipulating and attempting to manipulate the price 

of TET propane in February 2004, for cornering the 

market for TET propane in February 2004, and for 

attempting to manipulate the price of TET propane in 

April 2003. The consent order requires that BP pay a 

$125 million civil monetary penalty to the CFTC, 

establish a compliance and ethics program, and install 

a monitor to oversee BP’s trading activities in the 

commodities markets. The consent order also recognizes the payment of approximately $53 million by BP 

into a restitution fund for victims. CFTC v. BP Products 

North America Inc., No. 06-C-3503 (N.D. Ill.) 

11 This performance result was misstated as 100 percent in the FY 2007 Performance and Accountability Report; rather, of the 63 enforcement actions 

closed during FY 2007, one enforcement action was closed without sanctions due to an adverse trial court ruling on factual grounds, which decreased 

results to 98 percent. 
CFTC 61

P ERF O RMANCE SECTION

■ CFTC v. Energy Transfer Partners, L.P., et al. 

On March 17, 2008, the court entered an order settling 

charges against Energy Transfer Partners, L.P. (ETP) and 

three ETP subsidiaries (Energy Transfer Company, 

Houston Pipeline Company, and ETC Marketing, Ltd.).

The defendants were charged with attempting to 

manipulate natural gas prices at the Houston Ship 

Channel (HSC) delivery hub from September 2005 to 

early December 2005. Sanctions assessed included a 

permanent injunction against all defendants and an 

order that they pay, jointly and severally, a $10 million 

civil monetary penalty. CFTC v. Energy Transfer Partners, 

L.P., et al., No. 3-07CV1301-K (N.D. Tex. filed July 26, 

2007, settled March 17, 2008) 

■ CFTC v. Equity Financial Group LLC, et al. 

On February 4, 2008, the Commission announced a 

judgment against CFTC defendants Robert W. Shimer, 

Vincent J. Firth, and Equity Financial Group LLC 

following a two-week trial that ended September 6, 

2007. The court ordered more than $8 million in sanctions, including disgorgement of ill-gotten gains 

totaling $2,514,930 and payment of a civil monetary 

penalties totaling $5,529,900. The court found that 

the penalties were warranted by the egregious nature of 

the defendants’ roles in fraudulently soliciting millions 

of dollars from investors in Shasta Capital Associates 

for investment in Tech Traders, a fraudulently run 

commodity pool that routinely touted double-digit 

monthly gains trading commodity futures, when it 

actually lost millions of dollars. CFTC v. Equity Financial 

Group LLC, et al., No. 04 CV 1512 (D.N.J.) 

■ CFTC v. Eustace, et al.

On August 13, 2008, the court ordered Eustace to pay 

more than $279 million in restitution and a $12 million 

civil penalty in this commodity pool fraud action.

The court also ordered PAAM to pay restitution of approximately $276 million, subject to offset by prior disbursements and payments by Eustace, and a $8.8 million civil 

monetary penalty. At the outset of the litigation, the 

CFTC’s action froze all the assets under the control of 

PAAM and Eustace and preserved more than $70 million 

for return to pool participants. The CFTC also obtained 

the appointment of a receiver to recover and distribute 

funds to defrauded participants. Through related receivership litigation, an additional $96 million has been 

obtained to date for the benefit of defrauded pool participants. CFTC v. Eustace, et al., No. 05CV2973 (E.D. Pa.) 

■ CFTC v. FxTrade Financial, LLC

On October 18, 2007, the court issued a decision 

against Gordon Jack Vandeveld, a broker with FxTrade 

Financial, LLC (FxTrade), finding that he committed 

forex futures fraud. The court also issued an order of 

default judgment and permanent injunction against: 

FxTrade; FxTrade principal Jeffrey A. Mischler; FxTrade 

brokers Mary Jo Sibbitt and Ernst H. Behr; and Reverie 

LLC. The court had earlier entered an order of default 

judgment and permanent injunction against FxTrade 

principal and broker Lee N. Romano II after he failed 

to participate in the pretrial process. With issuance of 

these orders, the defendants in this CFTC anti-fraud 

forex action were ordered to pay collectively $9,946,000 

in monetary sanctions, which includes $9,120,000 in 

civil monetary penalties and $826,000, jointly and 

severally, in restitution to defrauded customers. CFTC 

v. FxTrade Financial, LLC, No. 04-2181 (W.D. Tenn.) 
62 CFTC

Performance Measure 2.1.4 Cases filed by other criminal and civil law enforcement authorities during the 

fiscal year that included cooperative assistance from the Commission.

Measurement: Number

Status: Effective

Data Source: Cooperating authorities provide 

notice to DOE of related civil 

complaints, criminal information, 

and indictments. Cooperative 

enforcement matters are noted in 

the Practice Manager litigation 

management system.

Verification: Internal Enforcement system and 

the U.S. Judiciary Public Access 

to Court Electronic Records 

Services Center.

Lead Program Office 

Division of Enforcement

Performance Analysis & Review 

Performance target was met for FY 2008. The Commission 

believes that its performance in cooperative criminal and 

civil enforcement was effective. During the rating period, 

the Commission continued to devote significant resources 

to cooperative enforcement with other criminal and civil 

law enforcement authorities. DOE’s performance, during 

FY 2008, was influenced by the culmination of a joint 

effort by the Commission and the New York County 

District Attorney’s Office (NYCDA) to investigate abusive 

trading practices on the NYMEX, which resulted in seven 

related criminal actions (see discussion in Performance 

Highlights, below).

Performance Highlights

Among the significant enforcement actions filed by the 

Commission during FY 2008 are the following:

■ CFTC v. BP Products North America Inc. 

On October 25, 2007, in a filing related to the 

Commission’s settlement of its charges against BP, the 

Criminal Division, Fraud Section of DOJ simultaneously filed an information and entered into a deferred 

prosecution agreement with BP America Inc. based 

upon the same underlying conduct as the Commission 

action. DOJ deferred prosecution agreement requires 

BP America Inc. to pay a $100 million criminal penalty, 

plus $25 million into a consumer fraud fund, as well as 

payments to a restitution fund and installment of a 

monitor. Accordingly, the total monetary sanction that 

BP is required to pay to resolve the civil and criminal 

aspects of the unlawful conduct in the TET propane 

market is approximately $303 million. CFTC v. BP 

Products North America Inc., No. 06-C-3503 (N.D. Ill.) 
CFTC 63

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■ CFTC v. Eustace, et al. 

On December 26, 2007, the Receiver ad litem for PAAM 

announced that he had settled his action against MFG 

and Gilmartin arising from the same misconduct as the 

Commission’s action; the court entered the settlement 

that requires MFG and Gilmartin to pay a total of $75 

million, consisting of $69 million for the benefit of the 

receivership estate, which the receiver manages on behalf 

of investors in the funds traded by Eustace and PAAM; 

$6 million to reimburse the estate for the litigation costs 

of pursuing the claims against MFG and Gilmartin.

CFTC v. Eustace, et al., No. 05CV2973 (E.D. Pa.) 

■ In re Karvellas, In re Maloney, In re Tremblay, In re Rosenthal 

Collins Group, L.L.C., and In re Perez 

In an extensive cooperative law enforcement effort, in 

FY 2008, the Commission and the NYCDA conducted 

an investigation of abusive trading practices on the 

NYMEX resulting in a series of related civil and criminal 

actions. The Commission’s actions found violations 

related to fraudulent trade allocations (Steven Karvellas, 

Thomas Maloney, and Ryan Tremblay) and the 

improper disclosure of material, non-public NYMEX 

information (Alvin Perez). Based upon the same 

misconduct, the NYCDA’s criminal actions charged 

these individuals with violation of the Martin Act, a 

New York State statute that prohibits, among other 

things, the fraudulent sale of commodities products 

(Karvellas, Maloney, and Tremblay) and with the misdemeanor crime of Commercial Bribe Receiving in the 

Second Degree (Perez). In re Karvellas, CFTC Docket 

No. 08-08 (CFTC filed Apr. 8, 2008); In re Maloney, 

CFTC Docket No. 08-09 (CFTC filed Apr. 8, 2008); In re 

Tremblay, CFTC Docket No. 08-13 (CFTC filed Aug. 28, 

2008); In re Rosenthal Collins Group, L.L.C., CFTC Docket 

No. 08-12 (CFTC filed Aug. 26, 2008); In re Perez, CFTC 

Docket No. 08-11 (CFTC filed Aug. 26, 2008)
64 CFTC

Performance Measure 2.2.1 Percentage of self-regulatory organizations that comply with CFTC Core 

Principles.

Measurement: Percentage

Status: Effective

Data Source: Documentation from SROs 

and FCMs under review, 

agency reports, and files 

from reviews and analyses.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits at SROs and FCMs.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

DCIO met the performance target for FY 2008. DCIO 

conducts periodic, routine examinations of the financial 

and sales practice programs of the SROs for the purpose of 

assessing the SROs’ compliance with Commission regulations, including applicable CFTC Core Principles.

With respect to applicable CFTC Core Principles, DCIO 

completed a review of the financial surveillance program of 

one SRO in FY 2008. In addition, DCIO initiated an examination of the financial surveillance program of another SRO 

during FY 2008, and the examination’s focus is on the SRO’s 

oversight of their member FCMs. DCIO has not identified 

any issues that would indicate a failure of the SRO’s program 

to satisfy Commission regulations and applicable CFTC 

Core Principles. DCIO staff will continue the examination 

and report its findings to the Commission in FY 2009.

Performance Highlights

The completed review assessed the SRO’s financial surveillance program, including staffing levels and the conduct of 

examinations of member FCMs. DCIO concluded that the 

SRO’s program was compliant with Commission regulations and applicable CFTC Core Principles.
CFTC 65

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Performance Measure 2.2.2 Percentage of derivatives clearing organizations that comply with CFTC Core 

Principles.

Measurement: Percentage

Status: Effective

Data Source: Documentation from 

DCOs, agency reports and 

files, and financial 

surveillance materials.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits at DCOs.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

DCIO met the performance target for FY 2008. Two reviews 

to assess compliance with certain CFTC Core Principles were 

undertaken during FY 2008. One review of two DCOs 

focused on CFTC Core Principles of financial resources and 

risk management, while a second review of three DCOs 

focused on the Core Principle of default procedures.

In addition to these reviews, DCIO staff continued a joint 

review with DMO to assess business continuity plans of six 

DCOs. DCIO staff will continue to conduct these reviews 

and report its findings to the Commission in FY 2009.

In addition to conducting these reviews, DCIO staff conduct 

financial surveillance of DCOs and clearing members on a 

daily basis. Staff have identified no instances of noncompliance. Another component of DCO oversight is the review 

of rules and rules changes of DCOs. During the past fiscal 

year, 63 rule submissions, many containing multiple rules, 

were filed by DCOs under the self-certification provisions of 

the Act. Staff reviewed each of the submissions and found 

none that violated CFTC Core Principles.

Performance Highlights

None to report.
66 CFTC

Performance Measure 2.2.3 Percentage of professionals compliant with standards regarding testing, licensing, 

and ethics training.

Measurement: Percentage

Status: Effective

Data Source: NFA’s audit reports.

Verification: NFA audits and the 

agency’s ongoing 

oversight of NFA’s 

compliance and 

registration programs.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

DCIO met the performance target for FY 2008: 100 percent 

of professionals were compliant with standards regarding 

testing, licensing, and ethics training.

Performance Highlights

In May 2008, the Farm Bill became effective. Within the 

Farm Bill are several amendments to the Act concerning 

off-exchange retail forex transactions. Among other things, 

the legislation: creates a new category of Commission 

registrant eligible to act as a counterparty in these transactions, known as a “retail foreign exchange dealer” (RFED); 

provides financial requirements for FCMs, FCM affiliates, 

and RFEDs, who act as counterparties in retail forex transactions; and permits the intermediation of such transactions by registrants. In general, the Farm Bill establishes 

that those involved in offering forex products to retail 

customers should be registered with the Commission 

unless they are otherwise regulated. DCIO staff are drafting 

proposed regulations for Commission consideration that 

will address off-exchange retail forex transactions and 

require the registration of all intermediaries and RFEDs, 

and that will establish financial requirements for the new 

entities. Staff are also reviewing the Commission’s existing 

regulations regarding registration, maintenance of books 

and records, anti-fraud, risk-disclosure and supervisory 

requirements in an effort to identify those sections that 

will have to be amended or addressed in light of the 

legislation.
CFTC 67

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Performance Measure 2.2.4 Percentage of self-regulatory organizations that comply with requirement to 

enforce their rules.

Measurement: Percentage

Status: Effective

Data Source: Documentation from 

SROs, agency reports, and 

files from reviews and 

analyses.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits at SROs.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

DCIO met the performance target for FY 2008. DCIO 

conducts periodic, routine examinations of the financial 

and sales practice programs of the SROs for the purpose of 

assessing the SROs’ compliance with Commission regulations, including applicable CFTC Core Principles. During 

FY 2008, DCIO completed examinations on the compliance 

programs of two SROs. One examination focused on the 

SRO’s financial surveillance program, and the second examination focused on the SRO’s program for the oversight of 

disclosure documents issued by CPOs and CTAs. DCIO also 

initiated examinations of the financial surveillance programs 

of two other SROs during FY 2008, and the examinations’ 

focus is on the SROs’ oversight of their member FCMs. In 

addition, DCIO staff initiated a review of an SRO’s arbitration program. At this stage of the examinations, DCIO has 

not identified any issues that would indicate a failure of the 

SROs’ programs to satisfy Commission regulations, 

including applicable CFTC Core Principles. DCIO staff will 

continue to conduct these examinations and report its 

findings to the Commission in FY 2009.

CFTC Core Principle 11 provides, in relevant part, that a 

DCM shall establish and enforce rules to ensure the financial integrity of FCMs and the protection of customer funds.

DCMs, in their capacity as SROs, receive and review monthly 

financial reports submitted by FCMs for the purpose of 

assessing whether the FCMs are in compliance with the 

Commission’s and SROs’ minimum financial requirements, 

including requirements relating to the safeguarding of 

customer funds. In addition, Commission regulations and 

SRO rules require an FCM to file a notification with the 

Commission and its designated SRO whenever such FCM 

fails to meet its minimum capital or segregation requirement. DCIO’s review and analysis of FCM financial reports 

and notifications, including appropriate coordination with 

the SROs during FY 2008, demonstrates that the SROs are 

complying with CFTC Core Principle 11.

Performance Highlights

The two completed reviews assessed an SRO’s financial 

surveillance program including staffing levels, and the 

conduct of examinations of member FCMs, and another 

SRO’s program for the oversight of disclosure documents 

issued by CPOs and CTAs. DCIO concluded that the SROs’ 

compliance programs were compliant with Commission 

regulations.
68 CFTC

Performance Measure 2.2.5 Percentage of total requests receiving CFTC responses for guidance and advice.

Measurement: Percentage (rounded to the 

nearest 5%)

Status: Effective

Data Source: Signed letters (formal) and 

email and telephone 

responses (informal).

Verification: Agency files maintained in 

chronological files and 

responses to formal 

requests published on the 

Commission’s Web site.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

DCIO met the performance target for FY 2008. DCIO staff 

respond to numerous requests for guidance and advice on 

the CEA and Commission regulations each year. Requests 

are received from members of the public, market participants, intermediaries, SROs, foreign entities, and others.

These requests may be formal, such as written requests for 

no-action, interpretative, or exemption letters. DCIO also 

receives numerous informal requests for guidance and 

advice via email and phone calls. Although DCIO responds 

to all requests received, it is not always possible for DCIO to 

respond within the fiscal year that it receives a request.

Performance Highlights

In FY 2008, DCIO responded to requests for interpretations of the Commission’s registration requirements, and 

issued two interpretative letters addressing whether certain 

types of conduct required registration as an IB. In the two 

interpretations, DCIO responded that technology providers 

who provide customers with software applications with 

the ability to route orders for the purchase and sale of 

commodity futures need not register as IBs. The interpretations were based, in part, on representations that customers 

would establish relationships with IBs or FCMs of their 

own choosing, the platforms would not produce express 

“buy” or “sell” signals, and the providers would not have 

membership with trading privileges on a DCM or DTEF.

DCIO also issued a letter providing guidance to CPOs on 

complying with the financial reporting requirements set 

forth in Part 4 of the Commission’s regulations. The letter 

assisted CPOs in meeting their regulatory requirements by 

highlighting recent regulatory changes affecting the financial filings required of CPOs, and identified common deficiencies observed in prior year financial filings.
CFTC 69

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Performance Measure 2.3.1(a) Percentage of filed complaints resolved within one year of the filing date for 

Voluntary Proceedings.

Measurement: Percentage

Status: Effective

Data Source: Reparations case tracking 

system and Judgment 

Officer Disposition report.

Verification: Weekly and monthly 

reports and statistics 

submitted by Judgment 

Officer.

Lead Program Office 

Office of Proceedings

Performance Analysis & Review 

A claim of any size can be adjudicated through the voluntary proceeding if all complainants and respondents consent 

to use this approach and if the complainant submits the 

required $50 filing fee. All evidence is submitted in writing 

and there is no oral hearing. The decision issued by the 

Judgment Officer (JO) is final and is not appealable. 

Prior to FY 2007, data for the voluntary, summary, and 

formal proceedings were combined with a goal of completing 

all proceedings within one year of the date the complaint 

was received. In FY 2007, the performance goal was re-examined and revised to provide goals and results for each of the 

different types of proceedings. The change reflects the impact 

of the time required to correct complaint deficiencies, 

prepare and submit documentary evidence, and prepare for 

the hearings, as well as the complexity of the cases.

The voluntary proceedings tend to take less time because, 

given the non-appealable nature of the proceedings and the 

more informal nature of the resolution process, the parties 

are more inclined to settle and the proceeding is completed 

through a review of written documentation. 

The summary and formal proceedings take more time 

because of the evidentiary and hearing requirements of the 

proceedings; the summary tend to take slightly longer, in 

part, because more parties are pro se. A variety of other 

factors can affect the length of the proceeding, including 

motions for extensions of time and stays pending payment 

of penalties agreed to in settlement.

Performance Highlights

In FY 2008, the JO issued three decisions in voluntary cases.

Of those, two were completed in less than one year and the 

third case was completed in just over one year (367 days).

Therefore, although the percentage of cases resolved within 

one year or less of filing is 67 percent, the resolution of 

voluntary proceedings complaints is still timely and effective, supporting the outcome measure, objective, and goal.
70 CFTC

Performance Measure 2.3.1(b) Percentage of filed complaints resolved within one year and six months of the 

filing data for Summary Proceedings.

Measurement: Percentage

Status: Effective

Data Source: Reparations case tracking 

system and Judgment 

Officer Disposition report.

Verification: Weekly and monthly 

reports and statistics 

submitted by Judgment 

Officer.

Lead Program Office 

Office of Proceedings

Performance Analysis & Review 

If the complainant does not select the voluntary proceeding 

and the claim amount is $30,000 or less, the complainant 

must select the summary proceeding and submit a $125 

filing fee. In the summary proceeding process, evidence is 

submitted in writing and an oral hearing may be held by 

telephone. The decision by the JO is appealable to the 

Commission and, ultimately, to the U.S. Court of Appeals.

As explained in Performance Measure 2.3.1(a) above, the 

Commission previously measured all cases together, with a 

goal of resolving all types of cases (voluntary, summary, and 

formal) within one year of filing. However, because of 

differences in the three decisional processes and the external 

factors that can affect them, a new goal of resolving 50 

percent of summary complaints within one year and six 

months was set in FY 2007. In FY 2008, the goal was 

increased to 60 percent. In resolving the summary 

proceeding complaints, various external factors, including 

complaint deficiencies, requests for extension of time, and 

discovery issues may impact the ability to resolve the 

complaint in a speedy manner.

Performance Highlights

In FY 2008, 57 percent of the summary proceeding 

complaints were resolved in one year and six months.

Of the 14 cases resolved, eight were resolved in under one 

year and six months. The delays in the remaining six cases 

included, for example, multiple deficiencies in the original 

complaint that required correction, multiple deficient 

answers from respondents that required correction, and 

requests for extension of time by the parties. Because this 

percentage is only slightly under the goal, and given the 

small number of cases decided, the resolution of these cases 

effectively supports Strategic Goal Two.
CFTC 71

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Performance Measure 2.3.1(c) Percentage of filed complaints resolved within one year and six months of the 

filing date for Formal Proceedings.

Measurement: Percentage

Status: Effective

Data Source: Reparations case tracking 

system and Administrative 

Law Judge’s Disposition 

reports.

Verification: Weekly and monthly 

reports and statistics 

submitted by Administrative Law Judges.

Lead Program Office 

Office of Proceedings

Performance Analysis & Review 

The formal proceeding can be selected if the complainant 

does not select the voluntary proceeding and if the claim 

amount is more than $30,000. The complainant must 

submit a $250 filing fee. In addition to the submission of 

documentary evidence, an oral hearing may be held in a 

location that is, to the extent possible, convenient to the 

parties. The decision is appealable to the Commission and 

ultimately to the U.S. Court of Appeals. 

As explained in Performance Measure 2.3.1(a) above, the 

Commission previously measured all cases together, with a 

goal of resolving all types of cases (voluntary, summary, and 

formal) within one year of filing. However, because of differences in the three decisional processes and the external factors 

that can affect them, a new goal of resolving 50 percent of 

formal complaints within one year and six months was set in 

FY 2007. Because of the success in meeting this goal in 

FY 2007, the goal was increased to 90 percent in FY 2008.

Various external factors affect the timely processing and 

resolution of complaints, including: the facts and complexity 

of the case, whether the parties are cooperative in discovery 

and prepare and submit their evidence quickly, whether any 

procedural disputes arise, and whether an oral hearing is 

required (and, if so, when it can be scheduled.) Pro se 

complainants and inexperienced attorneys also impact the 

amount of time it takes to process this type of case. 

Performance Highlights

In FY 2008, 73 percent of the formal proceeding complaints 

were resolved in one year and six months. The Administrative 

Law Judges resolved a total of 11 formal complaints during 

FY 2008. Of those, two cases skewed the statistics: one case, 

even excluding a period during which the case was stayed, 

took 1,038 days; the other case took a total of 1,019 days to 

resolve. Excluding those two cases, eight of the cases were 

resolved within one year and six months and the ninth case 

took only 16 days longer than that period. The two outlying 

cases were lengthy for a number of reasons: deficiencies in 

the complaint that took several months to resolve; postponement and rescheduling of hearings, which occurred 

seven times in one case; and a lengthy discovery period.

With those cases as exceptions, the goal of resolving cases 

within one year and six months was effectively met.
72 CFTC

Performance Measure 2.3.2 Percentage of appeals resolved within six months.

Measurement: Percentage

Status: Effective

Data Source: Opinions and orders 

issued by the Commission.

Verification: Final opinions and orders 

are posted on the 

Commission’s Web site. 

Pending cases are 

maintained by the 

Secretariat, status reports 

are issued monthly.

Lead Program Office 

Office of General Counsel

Performance Analysis & Review 

The performance of OGC under this measure is effective, 

exceeding the goal for the year (5o percent of appeals 

resolved within six months). The performance also is effective because OGC exceeded its goal despite substantial 

constraints on its ability to control ultimate outcomes under 

this measure. Once an appeal is filed, its resolution may be 

delayed by one or more appealing parties, who may seek 

extensions of filing deadlines. After OGC staff review a case 

and make a recommendation to the Commission regarding 

its resolution, OGC no longer controls the case. The case 

rests with the Commissioners and their advisors, who face 

competing priorities and who may take time to attempt to 

reconcile any differences in viewpoint among them. Finally, 

the performance of OGC this year particularly warrants 

being deemed effective because the performance measure 

was exceeded in a year when OGC continued operating with 

a substantially reduced professional staff.

OGC will exceed its planned goal for the second year in a 

row, although this year’s margin is smaller than that achieved 

in FY 2007. As was the case last year, the increased number 

of cases resolved within six months resulted primarily from 

the disposition of matters through delegated authority. 

Performance Highlights

In FY 2008, the Commission reiterated the importance of 

maintaining the user-friendly nature of the customer reparations forum. 

The Commission confirmed its longstanding interpretation 

of Section 14(d) of the CEA as allowing prevailing reparation complainants to have their awards enforced in federal 

district courts expeditiously as “local judgments” under 28 

U.S.C. 1963. (Numbers v. Moore). At the CFTC’s request, 

Congress subsequently amended Section 14(d) to state 

expressly that reparation awards shall be treated as local 

judgments. 

The Commission, exercising its rarely used authority to take 

sua sponte review of an initial decision, determined that 

sanctions imposed on the complainant and a respondent 

for deficient responses to a prehearing order constituted an 

abuse of discretion. The Commission offered complainant 

an opportunity for a hearing. Wade v. Chevalier.
CFTC 73

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The Commission vacated an initial decision on remand, 

holding that the ALJ, ignoring earlier guidance, again held 

the parties to overly strict litigating standards and abused 

his discretion by imposing sanctions prohibiting them from 

testifying and cross-examining each other. The Commission 

vacated the initial decision and remanded and reassigned 

the case. Anderson v. Beach.

Also, the Commission affirmed an initial decision 

dismissing an IB’s complaint against its clearing FCM and 

others for lost commission revenue. The complainant 

alleged that the clearing broker required it to refer customers 

to a CTA that gave advice resulting in losses to complainant’s customers. The Commission held that complainant 

sought relief not available under Section 14(a) of the CEA, 

which limits reparation awards to “actual damages proximately caused” by a violation of the CEA. The Commission 

also held that as a NFA member, the complainant was 

required to resolve its claims against the clearing broker 

and the advisor (also NFA members) through an NFA arbitration. Los Angeles Trading Group, Inc. v. Peregrine Financial 

Group, Inc.
74 CFTC

Strategic Goal Three: Industry

Goal Three: Ensure market integrity in order to foster open, competitive, and financially 

sound markets

Outcome Objective 3.1: Clearing organizations and firms holding customer funds have sound 

financial practices.

n Annual Performance Goal 3.1: No loss of customer funds as a result of firms’ 

failure to adhere to regulations. No customers prevented from transferring funds from 

failing firms to sound firms. 

Outcome Objective 3.2: Commodity futures and option markets are effectively self-regulated.

n Annual Performance Goal 3.2: No loss of funds resulting from failure of self-regulated 

organizations to ensure compliance with their rules. 

Outcome Objective 3.3: Markets are free of trade practice abuses.

n Annual Performance Goal 3.3: Minimize trade practice abuses. 

Outcome Objective 3.4: Regulatory environment is flexible and responsive to evolving market 

conditions.

n Annual Performance Goal 3.4: Rulemakings issued and requests responded to reflect 

the evolution of the markets and protect the interests of the public.

Photo above is of staff from the CFTC Regional Office located in Kansas City.
CFTC 75

P ERF O RMANCE SECTION

Performance Measure 3.1.1(a) Lost Funds: Number of customers who lost funds.

Measurement: Number

Status: Effective

Data Source: Agency database of financial 

information from 1-FR-FCM 

and FOCUS reports, and 

related regulatory notices.

Verification: Exchanges’ daily trading 

data and FCMs’ financial 

filings are maintained in 

Stressing Positions at Risk 

(SPARK12) and 1-FR data 

systems.

11 Refer to CFTC Information Technology Systems in the Appendix for a description of functionality.

Performance Measure 3.1.1(b) Lost Funds: Amount of funds lost.

Measurement: Dollars

Status: Effective

Data Source: Agency database of financial 

information from 1-FR-FCM 

and FOCUS reports, and 

related regulatory notices.

Verification: Exchanges’ daily trading 

data an d FCMs’ financial 

filings are maintained in 

SPARK and 1-FR data 

systems.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

Performance target was met for FY 2008. During FY 2008, no 

customers who deposited funds with FCMs for trading on 

DCMs experienced any losses as a result of the FCM’s failure 

to adhere to Commission regulations. However, a registered 

FCM filed for bankruptcy protection in August 2007. DCIO 

is continuing to monitor the FCM’s bankruptcy proceedings 

and, as of September 30, 2008, no customers trading on 

DCMs have lost funds due to the FCM’s bankruptcy. 

FCMs are required to segregate their own assets from all 

customer funds deposited for trading on DCMs in designated accounts with a bank, trust company, clearing organization, or other FCM. FCMs holding funds for customers 

trading on non-U.S. contract markets are required to comply 

with Part 30 of the Commission’s regulations with respect 

to the custody of the customers’ funds. 

FCMs also are required to prepare daily calculations demonstrating compliance with the customer funds custody 

requirements. These calculations must be prepared by 12:00 

Noon and must demonstrate compliance as of the end of 

business on the previous business day. 
76 CFTC

DCIO conducts financial and risk surveillance activities to 

closely monitor the operations of FCMs in possession of 

customer funds. These surveillance activities include DCIO’s 

SPARK system, combined with required financial warning 

notices from the FCMs and constant market monitoring. 

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

The failure to meet the FY 2008 performance plan is not 

viewed as a performance deficiency. The number of rulemakings to ensure market integrity and financial soundness is not 

a number that can be precisely predetermined. The final 

number of rulemakings is driven, in part, by changes in the 

marketplace, or in the structure of exchanges, clearing organizations, and intermediaries that operate within that marketplace. The number can be a function of what is needed to 

allow appropriate market interrelationships to be maintained 

and to allow registered entities to operate in the most efficient manner possible. These factors may not be foreseeable 

at the time the performance estimate is prepared.

In addition, the need for a rulemaking may not be known, 

or may not have reached a decision-making point until 

further analysis, study and other actions or events take place.

This also can account for a difference between the fiscal year 

plan and the actual outcome. In this connection, DCIO initiated an in-depth review of FCM investment of customer 

funds pursuant to Commission regulation 1.25, and assessed 

possible amendments to the FCM capital requirement 

pursuant to Commission regulation 1.17 as a result of 

market developments that have taken place in 2008.

The analysis of the data and follow-up work will not be 

completed until FY 2009. DCIO staff will likely recommend 

to the Commission that it amend regulations 1.25 and 1.17 

as a result of its review.

Performance Highlights

None to report.

Performance Highlights

There were no losses of regulated customer funds due to 

firm failures or the inability of customers to transfer their 

funds from a failing firm to a sound firm in FY 2008.

Performance Measure 3.1.2 Number of rulemakings to ensure market integrity and financially sound markets.

Measurement: Number

Status: Adequate

Data Source: Code of Federal Regulations; proposed and final 

amendments to regulations.

Verification: Proposed and final 

regulations are published in 

the Federal Register and 

posted on the Commission’s 

Web site.
CFTC 77

P ERF O RMANCE SECTION

Performance Measure 3.1.3 Percentage of clearing organizations that comply with requirement to enforce 

their rules.

Measurement: Percentage

Status: Effective

Data Source: Documentation from 

DCOs under review, 

agency reports, files, and 

financial surveillance 

materials.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits at DCOs.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

Performance target was met for FY 2008. Two reviews to 

assess compliance with Commission regulations, including 

applicable CFTC Core Principles, were undertaken during 

FY 2008. One review of two DCOs focuses on CFTC Core 

Principles of financial resources and risk management, while 

a second review of three DCOs focuses on the Core Principle 

of default procedures. In addition to these reviews, DCIO 

staff continued a joint review with DMO to assess the 

business continuity plans of six DCOs. DCIO staff will 

continue to conduct these reviews and report its findings to 

the Commission in FY 2009.

In addition to conducting these reviews, DCIO staff conduct 

financial surveillance of DCOs and clearing members on a 

daily basis. Staff have identified no instances of noncompliance. Another component of DCO oversight is the review 

of rules and rules changes filed by DCOs with the 

Commission. During the past fiscal year, 63 rule submissions, many containing multiple rules, were filed by DCOs 

under the self-certification provisions of the Act. Staff 

reviewed each of the submissions and found none that 

violated Commission regulations.

Performance Highlights

None to report.
78 CFTC

Performance Measure 3.2.1 Percentage of intermediaries who meet risk-based capital requirements.

Measurement: Percentage

Status: Effective

Data Source: Agency database of 

financial information from 

1-FR-FCM and FOCUS 

reports, and related 

regulatory notices.

Verification: Review and analysis of 

exchanges’ daily trading 

data and FCMs’ financial 

filings in SPARK and 1-FR 

data systems.

Lead Program Office 

Division of Clearing and Intermediary Oversight

Performance Analysis & Review 

Performance target was met for FY 2008. The Act, 

Commission regulations, and SRO rules require FCMs to 

comply with minimum financial requirements and related 

reporting requirements at all times. Included in the 

minimum financial requirements is the Commission’s and 

SROs’ risk-based capital requirement. 

Any FCM failing to meet the risk-based capital requirement 

must provide immediate notice to the Commission and to 

the firm’s designated SRO. Furthermore, Commission regulations provide that any FCM that fails to meet minimum 

capital requirements, including the risk-based capital 

requirement, and cannot timely come back into compliance 

with these requirements must transfer all customer accounts 

and immediately cease operating as an FCM until it can 

demonstrate compliance. 

The Commission and SROs monitor FCMs’ compliance 

with the risk-based capital requirement through review of 

monthly financial reports, regulatory notices, and the 

conduct of in-field examinations. DCIO also uses the 

SPARK system, combined with required financial warning 

notices and market monitoring, to closely monitor the 

financial condition of FCMs. 

Performance Highlights

DCIO staff reviewed all regulatory notices received from 

FCMs during FY 2008. This review included assessing each 

firm’s actions to ensure that all firms that reported a failure 

to maintain the minimum capital requirement either took 

the necessary steps to bring themselves back into compliance or properly transferred their customers’ accounts to 

other, adequately capitalized FCMs. DCIO staff reviewed 

financial reports submitted by every registered FCM on a 

monthly basis to assess compliance with the minimum 

financial requirements. DCIO staff also reviewed audited 

annual financial reports for every FCM during FY 2008.

Finally, DCIO staff conducted examinations of several 

FCMs during FY 2008 to assess the firms’ compliance with 

Commission and SRO capital requirements.
CFTC 79

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Performance Measure 3.2.2 Percentage of self-regulatory organizations that comply with requirement to 

enforce their rules.

Measurement: Percentage

Status: Effective

Data Source: Documentation from 

DCMs/SROs under 

review, agency reports and 

files, and financial 

surveillance materials.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits.

Lead Program Offices 

Division of Clearing and Intermediary Oversight

Division of Market Oversight

Performance Analysis & Review 

Division of Clearing and Intermediary Oversight: Performance 

target was met for FY 2008. DCIO conducts periodic, 

routine examinations of the financial and sales practice 

programs of the SROs for the purpose of assessing the SROs’ 

compliance with Commission regulations, including applicable CFTC Core Principles. During FY 2008, DCIO 

completed two examinations of SROs compliance programs.

One examination focused on the SRO’s financial surveillance program and the second examination focused on the 

SRO’s program for the oversight of disclosure documents 

issued by CPOs and CTAs. DCIO also initiated examinations of the financial surveillance programs of two other 

SROs during FY 2008 and these examinations focused on 

the SROs’ oversight of their member FCMs. In addition, 

DCIO staff initiated a review of an SRO’s arbitration 

program. At this stage of the examinations, DCIO has not 

identified any issues that would indicate a failure of the 

SROs’ programs to satisfy Commission regulations, 

including applicable CFTC Core Principles. DCIO staff will 

continue to conduct these examinations and report its 

findings to the Commission in FY 2009.

CFTC Core Principle 11 provides, in relevant part, that a 

DCM shall establish and enforce rules to ensure the financial integrity of FCMs and the protection of customer funds.

DCMs, in their capacity as SROs, receive and review monthly 

financial reports submitted by FCMs for the purpose of 

assessing whether the FCMs are in compliance with the 

Commission’s and SROs’ minimum financial requirements, 

including requirements relating to the safeguarding of 

customer funds. In addition, Commission regulations and 

SRO rules require an FCM to file a notification with the 

Commission and its designated SRO whenever such FCM 

fails to meet its minimum capital or segregation requirement. DCIO’s review and analysis of FCM financial reports 

and notifications, including appropriate coordination with 

the SROs during FY 2008, demonstrated that the SROs were 

complying with CFTC Core Principle 11.

Division of Market Oversight: DMO staff conduct rule 

enforcement reviews (RERs) of DCMs on a regular cycle to 

ensure that exchanges enforce their rules. CEA Core 

Principle 2 specifically requires that exchanges monitor and 

enforce compliance with their rules. DMO reviews exchange 

compliance with CEA Core Principle 2 when it conducts an 

RER of an exchange’s trade practice surveillance program.

RERs also examine the adequacy of an exchange’s market 

surveillance, audit trail, disciplinary, and dispute resolution 

programs. When DMO examines these programs, its review 

includes an analysis to ensure that an exchange is enforcing 

its rules that relate to the particular program under review.
80 CFTC

During FY 2008, DMO completed RERs of the Chicago 

Climate Futures Exchange (CCFE), HedgeStreet, and the 

U.S. Futures Exchange (USFE). Because NFA provides regulatory services for all three exchanges pursuant to separate 

Regulatory Services Agreements and uses similar systems, 

methods, and personnel to provide these services, DMO 

issued a single report rather than three separate reports to 

avoid unnecessary duplication. DMO’s review of these 

exchanges included, among other things, careful examination of the exchanges’ trade practice surveillance programs, 

including a detailed analysis of the systems used by NFA for 

conducting surveillance. DMO found that CCFE, 

HedgeStreet, and USFE all maintain adequate trade practice 

surveillance programs that include the use of sophisticated 

surveillance systems. DMO also completed reviews of the 

Chicago Board of Trade’s (CBOT) and NYMEX’s market 

surveillance programs during FY 2008. DMO found that 

both CBOT and NYMEX maintain effective and comprehensive market surveillance programs and did not identify any 

major deficiencies. Although these RERs focused on market 

surveillance, market surveillance issues sometimes directly 

relate to trade practice abuses.

DMO also conducts ongoing daily surveillance of all 

exchanges to ensure that exchanges are enforcing their rules.

Performance Highlights

Division of Clearing and Intermediary Oversight: The two 

completed reviews assessed an SRO’s financial surveillance 

program including staffing levels and the conduct of examinations of member FCMs, and another SRO’s program for 

the oversight of disclosure documents issued by CPOs and 

CTAs. DCIO concluded that the SROs’ compliance programs 

were compliant with Commission regulations.

Division of Market Oversight: DMO found in its combined 

RER report for CCFE, HedgeStreet, and USFE that all three 

exchanges maintain adequate trade practice surveillance 

programs to detect trading abuses. NFA uses automated 

exception reports and tools to identify potential trading 

violations and conduct initial inquiries on behalf of the 

three exchanges and the exchanges all coordinate with NFA 

when potential rule violations are identified. NFA conducts 

inquiries and works with the exchanges to complete investigations when appropriate. DMO made one recommendation for improvement with respect to HedgeStreet. DMO’s 

RERs of CBOT’s and NYMEX’s market surveillance programs 

found that both exchanges maintain effective and comprehensive market surveillance programs. Both CBOT and 

NYMEX maintain sophisticated large trade reporting 

systems that are the exchanges’ principal tool for monitoring positions and conducting market surveillance.
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Performance Measure 3.3.1 Percentage of exchanges deemed to have adequate systems for detecting trade 

practice abuses.

Measurement: Percentage

Status: Effective

Data Source: Agency reports and files 

from reviews and analyses, 

and documentation from 

exchanges subject to a 

rule enforcement review.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

DMO staff conduct RERs of DCMs on a regular cycle that 

includes review and analysis of exchange programs for 

detecting trading abuses and violations of exchange rules.

During FY 2008, DMO completed RERs of the market surveillance programs at NYMEX and CBOT. DMO also completed 

an RER of CCFE, USFE, and HedgeStreet that focused on the 

audit trail, market surveillance, trade practice surveillance, 

and disciplinary programs of those exchanges. Since NFA 

performs trade practice surveillance for those exchanges on a 

contract basis, this RER included review of NFA’s automated 

surveillance system. During FY 2008, DMO also initiated a 

review of MGEX’s audit trail, market surveillance, trade 

practice surveillance, and disciplinary programs, and a review 

of the audit trail, trade practice surveillance, and disciplinary 

programs maintained by ICE Futures U.S. DMO expects to 

complete these RERs during FY 2009 or shortly thereafter.

While these RERs are still in progress, staff have not identified any material deficiencies at either exchange. 

DMO also conducts ongoing daily surveillance of all 

exchanges to ensure that exchanges are enforcing their rules.

Performance Highlights

DMO found in its NYMEX and CBOT market surveillance 

RER reports that each exchange maintains an adequate, 

effective, and comprehensive market surveillance program.

Both exchanges conduct daily monitoring of prices and 

available supply and demand, the trading and positions of 

large traders, and trader compliance with Exchange rules, 

and heighten surveillance of expiring contracts to detect and 

prevent price manipulations and facilitate orderly liquidations. Market surveillance investigations at both exchanges 

were thorough and timely, and resulted in sanctions sufficient to deter violations. DMO recommended that NYMEX 

further improve its market surveillance program by 

increasing market surveillance staff size to keep pace with 

growth in trading volume and product offerings; adjusting 

position limit exemption procedures to ensure that all 

exemptions are based on demonstrated cash market or swap 

exposure; and ensuring that serious position and exemption 

limit violations by non-members as well as members result 

in sanctions sufficient to deter future violations.
82 CFTC

Performance Measure 3.3.2 Percentage of exchanges that comply with requirement to enforce their rules.

Measurement: Percentage

Status: Effective

Data Source: Agency reports and files 

from reviews and analyses, 

and documentation from 

exchanges subject to a 

review.

Verification: Review and analysis of 

systems, data, procedures, 

policies, practices, and 

manuals, including on-site 

visits.

Lead Program Offices 

Division of Clearing and Intermediary Oversight

Division of Market Oversight

Performance Analysis & Review 

Division of Clearing and Intermediary Oversight: Performance 

target was met for FY 2008. DCIO conducts periodic, routine 

examinations of the financial and sales practice programs of 

the SROs for the purpose of assessing the SROs’ compliance 

with Commission regulations, including applicable CFTC 

Core Principles. DCIO completed a review of the financial 

surveillance program of one SRO during FY 2008. In 

addition, DCIO initiated an examination of the financial 

surveillance program of another SRO during FY 2008, and 

the examination’s focus is on the SROs’ oversight of their 

member FCMs. DCIO has not identified any issues that 

would indicate a failure of the SROs’ programs to satisfy 

Commission regulations and applicable CFTC Core 

Principles. DCIO staff will continue the examination and 

report its findings to the Commission in FY 2009.

CFTC Core Principle 11 provides, in relevant part, that a 

DCM shall establish and enforce rules to ensure the financial 

integrity of FCMs and the protection of customer funds.

DCIO, and DCMs in their capacity as SROs, receive and 

review monthly financial reports submitted by FCMs for the 

purpose of assessing whether the FCMs are in compliance 

with the Commission’s and SRO’s minimum financial 

requirements, including requirements relating to safeguarding customer funds. In addition, Commission regulations and SRO rules require an FCM to file a notification 

with the Commission and its designated SRO whenever such 

FCM fails to meet its minimum capital or segregation 

requirement. DCIO’s review and analysis of FCM financial 

reports and notifications, including appropriate coordination with the SROs during FY 2008, demonstrated that the 

SROs were complying with CFTC Core Principle 11.

Division of Market Oversight: DMO staff conduct RERs of 

DCMs on a regular cycle to ensure that exchanges monitor 

and enforce compliance with their rules, as required by CFTC 

Core Principle 2. Such RERs may examine some or all of a 

DCMs audit trail, market surveillance, trade practice surveillance, disciplinary, and dispute resolution programs. When 

DMO examines any of these programs, its review includes an 

analysis designed to ensure that the DCM is enforcing its 

rules that relate to the particular program under review.

During FY 2008, DMO completed RERs of the market surveillance programs at NYMEX and CBOT. DMO also completed 

an RER of CCFE, USFE, and HedgeStreet that focused on the 

audit trail, market surveillance, trade practice surveillance, 

and disciplinary programs of those exchanges. Since NFA 

performs trade practice surveillance for those exchanges on a 

contract basis, this RER included review of NFA’s automated 
CFTC 83

P ERF O RMANCE SECTION

surveillance system. During FY 2008, DMO also initiated a 

review of MGEX’s audit trail, market surveillance, trade 

practice surveillance, and disciplinary programs, and a review 

of the audit trail, trade practice surveillance, and disciplinary 

programs maintained by ICE Futures US. DMO expects to 

complete these RERs during FY 2009 or shortly thereafter.

While these RERs are still in progress, staff have not identified any material deficiencies at either exchange. 

DMO also conducts ongoing daily surveillance of all 

exchanges to ensure that exchanges are enforcing their rules.

Performance Highlights

Division of Clearing and Intermediary Oversight: The 

completed review assessed the SRO’s financial surveillance 

program, including staffing levels and the conduct of examinations of member FCMs. DCIO concluded that the SRO’s 

program was compliant with Commission regulations.

Division of Market Oversight: DMO found in its NYMEX 

and CBOT Market Surveillance RER reports that each 

exchange maintains an adequate, effective, and comprehensive market surveillance program. Both exchanges conduct 

daily monitoring of prices and available supply and demand, 

the trading and positions of large traders, and trader compliance with Exchange rules, and heighten surveillance of 

expiring contracts to detect and prevent price manipulations 

and facilitate orderly liquidations. Market surveillance investigations at both exchanges were thorough and timely, and 

resulted in sanctions sufficient to deter violations. DMO 

recommended that NYMEX further improve its market 

surveillance program by increasing the market surveillance 

staff size to keep pace with the growth in trading volume 

and product offerings; adjusting position limit exemption 

procedures to ensure that all exemptions are based on 

demonstrated cash market or swap exposure; and ensuring 

that serious position and exemption limit violations by 

non-members as well as members result in sanctions sufficient to deter future violations.
84 CFTC

Performance Measure 3.4.1 Percentage of CFMA Section 126(b) objectives addressed.

Measurement: Percentage

Status: Effective

Data Source: Agency reports, files, and 

documentation.

Verification: Formal Memoranda of 

Understanding (MOUs) or 

seriatim approvals are 

published in the Federal 

Register and posted on the 

Commission’s Web site.

Lead Program Office 

Executive Direction and Support

Performance Analysis & Review 

The Commission’s Office of International Affairs (OIA) 

assists the Commission in formulating and implementing its 

international policy. OIA’s activities track the objectives set 

forth in section 126(b) of the CFMA, which endorsed the 

Commission’s international activities and encouraged the 

Commission to continue to: 1) coordinate with foreign 

regulatory authorities; 2) participate in international regulatory organizations and forums; and 3) provide technical 

assistance to foreign governmental bodies. These efforts are 

intended to facilitate cross-border transactions and the 

supervision of such transactions by developing internationally accepted standards, enhancing international supervisory 

cooperation, and improving the quality and timelines of 

international information sharing. 

These performance measures have been met by: 1) engaging 

in discussions with foreign regulators, both on a bilateral 

basis and within Treasury’s country dialogues, on an “as 

needed” basis to address regulatory issues, as well as by 

carrying forward discussions with the Committee of 

European Securities Regulators (CESR); 2) participating in 

meetings and working groups organized by multi-lateral 

organizations such as the International Organization of 

Securities Commissions (IOSCO), and the Council of 

Securities Regulators of the Americas (COSRA); 3) organizing 

the annual Commission training symposium and international regulators meeting; and 4) coordinating technical 

assistance missions to foreign market authorities.

OIA can anticipate certain recurring activities such as participating in the IOSCO Technical Committee and its constituent working groups, participating in Treasury’s country 

dialogues, and organizing the annual training seminar and 

international regulators’ meeting. Other international 

matters are event-driven, such as the need to engage in bilateral discussions with a foreign regulator to negotiate a market 
CFTC 85

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surveillance arrangement, or ad hoc in nature, such as 

requests for technical assistance. Even within the recurring 

forums of IOSCO and COSRA, for example, market events 

may result in the development of a new task force project, 

which, if it affects Commission regulatory interests, warrants 

Commission involvement.

To date, OIA has been able, within the limits of its staff 

resources, to provide international coordination, representation and technical assistance at acceptable levels as approved 

by the Chairman. However, the electronic integration of 

global markets, cross-border mergers, market alliances and 

requests by foreign entities for regulated status under the 

CEA, as well as increasing calls on the CFTC to participate in 

Treasury-organized dialogues with commercially important 

jurisdictions such as India and China, have led to increasing 

demands that are straining the capacity of OIA to provide 

adequate levels of international coordination, representation 

and technical assistance services to and on behalf of the 

Commission. Although these demands can be met by the 

additional staff resources allocated to OIA for FY 2009, the 

failure to fund these potential resources will make it unlikely 

that OIA will be able to address the increasing demands 

resulting from the globalization of U.S. futures markets.

Performance Highlights

Coordination with foreign regulatory authorities

■ Revisions to the MOU (2006) between the CFTC and 

United Kingdom (U.K.) Financial Services Authority 

(FSA), which established a framework for the CFTC 

and FSA to share information that the respective 

authorities need to detect potential abusive or manipulative trading practices that involve trading in related 

contracts on U.K. and U.S. derivatives exchanges. In 

order to address increased concerns as to the role of 

speculation in linked commodity markets, in 2008 OIA 

negotiated revisions to the MOU that require coordinated position limits and reporting requirements in 

linked contracts trading on U.S. and U.K. exchanges. 

■ In February 2008, the CFTC and the CSRC announced 

that the agencies have agreed to hold regular meetings 

to promote enhanced cooperation and collaboration.

These meetings will be designed to promote investor 

protection, market integrity, and the supervision of 

derivatives trading occurring on a cross-border basis 

between China and the United States. Such cooperative efforts support the U.S. Treasury’s Strategic 

Economic Dialogue with China.

■ OIA participated in and provided staff support to the 

Chairman in meetings with various global market 

authorities including, the European Commission (EC) 

and senior level directors at the EC, members of the 

Technical Committee of IOSCO, the Committee of 

European Securities Regulators (CESR), the Chairman 

of the Securities and Exchange Board of India (SEBI), 

the French market regulator, and European Union (EU) 

officials and industry representatives. These meetings 

establish relationships and provide a forum for raising 

and resolving regulatory issues.

■ OIA submitted various forms of “good standing” representations to support numerous applications by US 

futures exchanges for recognition in foreign jurisdictions (Singapore; Quebec, Canada; Brazil; Netherlands; 

and Dubai).

Participation in international regulatory organizations and 

forums

■ Staff participated actively in the standing committees 

on secondary markets and intermediaries, and provided 

support for the work of the standing committee on 

collective investments, which addressed issues such as 

regulatory issues surrounding direct market access, 

outsourcing, point of sale disclosure issue, and oversight of intermediaries. Staff also supported the work 

of the IOSCO Implementation Task Force, which 

encourages IOSCO’s member jurisdictions to undergo 

assisted assessment of compliance with the IOSCO 

Principles. These projects help foster a higher level of 

global regulation. 

■ Participated in Treasury-led dialogues on China, India 

and the EU, which supports Treasury’s policy goals, 

and encourages foreign jurisdictions to foster conditions favoring access to products and market. Staff also 

participated in discussions under the North American 
86 CFTC

Free Trade Agreement (NAFTA). As a result of the India 

dialogue, India permitted foreign firms to become 

members of India’s national commodity exchanges 

and U.S. CPOs to register with the India regulator as 

“foreign institutional investors.” Within the NAFTA 

Dialogue OIA promoted greater access by U.S.

exchanges to Mexico. Within the EU Dialogue, OIA 

staff discussed issues related to the recognition of 

exchanges and brokers, exchange mergers and implementation of EU market legislation. Within the China 

Dialogue, OIA raised a number of issues that focused 

on promoting greater access by U.S. firms to Chinese 

markets and the ability of Chinese nationals to access 

U.S. markets. OIA staff also provided issues of concern 

to staff at Treasury in connection with Treasury’s participation in the Financial Stability Forum and discussed 

futures-related issues related to the Doha round of 

trade negotiations. 

■ As a follow-up to the China Dialogue, OIA met with 

Treasury’s financial attaché in Beijing to discuss 

ongoing negotiations in the Strategic Economic 

Dialogue, including issues relating to access by U.S.

firms and market participants to the Chinese markets.

■ OIA participated with the CFTC Acting Chairman in a 

meeting with CESR’s Chairman to discuss common 

points of interest, including an agreement to work on a 

project to facilitate Internet-based searches of the regulatory registration statutes of the CFTC and CESR 

member agencies.

■ OIA coordinated and participated in meetings between 

CFTC senior staff and International Monetary Fund 

staff to discuss heightened concerns with regard to 

activity in agricultural and energy commodities.

Providing technical assistance

■ CFTC senior staff, funded by the U.S. Agency for 

International Development (USAID) in 2008, provided 

on-site technical assistance in Ethiopia for approximately 30 staff from the newly formed Ethiopian 

Commodity Exchange Authority.

■ OIA coordinated numerous training internships for 

staff from foreign regulators at the CFTC’s offices.

Recent internships were provided to staff from the 

following foreign regulatory agencies: CSRC, Korea 

Financial Services Commission, Securities Commission 

of El Salvador, Securities and Surveillance Commission 

of Japan (SESC), and representatives sponsored by the 

government of Yemen under a Financial Services 

Volunteer Program.

■ In November 2007, CFTC staff provided technical 

training to a delegation of 20 representatives from 

CSRC.

■ CFTC staff provided comments to the Egyptian Ministry 

of Investments and Capital Market Authority on draft 

commodities regulations. 

■ In August 2008, CFTC staff presented a three-day 

training program on market surveillance, including the 

CFTC large trader reporting system. Approximately 30 

regulators from Brazil; China; Colombia; Ethiopia; 

Hong Kong; India; Japan; Quebec, Canada; and 

Romania attended.

■ The annual International Symposium and Training 

Program on Regulation of Derivative Products, Markets, 

and Financial Intermediaries (October 2007), which 

was attended by over 100 participants from 30 countries, allows the CFTC to share its experiences and 

exchange ideas concerning how derivatives regulators 

can better meet new risks and challenges. This training 

program helps facilitate cooperation and essential 

dialogue so that the CFTC may continue to ensure 

customer and market protections.

■ The annual International Regulators Meeting held in 

conjunction with the FIA annual conference, brought 

together over 40 global regulators to address regulatory 

challenges of a changing marketplace. Such meetings 

allow regulators to identify issues of common concern 

and to share ideas about different approaches to 

address such issues.
CFTC 87

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Performance Measure 3.4.2 Number of rulemakings, studies, interpretations, and guidances to ensure market 

integrity and exchanges’ compliance with regulatory requirements.

Measurement: Number

Status: Effective

Data Source: Federal Register, proposed 

and final amendments to 

regulations, notices and 

orders, and staff statements 

of guidance.

Verification: Proposed and final 

regulations are published in 

the Federal Register and 

posted on the Commission’s 

Web site.

Lead Program Offices 

Division of Clearing and Intermediary Oversight

Division of Market Oversight

Performance Analysis & Review 

Division of Clearing and Intermediary Oversight: DCIO 

completed a combined total of 25 rulemakings, interpretations, orders, and statements of guidance that addressed 

regulatory efforts to ensure market integrity and exchanges’ 

compliance with regulatory requirements. The combined 

total exceeded DCIO’s fiscal year plan of 17.

The number of rulemakings, studies, orders, interpretations, 

and statements of guidance to ensure market integrity and 

exchanges’ compliance with regulatory requirements is not a 

number that can be precisely predetermined. The final 

number of these combined statistics reported by DCIO is 

driven, in part, by changes in the marketplace, or in the structure of the exchanges, clearing organizations, and intermediaries that operate within that marketplace. The number can 

be a function of what is needed to allow appropriate market 

interrelationships to be maintained and to allow the 

exchanges, clearing organizations, and intermediaries to 

operate in the most efficient manner possible. These factors 

may not be foreseeable at the time the performance estimate 

is prepared. In addition, the need for a rulemaking, study, 

interpretation, or guidance may not be known or may not 

have reached a decision-making point until further analysis 

and other actions or events have taken place. This also can 

account for a difference between the fiscal year plan and 

actual.

Division of Market Oversight: The number of rulemakings, 

studies, interpretations, and statements of guidance is not a 

number that can be forecasted precisely. The final number is 

driven, in part, by changes in the marketplace or in the operations of exchanges that may not be foreseeable at the time 

the performance estimate is prepared.

Performance Highlights 

Division of Clearing and Intermediary Oversight: The 

Commission amended its regulations concerning the registration of firms outside the United States that are engaged in 

intermediating commodity interest transactions on U.S.

DCMs and DTEFs. The amended regulations codify past 

actions of the Commission or its staff to permit certain 

foreign firms, specifically, those that limit their customers to 

foreign customers, and submit U.S. DCM and DTEF business 

on behalf of those customers for clearing on an omnibus 

basis through a registered FCM, to be exempt from registration as an FCM pursuant to Section 4d of the Act.

The amended regulation similarly extends the relief from 

registration to those foreign persons acting in the capacity of 
88 CFTC

an IB, CTA, and CPO solely on behalf of foreign customers.

The amendment brought greater clarity and legal certainty to 

Commission registration requirements by codifying the 

longstanding Commission policy, known as the “foreign 

broker exemption,” on the activities of certain foreign intermediaries engaged in soliciting or accepting commodity 

interest transactions solely on behalf of customers located 

outside the United States.

DCIO prepared an interpretative statement issued by the 

Commission regarding the bankruptcy treatment of customer 

funds related to cleared-only contracts. The interpretation 

concluded that claims arising out of cleared-only contracts 

are properly included within the meaning of “net equity” for 

purposes of the U.S. Bankruptcy Code and Commission 

regulations.

Division of Market Oversight: In October 2007, the 

Commission delivered to Congress a report that included 

recommendations to increase the oversight of some trading 

activity on ECMs. The report, which was issued after 

analyzing a substantial number of comments and conducting 

a public hearing, recommended legislative changes to ensure 

that ECMs contracts that serve a significant price discovery 

function are subject to large trader position reporting, 

position limits and/or accountability level regimes, self-regulatory oversight, and the Commission’s emergency authority.

Notably, the Commission’s recommended CEA revisions 

served as the basis for significant portions of the Farm Bill.

In September 2008, the Commission issued a public report 

regarding the role of commodity index traders and swap 

dealers in trading on regulated futures exchanges and related 

OTC markets. The report, which was based upon an analysis 

of trading data provided in response to a comprehensive set 

of Commission-issued special calls, included various regulatory and operational recommendations such as removing 

swap dealers from the commercial category and creating a 

new swap dealer classification for Commitments of Traders 

(COT) reporting purposes; publishing a new periodic supplemental report on OTC swap dealer activity; creating a new 

CFTC Office of Data Collection with enhanced procedures 

and staffing; developing “long form” reporting for certain 

large traders to more accurately assessing types of trading 

activity; and reviewing whether to eliminate bona fide hedge 

exemptions for swap dealers and create a new limited risk 

management exemption.
CFTC 89

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Performance Measure 3.4.3 Percentage of requests for no-action or other relief completed within six months 

related to novel market or trading practices and issues to facilitate innovation.

Measurement: Percentage

Status: Effective

Data Source: Applicant’s letter requesting 

relief and Commission letter 

of response.

Verification: Applicant’s letter and 

supporting documentations 

maintained in internal 

tracking system, FILAC13. 

Responses to formal 

request published on the 

Commission’s Web site.

Lead Program Office 

Division of Market Oversight

Performance Analysis & Review 

In FY 2008, DMO issued four no-action letters in response to 

requests for formal no-action relief from requirements of the 

CEA. Each letter was issued by DMO within six months of 

the receipt of the relief request.

Performance Highlights 

On June 17, 2008 and July 3, 2008, DMO issued letters to 

ICE Futures Europe and the Dubai Mercantile Exchange, 

respectively, amending their no-action relief to provide that, 

to the extent that their contracts settle against the price of 

any DCM or DTEF contract, the exchanges must set comparable position limits or position accountability levels on 

these contracts, publish daily trading information, and 

provide the Commission with a daily report of large trader 

positions.

On August 20, 2008, DMO issued a letter granting no-action 

relief to permit Nord Pool ASA (Nord Pool or the Exchange) 

to make its electronic trading and order matching system 

(ETS) and its Application Program Interface (API), available 

to Exchange members in the United States without obtaining 

contract market designation or registration as a derivatives 

transaction execution facility pursuant to Sections 5 and 5a 

of the CEA.

DMO also issued on September 26, 2008 a similar no–action 

relief letter to BM&F, a Sao Paolo, Brazil-based futures 

exchange. BM&F received permission to allow direct access 

by its U.S.-based trading members to trade various agricultural, metal currency and equity under futures products.

13 Refer to CFTC Information Technology Systems in the Appendix for a description in functionality.
90 CFTC

Performance Measure 3.4.4 Percentage of total requests receiving CFTC responses for guidance and advice.

Measurement: Percentage

Status: Effective

Data Source: Signed letters (formal) and 

email and telephone 

responses (informal).

Verification: Agency files maintained in 

chronological files and 

responses to formal request 

are published on 

Commission’s Web site.

Lead Program Offices 

Division of Clearing and Intermediary Oversight

Division of Market Oversight

Performance Analysis & Review 

Division of Clearing and Intermediary Oversight: Performance 

target was met for FY 2008. DCIO staff respond to numerous 

requests for guidance and advice on the Act and Commission 

regulations each year. Requests are received from members 

of the public, market participants, intermediaries, SROs, 

foreign entities, and others. These requests may be formal, 

such as written requests for no-action, interpretative, or 

exemption letters. DCIO also receives numerous informal 

requests for guidance and advice via email and phone calls.

Although DCIO responds to all requests received, it is not 

always possible for DCIO to respond within the fiscal year 

that it receives a request.

Division of Market Oversight: DMO staff respond to 

numerous requests for guidance and advice on the CEA and 

Commission regulations each year. These requests may be 

informal, via email or phone calls, or formal in the form of 

requests for no-action, interpretative, or exemptive letters.

Staff respond to informal guidance and advice request in a 

very short period of time, usually no longer than a period of 

days. To the extent that staff are unable to provide an 

informal response to such requests, the requester is advised 

to submit a formal request for guidance. DMO staff strive to 

address such formal requests within six months of receipt.

Performance Highlights 

Division of Clearing and Intermediary Oversight: In FY 2008, 

DCIO responded to several requests for exemptive relief by 

registered CPOs of commodity pools, whose shares of which 

the CPOs intended to publicly offer and to list for trading on 

national securities exchanges. The relief granted by DCIO 

was based on the requirement that the CPOs complied with 

comparable disclosure, reporting and recordkeeping requirements imposed by securities regulators. (See Staff Letters 

08-01, dated January 11, 2008; 08-02, dated January 29, 

2008; 08-15, dated August 20, 2008; and 08-16, dated 

September 3, 2008.) The Commission’s flexible approach 

allows new products to develop while it ensures that its regulatory requirements are met, in this case through a substituted compliance program.
CFTC 91

Strategic Goal Four: Organizational Excellence

Goal Four: Facilitate Commission performance through organizational and management 

excellence, efficient use of resources, and effective mission support.

Outcome Objective 4.1: A productive, technically competent and diverse workforce that takes 

into account current and future technical and professional needs of the Commission.

n Annual Performance Goal 4.1: Recruit, retain, and develop a skilled and diversified staff to 

keep pace with attrition and anticipated losses due to retirement.

Outcome Objective 4.2: A modern and secure information system that reflect the strategic 

priorities of the Commission.

n Annual Performance Goal 4.2: Link business decisions on information technology 

resources to CFTC strategic goals by establishing a decision-making and review process 

for allocation of information technology resources.

Outcome Objective 4.3: An organizational infrastructure that efficiently and effectively responses 

to and anticipates both the routine and emergency business needs of the Commission.

n Annual Performance Goal 4.3: A fully operational Contingency Planning Program to 

ensure the CFTC is prepared for emergencies and is fully capable of recovery and 

reconstitution.

Outcome Objective 4.4: Financial resources are allocated, managed, and accounted for in 

accordance with the strategic priorities of the Commission.

n Annual Performance Goal 4.4: A clean audit opinion for CFTC.

Outcome Objective 4.5: The Commission’s mission is fulfilled and goals are achieved through 

sound management and organizational excellence provided by executive leadership.

n Annual Performance Goal 4.5: Progress in completing the 18 priorities established in the 

Commission Strategic Plan for FY 2007 through FY 2012.
92 CFTC

Performance Measure 4.1.1 Percentage of fiscal year program development objectives met under CFTC pay for 

performance authority.

Measurement: Percentage

Status: Effective

Data Source: Memoranda and policy documents published by 

the Chairman, Pay Parity Governance 

Committee, and Office of the Executive Director, 

which are posted on the CFTC Intranet.

Verification: The NFC personnel/payroll system documents 

that the first pay for performance base pay 

changes took effect on July 6, 2008. The new 

incentive awards program policy was published 

on May 1, 2008, in coordination with on-site 

training sessions in all regions on its use that 

also incorporated employee focus groups to 

solicit ideas for future benefits programs 

modifications under this authority.

Lead Program Office 

Office of Human Resources (OHR)

Performance Analysis & Review 

The Commission met all objectives for FY 2008. These objectives are part of a multi-year plan to implement pay for 

performance under the agency’s statutory compensation 

authority. All employees contributed to this goal by providing 

input to the development of the pay for performance program 

and by successfully implementing new provisions, such as 

quarterly discussions of performance, goals, objectives, and 

outcomes. This participative, transparent approach, which 

included employee focus groups and the publication of statistics on awards and performance rating, contributed to the 

agency’s success in using its compensation authority. The 

CFTC efforts have resulted in recruitment and retention of 

skilled employees and in the positive results of the last two 

all-employee surveys on the CFTC work environment.

Performance Highlights 

■ The CFTC pay, performance management, and incentive awards policies were updated to respond to 

employee input and to ensure that the policies work 

together to support an environment of shared accountability for meeting CFTC goals and objectives. In 

support of these programs, the first Chairman’s 

honorary awards ceremony took place on September 25, 

2008, with participation by all regions.

■ The Pay Parity Governance Committee continued its 

review of compensation program options in the areas 

of benefits and position classification, based on input 

from employee focus groups and interviews with 

managers. The committee, which includes representatives from all segments of the CFTC, completed its 

initial recommendations on benefits program options 

that would best serve to enhance employee recruitment 

and retention. This will allow continued incremental 

improvements and set the stage for meeting the 

objectives set for this performance element for the 

coming year.
CFTC 93

P ERF O RMANCE SECTION

Performance Measure 4.1.2 Average number of days between close of vacancy announcement and job offer, 

per Federal standards of 45 days or less.

Measurement: Number

Status: Effective

Data Source: Running account on status of the priority hiring 

initiative is updated and distributed weekly to 

agency offices and divisions.

Verification: Vacancy announcements with opening and 

closing dates are published on the 

Commission’s Web site. Offer letters to 

candidates are filed in the candidate’s official 

personnel folder and maintained in OHR 

according to Office of Personnel Management 

(OPM) guidelines.

Lead Program Office 

Office of Human Resources

Performance Analysis & Review 

The FY 2008 priority hiring initiative to fill 65 positions is the 

first major recruitment effort by the agency in several years.

This required a significant level of effort by the Commission’s 

program offices and OHR at a time when the agency was 

understaffed and experiencing extreme demands on its time 

to respond to market events. The selecting officials and the 

OHR staff successfully updated recruitment strategies and 

efficiently processed the large number of qualified candidates 

who applied. Given these constraints and challenges, the 

agency’s ability to come so close to its 55-day objective for 

completing hiring effectively met the goal.

Performance Highlights 

■ Built an agency priority hiring team that effectively 

responded to ambitious recruitment goals with timely 

identification and appointment of high-quality candidates. Actions included rigorous examination and 

update of recruitment tools and processes, including 

job analyses and crediting plans used to rate and rank 

candidates, and contact listings for targeted recruitment 

efforts to increase the diversity and overall strength of 

the applicant pools.

■ In addition to the strenuous efforts to rapidly fill 

permanent positions, the Commission dedicated 

significant resources to filling approximately 50 

summer positions. This major hiring effort was undertaken as a way to meet immediate workforce needs and 

as an investment in publicizing to entry level and other 

candidates the CFTC’s mission and its appeal as a 

potential future employer.
94 CFTC

Performance Measure 4.1.3 Rate of employee turnover, exclusive of retirements.

Measurement: Percentage

Status: Effective

Data Source: Records entered in the NFC 

personnel/payroll system to effect each 

action, with crosscheck compilation 

and summary report by CFTC’s Office 

of Financial Management (OFM).

Verification: Each turnover action is recorded in the 

NFC full-service personnel/payroll 

system and is daily tracked by OFM to 

identify and project the status of FTEs 

and funding for the fiscal year.

Lead Program Office 

Office of Human Resources

Performance Analysis & Review 

CFTC exceeded its goals for employee retention during FY 

2008. This is one measure of Commission success in building 

and sustaining a work environment that makes it an employer 

of choice for a workforce with the mission-critical competencies that are in high demand in the labor market. Through 

effective efforts to retain permanent staff members, the 

Commission protects its knowledge base, optimizes the availability of trained staff to meet workload demands, and minimizes the costs of repeated recruitment and development of 

replacement hires. This goal has not been easy to meet in the 

face of external wage pressures. In response, the CFTC used its 

pay parity authority to develop an attractive package of total 

compensation.

Performance Highlights 

■ The Pay Parity Governance Committee, with input 

from employee focus groups in headquarters and each 

regional office, formulated recommendations for 

benefit program revisions in time for the inclusion of 

supportive funding in the budget formulation for 

FY 2009.

■ To assure that employees who are eligible to retire only 

do so after full, informed consideration of the financial 

and psychological implications, the Commission 

provided on-site retirement and financial planning 

services for eligible employees. Over 100 staff members 

took advantage of these consulting services. While the 

objective was to support prudent retirement planning 

by each employee, the service also supported the 

Commission’s retention and recruitment efforts by 

demonstrating the supportive nature of the CFTC work 

environment.
CFTC 95

P ERF O RMANCE SECTION

Performance Measure 4.1.4 Percentage of employees in mission-critical positions rating themselves at 

“extensive” or higher level of expertise on Strategic Workforce Planning Survey.

Measurement: Percentage

Status: Effective

Data Source: Self-assessments of over 95% of agency 

employees who completed the FY 2008 online 

Strategic Workforce Planning Survey.

Verification: The aggregate statistical results of this annual 

survey were presented to executive management 

January 2008. The data elements on the 

self-assessment of agency employees in the 

major categories of mission-critical positions 

(Economist, Auditor, Attorney, and Futures 

Trading Specialist/Investigator) captured the 

percentage of total headcount in each job series 

rating themselves at the “extensive” or higher 

level of expertise for their position of record.

Lead Program Office 

Office of Human Resources

Performance Analysis & Review 

The CFTC-wide survey results substantially exceeded the goal 

for this measure. Since the overall objective of the strategic 

management of human capital is to have competent 

employees in each position, this measure indicates that the 

Commission can be confident in the availability of the critical 

skills needed to meet mission requirements. Contributors to 

this trend include success in recruiting and training highlycompetent staff and supporting them with ongoing career 

development resources. In addition, mandatory quarterly 

performance reviews heighten understanding of the critical 

elements for success in meeting individual duties and responsibilities. The resulting employee confidence is especially 

notable because it occurred despite the substantial potential 

for loss of institutional memory as many long-time employees 

retired over the past two years.

Performance Highlights 

■ Division and office heads received their third annual 

Strategic Workforce Planning Survey reports during FY 

2008. These reports provide objective, quantitative 

data to help them to assess pending workforce issues 

and to develop or acquire the critical employee competencies they need as employees retire or leave the 

agency or as the nature of their work changes.

■ OHR drafted policy documents to encourage more 

effective use of the Commission’s extensive training 

and career development resources. The goal of the 

policy is to help individuals and organizations target 

the development of the major job competencies needed 

to meet the goals and objectives mapped of the CFTC 

Strategic Plan for 2007 – 2012.
96 CFTC

Performance Measure 4.1.5 Percentage of underrepresented groups among new hires.

Measurement: Percentage

Status: Effective

Data Source: Documentation consists of 

self-identification provided by new hires 

when they enter on duty and complete 

Standard Form 181, Ethnicity and Race 

Identification, creating a data element that 

is also a required entry in the NFC 

personnel/payroll system employment 

record.

Verification: Results represent compilation of all 

available self-identification form results, 

whether on hard copy kept in secure OHR 

file or from the NFC database. 

Lead Program Office 

Office of Human Resources

Performance Analysis & Review 

OHR consulted with the Office of Equal Employment 

Opportunity to set a 27 percent goal that approximates the 

diversity of the Nation’s workforce. Self-identification by the 

FY 2008 hires indicates substantial progress and reflects the 

success of CFTC’s targeted recruitment efforts. During FY 

2008, CFTC updated and expanded email contacts for the 

distribution of agency vacancy announcements. In addition, 

the agency implemented a substantial summer employment 

program that increased its visibility to a diverse pool of candidates, encouraging a broad base of individuals to consider 

the Commission as a permanent employer when they 

complete their education. In addition, the Commission’s 

offices and divisions drew on a diverse pool of selecting officials to represent the Commission during the recruitment 

process. These incremental efforts build on and reinforce 

one another, promising that ongoing recruitment outcomes 

for this measure will continue an upward trend and secure 

the benefits of an increasingly diverse CFTC workforce.

Performance Highlights 

■ Achieved significant representative hiring when filling 

positions across the full range of Commission position 

types and grade levels.

■ Achieved a 43 percent minority representation rate 

when filling approximately 50 summer positions, 

increasing agency recruitment visibility for the future 

and securing a number of those hires for continuing 

internships during the school year.
CFTC 97

P ERF O RMANCE SECTION

Performance Measure 4.2.1 Percentage of CFTC information technology resources directly tied to Commission 

resource priorities as stated in the Strategic Plan.

Measurement: Percentage

Status: Adequate

Data Source: IT budget documents, Enterprise 

Architecture documents, and the CFTC 

Strategic Plan.

Verification: IT planning and procurement process 

meetings with the Chief Information 

Officer (CIO) and OITS staff are held and 

documented twice monthly. Meetings 

assure that planning and procurement 

adhere to the Enterprise Architecture and 

the CFTC Strategic Plan. 

Lead Program Office 

Office of Information and Technology Services (OITS)

Performance Analysis & Review 

The CFTC establishes its IT resources through a planning 

and procurement process based on the strategic goals of the 

CFTC. 

The CFTC holds IT planning and procurement process 

meetings twice a month to assure its alignment of IT 

resources with the strategic plan. These meetings review 

the planning and procurement documents and assure that 

adequate resources are requested to support CFTC goals.

The planning and procurement process tracks planned 

versus actual budgets and aligns priorities as needed.

Because of tight budget constraints, the CFTC has been 

forced to postpone some infrastructure upgrades and has 

requested additional funds to meet its growing infrastructure needs.

Performance Highlights

The CFTC continues to fund IT initiatives in support of its 

strategic plan. As an example, the Strategic Plan’s Strategic 

Priority 1.1 is to “Enhance technology capability and data 

standards to recognize, understand, and adapt to market 

changes.” In support of this priority, the CFTC has funded 

key initiatives such as the TSS, which uses complex algorithms to find trade practice violations. The CFTC is also 

aggressively pursuing data standardization for collecting 

data in support of the trade surveillance program. Over the 

last year and a half, the CFTC has been meeting with the 

futures industry to adopt Financial Information Exchange 

Markup Language (FIXML), a world-wide standard that will 

improve data quality and flexibility for the CFTC and the 

futures industry. The CFTC is currently processing FIXML 

test files from a major exchange, and will be implementing 

FIXML in FY 2009.
98 CFTC

Performance Measure 4.2.2 Percentage of major information technology investments having undergone an 

investment review within the last three years.

Measurement: Percentage

Status: Adequate

Data Source: Investment Review Board 

documents. 

Verification: Investment Review Board 

documents created by 

project managers. Project 

managers update the 

Investment Review Board 

documents; incorporating 

comments 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The CFTC conducted IT investment reviews for all of CFTC’s 

major systems within the last three years. The major systems 

include the TSS, eLaw14, ISS, and the CFTC network. The 

CFTC reviews its major systems to assure that technology is 

meeting the needs of the CFTC and is properly aligned with 

the strategic goals of the Commission. These thorough 

reviews include senior management, business users, IT 

professionals, and the CFO staff. The review boards found 

that CFTC’s major systems continue to exceed expectations, 

and are within budget. 

Performance Highlights

The CFTC recently has completed its eLaw investment 

review board. eLaw provides CFTC with automated tools 

and a litigation support team to assist staff in performing 

their work more efficiently and effectively and gives the 

lawyers the ability to rapidly query and retrieve information about investigations and litigation. Its sophisticated 

search and retrieval capabilities support recurrent and ad 

hoc reporting requirements, and provide a collaborative 

electronic work environment across geographically 

dispersed locations (Washington, D.C.; Chicago; New York; 

and Kansas City). eLaw provides remote access to and 

presentation of documentary and analytic evidence, trial 

presentation and support capabilities, and forensics tracking 

information on seized computer equipment.

14 Refer to CFTC Technology Systems in the Appendix for a description of functionality.
CFTC 99

P ERF O RMANCE SECTION

Performance Measure 4.2.3 Percentage of Customer Support Center inquiries resolved within established 

performance metrics.

Measurement: Percentage

Status: Effective

Data Source: Customer support logs.

Verification: Customer support logs are 

recorded daily and 

reviewed periodically by the 

associate director for 

customer support. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The CFTC exceeded its goal of resolving 80 percent of inquiries within tight performance metrics. The CFTC tracks its 

customer support inquiries and their resolution through a 

sophisticated customer support system. The system also 

allows the CFTC to organize inquiries so that the CFTC 

can proactively make decisions to improve service and 

reduce issues.

Performance Highlights

In FY 2008, the CFTC resolved 84 percent of its inquiries 

within established performance metrics, exceeding its goal 

of 80 percent. In addition, the CFTC’s monthly user satisfaction surveys showed that 95 percent or more of the users 

rated the Commission’s Customer Support Center’s service 

as satisfactory or better.
100 CFTC

Performance Measure 4.2.4 Percentage of employees with network availability.

Measurement: Percentage

Status: Adequate

Data Source: Network logs.

Verification: Network logs are recorded 

daily and reviewed 

periodically by the 

associate director for 

network operations. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The CFTC maintains connectivity through redundant servers 

in Washington, D.C. and Chicago. The CFTC has requested 

additional funds to upgrade its aging network infrastructure 

to meet growing needs. The requested additional funds will 

allow the CFTC to continue to support its strategic goals by 

assuring network availability through refreshment of 

technology.

Performance Highlights

The CFTC is committed to providing the best possible IT 

support to its staff. As part of this commitment, the CFTC 

achieved 100 percent network conductivity by utilizing 

redundant circuits to avoid network outages that would 

have cost the CFTC time and productivity. In addition, the 

CFTC has invested in technology to assure the performance 

of the network is optimized, so there is negligible delay in 

accessing information.
CFTC 101

P ERF O RMANCE SECTION

Performance Measure 4.2.5 Percentage of employees who require remote network availability that have it.

Measurement: Percentage

Status: Adequate

Data Source: Network logs.

Verification: Network logs are recorded 

daily and reviewed 

periodically by the 

associate director for 

network operations. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The CFTC maintains connectivity through redundant servers 

in Washington, D.C. and Chicago. The CFTC has requested 

additional funds to upgrade its aging network infrastructure 

to meet growing needs. The requested additional funds will 

allow the CFTC to continue to support its strategic goals 

by assuring network availability through refreshment of 

technology.

Performance Highlights

The CFTC is committed to providing the best possible IT 

support to its staff. As part of this commitment, the CFTC 

achieved 100 percent network conductivity by utilizing 

redundant circuits to avoid network outages that would 

have cost the CFTC time and productivity. In addition, the 

CFTC has invested in technology to assure the performance 

of the network is optimized, so there is negligible delay in 

accessing information.
102 CFTC

Performance Measure 4.2.6 Percentage of major systems and networks certified and accredited in accordance 

with NIST guidance.

Measurement: Percentage

Status: Adequate

Data Source: Accreditation documentation.

Verification: Accreditation reviews are 

conducted and 

documented by the chief 

information security officer 

and approved by the CIO. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

All four major CFTC systems are accredited. The CFTC 

conducted IT investment reviews for all its major systems, 

TSS, eLaw, ISS, and the CFTC network, within the last three 

years. The CFTC reviews its major systems to assure that 

technology is meeting the needs of the CFTC and is properly 

aligned with the strategic goals of the Commission. These 

reviews include senior management, business users, IT 

professionals, and CFO staff. The review boards found that 

CFTC’s major systems continue to exceed expectations and 

are within budget. OITS continues to accredit its major 

systems as required. eLaw was the latest major system 

accredited (September 16, 2008).

Performance Highlights

The CFTC recently completed its eLaw accreditation. eLaw 

provides CFTC with automated tools and a litigation 

support team to assist staff in performing their work more 

efficiently and effectively and gives the lawyers the ability to 

rapidly query and retrieve information about investigations 

and litigation. Its sophisticated search and retrieval 

capabilities support recurrent and ad hoc reporting 

requirements and provide a collaborative electronic work 

environment across geographically dispersed locations 

(Washington, D.C.; Chicago; New York; and Kansas City).

eLaw provides remote access to and presentation of documentary and analytic evidence, trial presentation and 

support capabilities, and forensics information tracking on 

seized computer equipment. 
CFTC 103

P ERF O RMANCE SECTION

Performance Measure 4.2.7 Percentage of information technology E-Government initiatives on target for 

compliance with implementation schedule.

Measurement: Percentage

Status: Adequate

Data Source: E-Government documents.

Verification: E-Government documents 

are created by the OITS 

staff and reviewed by the 

CIO. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The CFTC met 100 percent of its E-Government initiatives.

The CFTC oversees the futures industry, one of the world’s 

largest and fastest growing markets. The futures markets 

depend heavily on electronic trading. The CFTC must use 

technology effectively and efficiently to meet its mission of 

protecting market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity 

and financial futures and options, and to foster open, 

competitive, and financially sound futures and option 

markets. Meeting the mandates of the E-Government Act in 

many cases provides direct support for the CFTC in fulfilling 

its mission. The CFTC has met its E-Government goals by 

enhancing its Web site, as described below.

Performance Highlights

The CFTC has met its requirements for compliance with 

E-Government initiatives including Web site and records 

management.

Specifically, CFTC’s Web site, CFTC.gov, continues to 

provide an example of an internal agency-specific 

E-Government initiative that is transforming agency operations. The Commission maintains close communication 

with its stakeholders to ascertain their needs and attempt to 

meet those needs through CFTC.gov. The agency wants 

CFTC.gov to reflect the input and feedback of its external 

users, including representatives from the futures industry, 

SROs, and the public.

In FY 2008, the agency initiated an email subscription 

service that has allowed stakeholders and users to be 

notified immediately of any updates in information of 

interest to them published on the Web site. The number of 

subscribers is 5,687 and the number of subscriptions is 

currently 26,549. The top updates requested are in the 

categories of Press Releases, Commitments of Traders, 

Speeches and Testimony, Financial Data for FCMs, and 

CFTC Calendar. 

As part of the CFTC’s ongoing effort to protect market participants and the public from fraud, manipulation, and abusive 

practices, in FY 2008, the agency made its disciplinary 

history available to the public in a new searchable format 

through CFTC.gov. Specifically, the agency’s Reparations 

Sanctions in Effect and Administrative Sanctions in Effect 

are now searchable by respondent name and by CFTC 

docket number or NFA ID. In addition, the Industry Filings 

Search Tool, made available on the Web site in FY 2007, has 

been enhanced over the past year to provide its users with 

access to information about, and filings by, U.S. and foreign 

trading facilities and clearing organizations. 

During FY 2008, the CFTC initiated the use of Webcasting 

to make meetings and other events more widely available 

and accessible to its stakeholders and members of the 

public. To date, three advisory committee meetings and a 

forum to discuss events affecting the agriculture markets 

have been Webcast. Webcasts are archived on CFTC.gov.
104 CFTC

Performance Measure 4.2.8 Percentage of network users who have completed annual security and privacy 

training.

Measurement: Percentage

Status: Effective

Data Source: Annual security and privacy 

training documents and 

attendance sheets.

Verification: Annual security and privacy 

training is conducted and 

documented by the chief 

information security officer 

and reported in the agency’s 

FISMA filing to OMB. 

Lead Program Office 

Office of Information and Technology Services

Performance Analysis & Review 

The Commission exceeded its annual security and privacy 

training goal. FISMA requires that all Federal employees 

and contractors receive annual security and privacy training.

The CFTC takes security and privacy training very seriously 

and is proud that 99 percent of the staff were trained in 

security and privacy training this year, exceeding the CFTC’s 

goal of 98 percent.

Performance Highlights

The CFTC exceeded its goal of 98 percent completion of its 

annual security and privacy training. Through multiple 

training sessions and multi-media presentations, the CFTC 

was able to accommodate the busy schedules of its 

employees. The CFTC was able to use its IT capabilities to 

conduct the training at its remote locations, assuring access 

to all employees.
CFTC 105

P ERF O RMANCE SECTION

Performance Measure 4.3.1 Number of hours required to deploy staff and begin mission essential functions at 

the COOP site.

Measurement: Number

Status: Moderately Effective

Data Source: DHS/FEMA National Level Exercise (NLE) 

2-08 Eagle Horizon 2008 Continuity 

Evaluation; EOP/OSTP National Communications Systems Directive (NCSD) 3-10 

Compliance Report; and DHS/FEMA 

approval of CFTC Mission Essential 

Function/Primary Mission Essential 

Function (MEF/PMEF) Designations.

Verification: The Commission’s DHS/FEMA-approved 

NLE 2-08 After Action Report; EOP/OSTPapproved NCSD 3-10 Compliant Report; 

and DHS/FEMA-approved MEF/PMEF 

Designations. 

Lead Program Offices 

Office of Management Operations

Office of Information and Technology Services

Performance Analysis & Review 

In FY 2008, the CFTC measured its performance based on 

the agency’s participation in the U.S. Department of 

Homeland Security’s (DHS) Federal Emergency Management 

Agency (FEMA) National Level Exercise 2-08 Eagle Horizon 

08 (DHS/FEMA NLE 2-08 EH-08). The DHS/FEMA NLE 

2-08 EH-08 program was a mandatory full-scale exercise for 

testing and evaluating the continuity capabilities of executive branch departments and agencies.

The CFTC fully participated in the DHS/FEMA NLE 2-08 

EH-08 program. The agency deployed a team of evaluators 

to its continuity facility and tested its COOP capabilities 

within 18 hours of activation of the exercise. The team 

assessed the agency’s continuity program, plans, and 

procedures using an evaluation tool that tested the 

agency’s compliance with elements defined in Federal 

Continuity Directive 1, Federal Executive Branch Continuity 

Program and Requirements. The CFTC was rated as 

72 percent compliant with critical requirements and 94 

percent compliant with operational and implementation 

requirements. 

In addition to the CFTC’s participation in the DHS/FEMA 

NLE 2-08 EH-08 program, the agency assessed and reported 

on its compliance with the Executive Office of the President’s 

Office of Science and Technology Policy, National 

Communications System Directive 3-10, Minimum 

Requirements for Continuity Capabilities (NCSD 3-10). Of 

the 13 communications requirements assessed for headquarters, the CFTC fully complied with six, partially 

complied with two, and did not comply with five. For the 

agency’s continuity facility, the CFTC fully complied with 

nine requirements and did not comply with four.
106 CFTC

The risk to CFTC from non-compliance with regulatory 

requirements was determined to be low and to not result in 

a significant impact on the agency’s ability to effectively 

communicate or support its Primary Mission Essential 

Functions during emergencies. Funding for the noncompliant requirements was requested as part of the agency’s 

FY 2009 and FY 2010 submissions.

Performance Highlights

In FY 2008, the CFTC completed work with the DHS to 

validate its Mission Essential and Primary Mission Essential 

Functions. Validation of the agency’s functions, along with 

the assessments of compliance with continuity capabilities 

and communications, has strengthened the CFTC’s ability 

to efficiently and effectively respond to and anticipate both 

routine and emergency needs of the Commission.

In addition to the CFTC program evaluations identified 

above, performance highlights include:

■ Hiring a Chief of Security and Continuity Planning to 

oversee the COOP program;

■ Visiting the continuity facility quarterly to ensure that 

it is operating effectively;

■ Testing and upgrading Blackberry capabilities for 

Emergency Management officials;

■ Testing the Virtual Private Network service that allows 

employees to securely access the CFTC network from 

telework or home computers; and

■ Entering into an interagency agreement with the 

Pension Benefit Guaranty Corporation for the use of 

office space in Washington, D.C. and Springfield, 

Virginia areas in the event of a building-specific emergency where either agency’s building is rendered 

temporarily unavailable.
CFTC 107

P ERF O RMANCE SECTION

Performance Measure 4.4.1 Audit opinion of the Commission’s annual financial statements as reported by the 

CFTC’s external auditors.

Measurement: Audit Criterion

Status: Effective

Data Source: CFTC Performance and 

Accountability Report.

Verification: KPMG Report of the 

Independent Auditors.

Lead Program Office 

Office of Financial Management

Performance Analysis & Review 

For the fourth consecutive year, the public accounting firm, 

KPMG LLP, on behalf of the Inspector General, reported that 

the Commission’s financial statements were presented fairly, 

in all material respects, and were in conformity with the 

GAAP for Federal agencies.

Performance Highlights 

The CFTC 2008 Financial Statements were presented fairly, 

in all material respects, and in conformity with the GAAP 

for Federal agencies.

15 The Commission’s first independent audit was conducted in FY 2005 by KPMG, LLP. The Commission received an unqualified opinion on its balance sheet.
108 CFTC

Performance Measure 4.4.2 Number of material internal control weaknesses reported in the Performance and 

Accountability Report.

Measurement: Number

Status: Effective

Data Source: CFTC Performance and 

Accountability Report.

Verification: KPMG Report of the 

Independent Auditors. 

Lead Program Office 

Office of Financial Management

Performance Analysis & Review 

During FY 2006, Commission error and other deficiencies 

led KPMG to find that there were material weaknesses in the 

controls over financial reporting. The Commission took 

corrective actions in FY 2007 to remediate two of the three 

components of that material weakness finding. The areas of 

controls that were corrected were over leases and civil 

monetary sanctions. The last component of the material 

weakness, the process for estimating year-end accounts 

payable and accruals repeated, however, was downgraded to 

a significant deficiency.

Performance Highlights 

The CFTC had no material weaknesses in FY 2008.
CFTC 109

P ERF O RMANCE SECTION

Performance Measure 4.4.3 Number of non-compliance disclosures in the audit report.

Measurement: Number

Status: Effective

Data Source: CFTC Performance and 

Accountability Report.

Verification: KPMG Report of the 

Independent Auditors. 

Lead Program Office 

Office of Financial Management

Performance Analysis & Review 

The CFTC has improved its audit results over previous years 

by coming into substantial compliance with laws and regulations. The FY 2006 KPMG audit disclosed noncompliance 

with FISMA. Specifically, the Commission needed to 

improve entity-wide security and contingency planning 

programs, access controls, segregation of duties, and service 

continuity to fully meet guidelines of the E-Government Act 

of 2002 and OMB Circular A-130, Management of Federal 

Information Resources. Moving to compliance was greatly 

facilitated by migrating to a financial management systems 

platform operated by the DOT’s Enterprise Service Center, 

an OMB-designated financial management line of business 

service provider. Over the last year, this business arrangement has enabled the CFTC to accumulate, analyze, and 

present reliable financial information, provide reliable, 

timely information for managing current operations, and 

achieve timely reporting of financial information to central 

agencies.

Performance Highlights 

The CFTC is in substantial compliance with laws and regulations in FY 2008.
110 CFTC

Performance Measure 4.5.1 Percentage of 18 Strategic Plan priorities that are on track to completion by 

FY 2012.

Measurement: Percentage

Status: Effective

Data Source: Pilot operating plans related 

to IT (Strategic Priority 1.1) 

and human capital (Strategic 

Priority 4.3).

Verification: Not applicable at pilot stage; 

however pilot operating 

plans related to IT (Strategic 

Priority 1.1) and human 

capital (Strategic Priority 

4.3) are available for review.

Lead Program Office 

Office of Executive Director

Performance Analysis & Review 

The Commission in on track for completion of the Strategic 

Priorities outlined in the Strategic Plan by the end of 

FY 2012.

In the last quarter of FY 2008, the Office of the Executive 

Director began work on developing pilot operating plans 

for two Strategic Priorities that, if successful, will serve as a 

model for the remaining strategic priorities. In short, the 

objectives of the operating plans are: to provide a blueprint 

to managers in developing effective, efficient approaches to 

structuring operating plans for programmatic (mission) or 

operational (mission support) priorities; and to assist 

managers in articulating short-term strategies for achieving 

strategic priorities in the face of ongoing changes in both 

mission authorities and budgetary resources. Additionally, 

the plans, if successful, will assist managers in adopting 

business processes that address governance needs and 

provides streamline documentation to measure progress in 

executing plans in order to ensure priories are ultimately 

achieved.

Performance Highlights 

Pilot operating plans for two strategic objectives are in the 

formative stages.
CFTC 111
FINANCIAL SECTION

A Message from the Chief Financial Officer .........113

Limitations of Financial Statements ....................114

Principal Financial Statements ...........................115

Notes to the Financial Statements ......................120

Report of the Independent Auditors..................... 131
CFTC 113

For the fourth consecutive year, the public 

accounting firm KPMG LLP, on behalf of our 

Inspector General, reported that the financial 

statements included in this report were presented fairly, in 

all material respects, and in conformity with the U.S.

generally accepted accounting principles (GAAP) for 

Federal agencies. 

For the second consecutive year the Commission had no 

material weaknesses, and was compliant with laws and 

regulations. This includes substantial compliance with the 

Federal Information Security Management Act. 

The CFTC leverages a financial management systems 

platform operated by the U.S. Department of Transportation’s (DOT) Enterprise Service Center; an Office of 

Management and Budget designated financial management 

line of business service provider. As a consequence, the 

CFTC is able to accumulate, analyze and present reliable 

financial information, or provide reliable, timely information for managing current operations and timely reporting 

of financial information to central agencies. Furthermore, 

our system is in substantial compliance with the Federal 

Financial Management Improvement Act of 1996 (although 

CFTC is not required to comply with FFMIA, it has elected 

to do so.) 

Last year, KPMG identified a significant deficiency in the 

controls over Recording Accruals and Preparing Financial 

Statements. A corrective action plan was implemented to 

improve the process controls used to estimate accounts 

payable and accruals. The Commission was able to 

successfully remediate this weakness and has no new 

significant deficiencies in the controls over its financial 

reporting.

Mark Carney

Chief Financial Officer

November 17, 2008

A Message From the Chief Financial Officer
114114CFTCFTC

Management has prepared the accompanying financial statements to report the financial 

position and operational results for the CFTC for FY 2008 and FY 2007 pursuant to the 

requirements of Title 31 of the U.S. Code, section 3515 (b).

While these statements have been prepared from the books and records of the 

Commission in accordance with GAAP for Federal entities and the formats 

prescribed by OMB Circular A-136, Financial Reporting Requirements, these 

statements are in addition to the financial reports used to monitor and control 

budgetary resources, which are prepared from the same books and records.

The statements should be read with the understanding that they represent 

a component of the U.S. government, a sovereign entity. One implication 

of this is that the liabilities presented herein cannot be liquidated 

without the enactment of appropriations, and ongoing operations are 

subject to the enactment of future appropriations.

Limitations of Financial Statements
CFTC 115

Principal Financial Statements

Commodity Futures Trading Commission

Balance Sheets

As of September 30, 2008 and 2007

2008 2007

Assets

Intragovernmental:

Fund Balance with Treasury (Note 2) $ 27,666,831 $ 19,507,914

Accounts Receivable (Note 3) 7,440 5,806 

Prepayments (Note 1H) 47,279 131,142 

Total Intragovernmental 27,721,550 19,644,862 

Custodial Receivables, Net (Note 3) 1,721,526 620,311 

Accounts Receivable (Note 3) 4,094 120,470 

General Property, Plant and Equipment, Net (Note 4) 2,810,441 2,850,911 

Prepayments (Note 1H) 414,273 -

Total Assets $ 32,671,884 $ 23,236,554 

Liabilities

Intragovernmental:

FECA Liabilities $ 41,092 $ 32,787 

Accounts Payable 366,651 274,334 

Total Intragovernmental 407,743 307,121 

Accounts Payable 2,130,307 2,686,039 

Accrued Funded Payroll 3,504,048 2,566,433 

Annual Leave 4,525,329 4,849,189 

Actuarial FECA Liabilities (Note 7) 177,796 190,216 

Custodial Liabilities 1,721,526 620,311 

Contingent Liabilities (Note 9) - 310,000 

Deposit Fund Liabilities - 47,563 

Other - Deferred Lease Liabilities (Note 8) 3,294,324 3,169,541 

Other 9,957 10,001

Total Liabilities $ 15,771,030 $ 14,756,414 

Net Position

Cumulative Results of Operations $ (5,224,895) $ (5,700,823)

Unexpended Appropriations 22,125,749 14,180,963 

Total Net Position 16,900,854 8,480,140 

Total Liabilities and Net Position $ 32,671,884 $ 23,236,554 

The accompanying notes are an integral part of these financial statements. 
116 CFTC

Commodity Futures Trading Commission

Statements of Net Cost

For the Years Ended September 30, 2008 and 2007

2008 2007

Goal 1: Ensure the economic vitality of the commodity futures and option markets

Gross Costs $ 31,675,123 $ 30,547,442 

Less: Earned Revenue (20,244) (27,529)

Net Cost of Operations – Goal One $ 31,654,879 $ 30,519,913 

Goal 2: Protect market users and the public

Gross Costs $ 25,340,098 $ 24,437,953 

Less: Earned Revenue (16,195) (22,023)

Net Cost of Operations – Goal Two $ 25,323,903 $ 24,415,930 

Goal 3: Ensure market integrity in order to foster open, competitive, and financially

sound markets

Gross Costs $ 24,284,261 $ 23,419,705 

Less: Earned Revenue (15,520) (21,105)

Net Cost of Operations – Goal Three $ 24,268,741 $ 23,398,600 

Goal 4: Facilitate Commission performance through organizational and management

excellence, efficient use of resources, and effective mission support.

Gross Costs $ 24,284,261 $ 23,419,705 

Less: Earned Revenue (15,520) (21,105)

Net Cost of Operations – Goal Four $ 24,268,741 $ 23,398,600 

Grand Total

Gross Costs $ 105,583,743 $ 101,824,805 

Less: Earned Revenue (67,479) (91,762)

Total Net Cost of Operations $ 105,516,264 $ 101,733,043 

The accompanying notes are an integral part of these financial statements.
CFTC 117

F INANCIAL SECTION

Commodity Futures Trading Commission

Statements of Changes in Net Position

For the Years Ended September 30, 2008 and 2007

2008 2007

Cumulative Results of Operations

Beginning Balances, October 1 $ (5,700,823) $ (4,568,800)

Budgetary Financing Sources

Appropriations Used 102,111,763 96,725,117 

Other Financing Sources

Imputed Financing Sources 3,880,429 3,875,903 

Net Cost of Operations (105,516,264) (101,733,043)

Net Change 475,928 1,132,023 

Total Cumulative Results of Operations, September 30 $ (5,224,895) $ (5,700,823)

Unexpended Appropriations

Beginning Balances, October 1 $ 14,180,963 $ 13,858,546 

Budgetary Financing Sources

Appropriations Received 111,265,650 97,981,140 

Less: Canceled (1,209,101) (933,606)

Appropriations Used (102,111,763) (96,725,117)

 Total Budgetary Financing Sources 7,944,786 322,417 

Total Unexpended Appropriations, September 30 $ 22,125,749 $ 14,180,963 

Net Position $ 16,900,854 $ 8,480,140 

The accompanying notes are an integral part of these financial statements. 
118 CFTC

Commodity Futures Trading Commission

Statements of Budgetary Resources

For the Years Ended September 30, 2008 and 2007

2008 2007

Budgetary Resources

Unobligated Balance, October 1 $ 6,986,081 $ 4,734,164 

Recoveries of Prior Year Unpaid Obligations 3,990,815 4,715,177 

Total Prior Resources 10,976,896 9,449,341 

New Resources:

Appropriations 112,050,000 97,981,140 

Spending Authority from Offsetting Collections

 Collected 708,068 98,788 

 Change in Receivables from Federal sources (66,027) 73,467 

Change in Unfilled Customer Orders

 Advance Received (44) 10,001

 Without Advance from Federal Sources 7,244 951

Total New Resources $ 112,699,241 $ 98,164,347 

Permanently Not Available:

Cancellation of Expired Accounts (1,209,101) (933,606)

Enacted Reduction (784,350) -

Total Budgetary Resources $ 121,682,686 $ 106,680,082 

Status of Budgetary Resources

Obligations Incurred:

Direct

Obligations Incurred, Direct $ 116,936,033 $ 99,694,001 

Total Obligations Incurred (Note 11) 116,936,033 99,694,001 

Unobligated Balance

Apportioned:

Unobligated Balance Apportioned 1,689,337 3,475,149 

Unobligated Balance Not Available 3,057,316 3,510,932 

Total Status of Budgetary Resources $ 121,682,686 $ 106,680,082 

Change in Obligated Balances

Net Obligated Balance, October 1

Unpaid Obligations $ 12,548,687 $ 15,273,855 

Uncollected customer payments from Federal sources (74,417) -

Net Obligated Balance, October 1 $ 12,474,270 $ 15,273,855 

Gross Obligations Incurred 116,936,033 99,694,001 

Gross Outlays (102,558,095) (97,703,992)

Recoveries of Prior Year Unpaid Obligations (3,990,815) (4,715,177)

Change in Receivables from Federal sources 58,783 (74,417)

 $ 22,920,176 $ 12,474,270 

Net Obligated Balance, September 30

Unpaid Obligations $ 22,935,810 $ 12,548,687 

Uncollected customer payments from Federal sources (15,634) (74,417)

Net Obligated Balance, September 30 $ 22,920,176 $ 12,474,270 

Net Outlays

Gross Outlays $ 102,558,095 $ 97,703,992 

Offsetting Collections Received (708,024) (108,789)

Distributed Offsetting Receipts (4,933) (12,378)

Net Outlays $ 101,845,138 $ 97,582,825 

The accompanying notes are an integral part of these financial statements.
CFTC 119

F INANCIAL SECTION

Commodity Futures Trading Commission

Statements of Custodial Activity

For the Years Ended September 30, 2008 and 2007

2008 2007

Revenue Activity

Sources of Cash Collections:

Registration and Filing Fees $ 906,326 $ 287,615 

Fines, Penalties, and Forfeitures 140,879,579 12,143,639 

General Proprietary Receipts 4,933 12,378 

Total Cash Collections 141,790,838 12,443,632 

Change in Custodial Receivables 1,101,215 (5,136,294)

Total Custodial Revenue $ 142,892,053 $ 7,307,338 

Disposition of Collections

Transferred to Others, by Recipient:

 Transferred to Treasury (141,790,838) (12,443,632) 

 Change in Custodial Liabilities (1,101,215) 5,136,294 

Net Custodial Activity $ - $ - 

The accompanying notes are an integral part of these financial statements.
120 CFTC

Notes to the Financial Statements

As of and For the Fiscal Years Ended September 30, 2008 and 2007

Note 1. Summary of Significant 

Accounting Policies

A. Reporting Entity

The Commodity Futures Trading Commission (CFTC) is an 

independent agency of the executive branch of the Federal 

Government. Congress created the CFTC in 1974 under 

the authorization of the Commodity Exchange Act (CEA) 

with the mandate to regulate commodity futures and option 

markets in the United States. The agency’s mandate was 

renewed and expanded under the Futures Trading Acts of 

1978, 1982, and 1986; under the Futures Trading Practices 

Act of 1992; under the CFTC Reauthorization Act of 1995, 

and under the Commodity Futures Modernization Act of 

2000. Congress recently passed the Food, Conservation, 

and Energy Act of 2008 (Farm Bill), which reauthorized 

the Commission through FY 2013. Since its inception, 

the CFTC has continuously operated through authorized 

appropriations. 

The CFTC is responsible for ensuring the economic utility 

of futures markets by encouraging their competitiveness and 

efficiency, ensuring their integrity, and protecting market 

participants against manipulation, abusive trade practices, 

and fraud.

B. Basis of Presentation

The financial statements have been prepared to report the 

financial position and results of operations for the CFTC, 

as required by the Chief Financial Officers’ Act of 1990 

along with the Accountability of Tax Dollars Act of 2002, 

and the Government Management Reform Act of 1994.

They are presented in accordance with the form and content 

requirements contained in Office of Management and 

Budget (OMB) Circular No. A-136, “Financial Reporting 

Requirements,” dated June 3, 2008. 

The principal financial statements have been prepared in 

all material respects from the agency’s books and records in 

conformity with U.S. generally accepted accounting principles (GAAP), as prescribed for the federal government by the 

Federal Accounting Standards Advisory Board (FASAB). The 

application and methods for applying these principles are 

appropriate for presenting fairly the entity’s assets, liabilities, net cost of operations, changes in net position, and 

budgetary resources.

The financial statements report on the CFTC’s financial 

position, net cost of operations, changes in net position, 

budgetary resources, and custodial activities. The books and 

records of the agency served as the source of information for 

preparing the financial statements in the prescribed formats.

All agency financial statements and reports used to monitor 

and control budgetary resources are prepared from the same 

books and records. The statements should be read with the 

understanding that they are for a component of the U.S.

Government, a sovereign entity.

The Balance Sheets present the financial position of the 

agency. The Statements of Net Cost present the agency’s 

operating results; the Statements of Changes in Net Position 

display the changes in the agency’s equity accounts. The 

Statements of Budgetary Resources present the sources, status, 

and uses of the agency’s resources and follows the rules for 

the Budget of the United States Government. The Statements 

of Custodial Activity present the sources and disposition of 

collections for which the CFTC is the fiscal agent, or custodian, for the Treasury General Fund Miscellaneous Receipt 

accounts.

Throughout these financial statements, assets, liabilities, 

revenues and costs have been classified according to the 

type of entity with whom the transactions were made.

Intragovernmental assets and liabilities are those from or to 

other federal entities. Intragovernmental earned revenues are 

collections or accruals of revenue from other federal entities, 

and intragovernmental costs are payments or accruals to 

other federal entities. The CFTC does not transact business 

among its own operating units, and therefore, intra-entity 

eliminations were not needed. 

Certain fiscal year 2007 amounts have been reclassified to 

conform to the fiscal year 2008 presentation.
CFTC 121

F INANCIAL SECTION

deposit fund account and miscellaneous receipts accounts of 

the Treasury are not available for agency use. At fiscal year end, 

receipt account balances are cleared and returned to Treasury.

The CFTC does not maintain bank accounts of its own, has 

no disbursing authority, and does not maintain cash held 

outside of Treasury. Treasury disburses funds for the agency 

on demand. Spending authority from offsetting collections is 

recorded in the agency’s expenditure account and is available 

for agency use subject to certain limitations. (See Note 2)

F. Accounts Receivable 

Accounts receivable consists of amounts owed by other 

federal agencies and the public to the CFTC and is valued net 

of an allowance for uncollectible amounts. The allowance 

is based on past experience in the collection of receivables 

and analysis of the outstanding balances. Accounts receivable 

arise from reimbursable operations, earned refunds or the 

Civil Monetary Sanctions program. (See Note 3)

G. Property, Equipment, and Software 

Property, equipment, and software represent furniture, 

fixtures, equipment, and information technology hardware 

and software, which are capitalized and depreciated or amortized over their useful lives. 

The CFTC capitalizes assets annually if they have useful lives 

of at least two years and an individual value of $25,000 or 

more. Bulk or aggregate purchases are capitalized when the 

individual useful lives are at least two years and a value of 

$25,000 or more. Property, equipment, and software that 

do not meet the capitalization criteria are expensed when 

acquired. Depreciation and amortization is computed on a 

straight-line basis using a 5-year life. The Commission’s assets 

are valued net of accumulated depreciation. (See Note 4) 

H. Prepayments

Payments to federal and non-federal sources in advance of the 

receipt of goods and services are recorded as prepayments, and 

recognized as expenses when the related goods and services 

are received. Intragovernmental prepayments reported on 

the Balance Sheet were made primarily to the Department 

of Transportation (DOT) Enterprise Service Center for report 

enhancement and transit subsidy services. Prepayments to the 

public were primarily for software and subscription services.

C. Budgetary Resources and Status 

The CFTC is funded through congressionally approved appropriations. The CFTC is responsible for administering the 

salaries and expenses of the agency through the execution of 

these appropriations. 

Congress annually enacts one-year appropriations that 

provide the CFTC with the authority to obligate funds within 

the respective fiscal year for necessary expenses to carry out 

mandated program activities. In addition, Congress enacted 

a permanent indefinite appropriation that is available until 

expended. All appropriations are subject to quarterly apportionment as well as Congressional restrictions.

The CFTC’s budgetary resources for FY 2008 consist of: 

■ Unobligated balances of resources brought forward 

from the prior year, 

■ Recoveries of obligations in prior years, and 

■ New resources in the form of appropriations and 

spending authority from offsetting collections. 

Unobligated balances associated with resources expiring at 

the end of the fiscal year remain available for five years after 

expiration only for upward adjustments of prior year obligations, after which they are canceled and may not be used.

All unused monies related to canceled appropriations are 

returned to Treasury and the canceled authority is reported as 

a line item on the Statements of Budgetary Resources and the 

Statements of Changes in Net Position.

D. Entity and Non-Entity Assets 

Assets consist of entity and non-entity assets. Entity assets are 

those assets that the CFTC has authority to use for its operations. Non-entity assets are those held by the CFTC that are 

not available for use in its operations. Non-entity assets held 

by the CFTC include deposit fund balances, custodial fines, 

and interest receivable, net. (See Note 3) 

E. Fund Balance with Treasury 

Fund Balance with Treasury is the aggregate amount of the 

CFTC’s funds with Treasury in expenditure, receipt, and deposit 

fund accounts. Appropriated funds recorded in expenditure 

accounts are available to pay current liabilities and finance 

authorized purchases. Custodial collections recorded in the 
122 CFTC

I. Liabilities

The CFTC’s liabilities consist of actual and estimated amounts 

that are likely to be paid as a result of transactions covered 

by budgetary resources for which Congress has appropriated 

funds or funding, or are otherwise available from reimbursable transactions to pay amounts due.

Liabilities include those covered by budgetary resources in 

existing legislation and those not yet covered by budgetary 

resources (See Note 5). The CFTC liabilities not covered by 

budgetary resources include: 

■ Intragovernmental Federal Employees Compensation 

Act (FECA) liabilities,

■ Annual leave benefits which will be funded by annual 

appropriations as leave is taken,

■ Actuarial FECA liabilities,

■ Custodial liabilities for custodial revenue transferred 

to Treasury at fiscal year end,

■ Contingent liabilities, 

■ Deposit funds, 

■ Deferred lease liabilities, and

■ Other.

The CFTC’s liabilities that are covered by budgetary resources 

are considered current liabilities.

J. Accounts Payable 

Accounts payable consists primarily of contracts for goods 

or services, such as leases, utilities, telecommunications, and 

consulting and support services.

K. Accrued Payroll and Benefits and 

Annual Leave Liability

The accrued payroll liability represents amounts for salaries 

and benefits owed for the time since the payroll was last paid 

through the end of the fiscal year. The annual leave liability 

is the amount owed employees for unused annual leave as 

of the end of the fiscal year. At the end of each quarter, the 

balance in the accrued annual leave account is adjusted to 

reflect current balances and pay rates. Sick leave and other 

types of non-vested leave are expensed as taken.

The agency’s employees participate in the Civil Service 

Retirement System (CSRS) or the Federal Employees’ Retirement System (FERS). On January 1, 1987, FERS went into 

effect pursuant to Public Law 99-335. Most employees hired 

after December 31, 1983, are automatically covered by FERS 

and Social Security. Employees hired prior to January 1, 1984, 

could elect to either join FERS and Social Security or remain 

in CSRS.

For employees under FERS, the CFTC contributes an amount 

equal to one percent of the employee’s basic pay to the tax 

deferred Thrift Savings Plan and matches employee contributions up to an additional four percent of pay. FERS and CSRS 

employees can contribute a portion of their gross earnings to 

the plan up to IRS limits; however, CSRS employees receive no 

matching agency contribution.

L. Leases 

The CFTC does not have any capital lease liabilities. The 

operating leases consist of commercial property leases for the 

CFTC’s headquarters and regional offices. Lease expenses are 

recognized on a straight-line basis. 

M. Deposit Funds 

Deposit funds are expenditure accounts used to record monies 

that do not belong to the Federal government. They are held 

awaiting distribution based on a legal determination or investigation. The CFTC deposit fund is used to record and later 

distribute monetary awards to the appropriate defendants as 

restitution.

N. Net Position

Net position consists of unexpended appropriations and 

cumulative results of operations. Unexpended appropriations 

are appropriations that have not yet been used to acquire 

goods and services or provide benefits. Appropriations are 

considered expended, or used, when goods and services have 

been acquired by the CFTC or benefits have been provided 

using the appropriation authority, regardless of whether 

monies have been paid or payables for the goods, services, 

or benefits have been established. Appropriations were used 

primarily to acquire goods and services to operate the CFTC’s 

programs or to provide benefits.

Cumulative results of operations represent the excess of 

financing sources over expenses since inception. Cumulative 

results of operations are derived from the net effect of 

capitalized assets, expenses, exchange revenue, and unfunded 

liabilities.
CFTC 123

F INANCIAL SECTION

O. Earmarked Funds 

As of September 30, 2008, the CFTC’s financing sources did 

not have any earmarked funds. Earmarked funds were not 

received by the agency for designated activities, benefits or 

purposes as specifically required by statute.

P. Revenues

The CFTC receives reimbursement and earns revenue for the 

following activities:

■ Reimbursement for travel, subsistence, and related 

expenses from non-federal sources for attendance at 

meetings or similar functions that an employee has 

been authorized to attend in an official capacity on 

behalf of the Commission. 

■ Reimbursement for Intergovernmental Personnel Act 

Mobility Program assignments from state and local 

governments, institutions of higher education, and 

other eligible organizations for basic pay, supplemental 

pay, fringe benefits, and travel and relocation expenses.

■ Reimbursement from non-federal sources for registration 

fees to cover the cost of expenses related to the CFTC’s 

annual International Regulators Conference.

Q. Net Cost of Operations 

Net cost of operations is the difference between the CFTC’s 

expenses and its earned revenue. The presentation of program 

results by strategic goals is based on the CFTC’s current 

Strategic Plan established pursuant to the Government 

Performance and Results Act of 1993.

The mission statement of the CFTC is to protect market users 

and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures 

and options, and to foster open, competitive, and financially 

sound futures and option markets. The mission is accomplished through four strategic goals, each focusing on a vital 

area of regulatory responsibility:

■ Ensure the economic vitality of the commodity futures 

and option markets,

■ Protect market users and the public,

■ Ensure market integrity in order to foster open, 

competitive, and financially sound markets, and

■ Facilitate Commission performance through 

organizational and management excellence, efficient 

use of resources, and effective mission support.

R. Custodial Activity 

The CFTC collects penalties and fines levied against firms for 

violation of laws as described in the Commodity Exchange Act 

as codified at 7 U.S.C. § 1, et seq, and the Commodities Futures 

Modernization Act of 2000, Appendix E of P.L. 106-554, 114 

Stat. 2763. Unpaid fines, penalties and accrued interest are 

reported as custodial receivables, with an associated custodial liability. The receivables and the liability are reduced by 

amounts determined to be uncollectible. Revenues earned 

and the losses from bad debts are reported to Treasury.

Collections made by the CFTC during the year are deposited 

and reported into designated Treasury miscellaneous receipt 

accounts for: 

■ Registrations and filing fees, 

■ Fines, penalties and forfeitures, and 

■ General proprietary receipts. 

At fiscal year end, custodial collections made by the CFTC are 

returned to Treasury. The CFTC does not retain any amount 

for custodial activities including reimbursement of the cost 

of collection. 

S. Use of Management Estimates 

The preparation of the accompanying financial statements in 

accordance with accounting principles generally accepted in 

the United States of America requires management to make 

certain estimates and assumptions that directly affect the 

results of reported assets, liabilities, revenues, and expenses.

Actual results could differ from these estimates.

T. Tax Status

The CFTC is not subject to Federal, state or local income taxes.

Accordingly, no provision for income taxes is recorded.

U. Reconciliation of Net Obligations and Net Cost 

of Operations 

In accordance with OMB Circular No. A-136, the Commission 

reconciles its change in budgetary obligations with its net cost 

of operations. (See Note 15).
124 CFTC

Note 2. Fund Balance with Treasury

A. Reconciliation to Treasury

There are no differences between the Fund Balance reflected in the CFTC Balance Sheets and the balance in the Treasury 

accounts.

B. Fund Balance with Treasury

Fund Balances with Treasury consist of entity assets such as appropriations and reimbursements for services rendered.

Obligation of these funds is controlled by quarterly apportionments made by OMB. Work performed under reimbursable 

agreements is initially financed by the annual appropriation and is subsequently reimbursed. Other funds include non-entity 

deposit fund receipts.

Fund Balance with Treasury at September 30, 2008 and 2007 consisted of the following:

2008 2007

Appropriated Funds $ 27,666,831 $ 19,460,351

Deposit Fund - 47,563

TOTAL APPROPRIATED FUND BALANCE WITH TREASURY $ 27,666,831 $ 19,507,914 

C. Status of Fund Balance with Treasury

Status of Fund Balance with Treasury at September 30, 2008 and 2007 consisted of the following:

2008 2007

Appropriated Funds

 Unobligated Fund Balance

Available $ 1,589,552 $ 3,261,296

Expired 84,151 139,436

Unavailable 3,057,317 3,510,932

Obligated Balance Not Yet Disbursed 22,935,810 12,548,687

Total Appropriated Funds 27,666,831 19,460,351

Deposit Fund - 47,563

Total Fund Balance with Treasury $ 27,666,831 $ 19,507,914 

Note 3. Accounts Receivable

Accounts receivable consist of amounts owed to the CFTC by other Federal agencies and the public. Accounts receivable are 

valued net of estimated uncollectibles. Non-custodial accounts receivable are primarily for overpayments of expenses to other 

agencies, or vendors, and repayment of employee benefits. Historical experience has indicated that most of the non-custodial 

receivables are collectible and there are no material uncollectible amounts.
CFTC 125

F INANCIAL SECTION

Custodial receivables (non-entity assets) are those for which fines and penalties have been assessed and levied against businesses for violation of law. The CFTC litigates against defendants for alleged violations of the CEA, as amended. Violators 

may be subject to a variety of sanctions including fines, injunctive orders, bars or suspensions, rescissions of illegal contracts, 

disgorgements, and restitutions to customers.

Historical experience has indicated that a high percentage of custodial receivables prove uncollectible. The methodology used 

to estimate the allowance for uncollectible amounts related to custodial accounts is that custodial receivables are considered 

100% uncollectible unless otherwise noted in the judgment. An allowance for uncollectible accounts has been established and 

included in accounts receivable on the balance sheets. The allowance is based on past experience in the collection of accounts 

receivable and analysis of outstanding balances. Accounts are re-estimated quarterly based on account reviews and the agency 

determination that changes to the net realizable value are needed.

Accounts receivable, as of September 30, 2008 and 2007, consisted of the following:

2008 2007

Custodial Receivables, Net:

Civil Monetary Penalty Interest $ 23,073,549 $ 28,980,636 

Civil Monetary Penalties, Fines, and Administrative Fees 1,431,481,646 1,145,896,796

Less: Allowance for Loss on Interest (23,069,460) (28,980,222)

Less: Allowance for Loss on Penalties, Fines, and Administrative Fees (1,430,214,727) (1,145,633,370)

Registration and Filing Fees 450,519 356,472

Net Custodial RECEIVABLES $ 1,721,526 $ 620,311

Other Accounts Receivable $ 11,534 $ 126,276 

Note 4. Property, Equipment, and Software, Net

Assets are capitalized annually if they have useful lives of at least two years and an individual value of $25,000 or more. Bulk 

or aggregate purchases are capitalized when the individual useful lives are at least two years and a value of $25,000 or more.

Depreciation and amortization is computed on a straight-line basis using a 5-year life. The CFTC did not defer any maintenance 

in FY 2008 or FY 2007. Property, Equipment and Software as of September 30, 2008 and 2007 consisted of the following:

2008

Service Life and 

Method Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Major Class Value

Equipment 5 Years/Straight Line $ 1,999,554 $ (864,058) $ 1,135,496

IT Software 5 Years/Straight Line 2,966,169 (1,291,224) 1,674,945

$ 4,965,723 $ (2,155,282) $ 2,810,441

2007

Service Life and 

Method Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Major Class Value

Equipment 5 Years/Straight Line $ 1,146,835 $ (564,103) $ 582,732 

IT Software 5 Years/Straight Line 2,966,169 (697,991) 2,268,179

$ 4,113,004 $ (1,262,093) $ 2,850,911
126 CFTC

Note 5. Liabilities Not Covered by Budgetary Resources

As of September 30, 2008 and 2007, the following liabilities not covered by budgetary resources exist:

2008 2007

Intragovernmental - FECA Liabilities $ 41,092 $ 32,787 

Annual Leave 4,525,329 4,849,189

Actuarial FECA Liabilities 177,796 190,216

Custodial Liabilities 1,721,526 620,311

Contingent Liabilities - 310,000

Deposit Fund Liabilities - 47,563

Deferred Lease Liabilities 3,294,324 3,169,541

Other 9,957 10,001

Total Liabilities Not Covered by Budgetary Resources $ 9,770,025 $ 9,229,608 

Note 6. Retirement Plans and Other Employee Benefits

The CFTC imputes costs and the related financing sources for its share of retirement benefits accruing to its past and present 

employees, which are in excess of the amount of contributions from the CFTC and its employees, which are mandated by 

law. The Office of Personnel Management (OPM), which administers federal civilian retirement programs, provides the cost 

information to the CFTC. The CFTC recognizes the full cost of providing future pension and Other Retirement Benefits (ORB) 

for current employees as required by Statement of Federal Financial Accounting Standards (SFFAS) No. 5, “Accounting for 

Liabilities of the Federal Government.”

Full costs include pension and ORB contributions paid out of the CFTC’s appropriations and costs financed by OPM. The 

amount financed by OPM is recognized as an imputed financing source. This amount was $3,880,429 for the year ended 

September 30, 2008 and $3,875,903 for the year ended September 30, 2007. Reporting amounts such as plan assets, accumulated plan benefits, or unfunded liabilities, if any, is the responsibility of OPM.

Liabilities for future pension payments and other future payments for retired employees who participate in the Federal 

Employees Health Benefits Program and the Federal Employees Group Life Insurance Program are reported by OPM rather 

than CFTC.

Note 7. Actuarial FECA Liabilities

FECA provides income and medical cost protections to covered federal civilian employees injured on the job, to employees 

who have incurred work-related occupational diseases and to beneficiaries of employees whose deaths are attributable to jobrelated injuries or occupational diseases. The FECA program is administered by the U.S. Department of Labor (DOL), which 

pays valid claims against the CFTC and subsequently seeks reimbursement from the CFTC for these paid claims. Accrued FECA 

liabilities represent amounts due to DOL for claims paid on behalf of the agency. Accrued FECA liabilities at September 30, 

2008 and September 30, 2007 were $41,092 and $32,787, respectively.

Actuarial FECA liability represents the liability for future workers compensation (FWC) benefits, which includes the expected 

liability for death, disability, medical, and miscellaneous cost for approved cases. The liability is determined using a formula 

provided by DOL annually as of September 30th using a method that utilizes historical benefits payment patterns related to 

a specific incurred period to predict the ultimate payments related to that period. The projected annual benefits payments 

are discounted to present value using OMB’s economic assumptions for ten-year Treasury notes and bonds. To provide more 
CFTC 127

F INANCIAL SECTION

specifically for effects of inflation on liability for FWC benefits, wage inflation factors (Consumer Price Index-Medical) are 

applied to the calculation of projected future benefits. These factors are also used to adjust historical payments so benefits 

are stated in current-year constant dollars. Actuarial FECA liabilities at September 30, 2008 and September 30, 2007 were 

$177,796 and $190,216, respectively. 

Note 8. Leases

The CFTC leases office space in publicly owned buildings for its locations in Washington D.C., Chicago, New York, and Kansas 

City. The lease contracts for publicly-owned buildings are operating leases. The CFTC has no real property. Future estimated 

minimum lease payments are not accrued as liabilities and are expensed on a straight-line basis.

As of September 30, 2008, future estimated minimum lease payments through FY 2012, and thereafter, is as follows:

Fiscal Year Dollars

2009 $ 10,801,167

2010 10,970,480

2011 11,268,766

2012 9,898,728

2013 8,147,303

Thereafter 16,589,980

Total Minimum lease payments 67,676,424 

Add: Amount representing estimated executory costs (taxes, maintenance, and insurance) 12,241,763

Total minimum lease payments, including estimated executory costs $ 79,918,187 

Lease expense is recognized on a straight-line basis. Because the lease payment amounts vary, and in some cases, CFTC receives 

periods of up-front free rent, a deferred lease liability representing expense amounts in excess of payments to date, has been 

recorded. The deferred lease liabilities at September 30, 2008 and September 30, 2007 were $3,294,324 and $3,169,541, 

respectively.

Note 9. Contingent Liabilities

The CFTC records commitments and contingent liabilities for legal cases in which payment has been deemed probable and 

for which the amount of potential liability has been estimated, including certain judgments that have been issued against the 

agency and which have been appealed. In FY 2007, the Commission estimated a probable liability of $310,000 in connection with a Merit Systems Protection Board suit, which was settled in FY 2008. There were no contingent liabilities as of 

September 30, 2008.

Note 10. Undelivered Orders

The amount of budgetary resources obligated for undelivered orders as of September 30, 2008 and 2007 consisted of the 

following:

2008 2007

Undelivered Orders $ 17,450,966 $ 7,204,942 

The amount of undelivered orders represents the value of unpaid and paid obligations recorded during the fiscal year, upward 

adjustments of obligations that were originally recorded in a prior fiscal year, and recoveries resulting from downward adjustments of obligations that were originally recorded in a prior fiscal year.
128 CFTC

Note 11. Apportionment Categories of Obligations Incurred

Obligations incurred and reported in the Statements of Budgetary Resources in 2008 and 2007 consisted of the following:

2008 2007

Direct Obligations, Category A $ 116,771,039 $ 99,575,548 

Reimbursable Obligations, Category A 164,994 118,453

Total Obligations Incurred $ 116,936,033 $ 99,694,001

Note 12. Permanent Indefinite Appropriations

The CFTC’s permanent indefinite appropriation as authorized by Public Law 107-38 funds emergency expenses to respond to 

the terrorist attacks on the United States that occurred on September 11, 2001. The fund provides support to deal with consequences of the attacks and support national security.

Note 13. Explanation of Differences between the Statement of Budgetary Resources and 

Budget of the United States Government

The CFTC had no material differences between the amounts reported in the Statement of Budgetary Resources and the actual 

amounts reported in the Budget of the U.S. Government for FY 2007. The Budget of the U.S. Government with actual numbers 

for FY 2008 has not yet been published. The expected publish date is February 2009. A copy of the Budget can be obtained 

from OMB’s Internet site at http://www.whitehouse.gov/omb/.

Note 14. Intra-governmental Cost and Exchange Revenue by Goal

As required by the Government Performance and Results Act of 1993, the agency’s reporting has been aligned with the following 

major goals presented in the 2007 – 2012 CFTC Strategic Plan. 

1. Ensure the Economic Vitality of the Commodity Futures and Option Markets

2. Protect Market Users and the Public

3. Ensure Market Integrity in Order to Foster Open, Competitive, and Financially Sound Markets

4. Facilitate Commission Performance Through Organizational and Management Excellence, Efficient Use of Resources, 

and Effective Mission Support

The Net Cost of Operations is derived from transactions between the Commission and public entities, as well as with other 

federal agencies. The details of the intra-governmental costs and revenues, as well as those with the public, are as follows:
CFTC 129

F INANCIAL SECTION

2008 2007

Goal 1: Ensure the economic vitality of the commodity futures and option markets

Intragovernmental Gross Costs $ 16,687,029 $ 7,553,897

Less: Earned Revenue (10,665) (6,807) 

Intragovernmental Net Cost of Operations $ 16,676,364 $ 7,547,090

Gross Costs with the Public $ 14,988,094 $ 22,993,545

Less: Earned Revenue (9,579) (20,721)

Net Cost of Operations with the Public $ 14,978,515 $ 22,972,824

Total Net Cost of Operations – Goal One $ 31,654,879 $ 30,519,913

Goal 2: Protect market users and the public

Intragovernmental Gross Costs $ 13,349,623 $ 6,043,117

Less: Earned Revenue (8,532) (5,446) 

Intragovernmental Net Cost of Operations $ 13,341,091 $ 6,037,672

Gross Costs with the Public $ 11,990,475 $ 18,394,836

Less: Earned Revenue (7,663) (16,577)

Net Cost of Operations with the Public $ 11,982,812 $ 18,378,259

Total Net Cost of Operations – Goal Two $ 25,323,903 $ 24,415,930

Goal 3: Ensure market integrity in order to foster open, competitive, and financially

sound markets

Intragovernmental Gross Costs $ 12,793,389 $ 5,791,321

Less: Earned Revenue (8,176) (5,219) 

Intragovernmental Net Cost of Operations $ 12,785,213 $ 5,786,102

Gross Costs with the Public $ 11,490,872 $ 17,628,384

Less: Earned Revenue (7,344) (15,886)

Net Cost of Operations with the Public $ 11,483,528 $ 17,612,498

Total Net Cost of Operations – Goal Three $ 24,268,741 $ 23,398,600

Goal 4: Facilitate Commission performance through organizational and management

excellence, efficient use of resources, and effective mission support

Intragovernmental Gross Costs $ 12,793,389 $ 5,791,321

Less: Earned Revenue (8,176) (5,219) 

Intragovernmental Net Cost of Operations $ 12,785,213 $ 5,786,102

Gross Costs with the Public $ 11,490,872 $ 17,628,384

Less: Earned Revenue (7,344) (15,886)

Net Cost of Operations with the Public $ 11,483,528 $ 17,612,498

Total Net Cost of Operations – Goal Four $ 24,268,741 $ 23,398,600

Net Cost of Operations $ 105,516,264 $ 101,733,043
130 CFTC

Note 15. Reconciliation of Net Obligations and Net Cost of Operations

The schedule presented in this footnote reconciles the net obligations with the Net Cost of Operations. Resources Used to Finance 

Activities reflects the budgetary resources obligated and other resources used to finance the activities of the agency. Resources Used 

to Finance Items Not Part of the Net Cost of Operations adjusts total resources used to finance the activities of the entity to account 

for items that were included in net obligations and other resources but were not part of the Net Cost of Operations. Components 

Requiring or Generating Resources in Future Periods identifies items that are recognized as a component of the net cost of operations for the period but the budgetary resources (and related obligation) will not be provided (or incurred) until a subsequent 

period. Components Not Requiring or Generating Resources includes items recognized as part of the net cost of operations for 

the period but will not generate or require the use of resources. Net Cost of Operations agrees with the Net Cost of Operations as 

reported on the Statements of Net Cost.

2008 2007

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations Incurred $ 116,936,033 $ 99,694,001 

Less: Spending Authority from Offsetting Collections and Recoveries (4,640,056) (4,898,384)

Obligations Net of Offsetting Collections and Recoveries 112,295,977 94,795,617 

Less: Offsetting Receipts (4,933) (12,378)

Net Obligations After Offsetting Receipts 112,291,044 94,783,239 

Other Resources

Imputed Financing from Cost Absorbed by Others 3,880,429 3,875,903 

Total Resources Used to Finance Activities $ 116,171,473 $ 98,659,142 

Resources Used to Finance Items Not Part of the Net Cost of Operations

Change in Budgetary Resources Obligated for Goods, Services, and Benefits Ordered but 

not yet Provided (10,037,677) 1,587,752 

Resources That Fund Expenses Recognized in Prior Periods (Decrease in unfunded liabilities) (336,280) (325,401)

Offsetting Receipts 4,933 12,378

Resources that Finance the Acquisition of Fixed Assets (852,719) -

Total Resources Used to Finance Items Not Part of the Net Cost of Operations $ (11,221,743) $ 1,274,729 

Components of the Net Cost of Operations That Will

not Require or Generate Resources in the Current Period

Increase in Contingent Liabilities (310,000) 298,400

Increase in Unfunded Deferred Leases and FECA Liability 133,088 335,441 

Decrease in Prepayments - 329,896 

Increase in exchange revenue receivable from the public - (40,300)

Total Components of Net Cost of Operations That Will Require or Generate Resources 

in Future Periods $ (176,912) $ 923,437 

Components Not Requiring or Generating Resources

Depreciation and Amortization 893,189 823,582 

Other 27,169 52,153

Total Components of Net Cost of Operations that will Not Require or

Generate Resources $ 743,446 $ 875,735

Total Components of Net Cost of Operations that will Not Require or

Generate Resources in the Current Period $ 566,534 $ 1,799,172

Net Cost of Operations $ 105,516,264 $ 101,733,043
CFTC 131

Report of the Independent Auditors

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Acting Chairman and Inspector General of the 

U.S. Commodity Futures Trading Commission: 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission 

(CFTC) as of September 30, 2008 and 2007, and the related statements of net cost, changes in net position, 

custodial activity, and budgetary resources (hereinafter referred to as “financial statements”) for the years 

then ended. The objective of our audits was to express an opinion on the fair presentation of these financial 

statements. In connection with our fiscal year 2008 audit, we also considered CFTC’s internal controls over 

financial reporting and tested CFTC’s compliance with certain provisions of applicable laws, regulations, 

and contracts that could have a direct and material effect on these financial statements. 

Summary 

As stated in our opinion on the financial statements, we concluded that CFTC’s financial statements as of 

and for the years ended September 30, 2008 and 2007, are presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting would not necessarily disclose all matters in 

the internal control that might be material weaknesses as defined in the Internal Control Over Financial 

Reporting section of this report. However, we noted no matters involving the internal control and its 

operation that we considered to be material weaknesses as defined in this report. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed 

no instances of noncompliance or other matters that are required to be reported under Government Auditing 

Standards, issued by the Comptroller General of the United States, and Office of Management and Budget 

(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements.

The following sections discuss our opinion on CFTC’s financial statements; our consideration of CFTC’s 

internal controls over financial reporting; our tests of CFTC’s compliance with certain provisions of 

applicable laws, regulations, and contracts; and management’s and our responsibilities. 

Opinion on the Financial Statements 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission as of 

September 30, 2008 and 2007, and the related statements of net cost, changes in net position, custodial 

activity, and budgetary resources for the years then ended. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of the Commodity Futures Trading Commission as of September 30, 2008 and 2007, and 

its net costs, changes in net position, custodial activity, and budgetary resources for the years then ended, in 

conformity with U.S. generally accepted accounting principles. 

The information in the Management’s Discussion and Analysis is not a required part of the financial 

statements, but is supplementary information required by U.S. generally accepted accounting principles. 

We have applied certain limited procedures, which consisted principally of inquiries of management 

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Acting Chairman and Inspector General of the 

U.S. Commodity Futures Trading Commission: 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission 

(CFTC) as of September 30, 2008 and 2007, and the related statements of net cost, changes in net position, 

custodial activity, and budgetary resources (hereinafter referred to as “financial statements”) for the years 

then ended. The objective of our audits was to express an opinion on the fair presentation of these financial 

statements. In connection with our fiscal year 2008 audit, we also considered CFTC’s internal controls over 

financial reporting and tested CFTC’s compliance with certain provisions of applicable laws, regulations, 

and contracts that could have a direct and material effect on these financial statements. 

Summary 

As stated in our opinion on the financial statements, we concluded that CFTC’s financial statements as of 

and for the years ended September 30, 2008 and 2007, are presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting would not necessarily disclose all matters in 

the internal control that might be material weaknesses as defined in the Internal Control Over Financial 

Reporting section of this report. However, we noted no matters involving the internal control and its 

operation that we considered to be material weaknesses as defined in this report. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed 

no instances of noncompliance or other matters that are required to be reported under Government Auditing 

Standards, issued by the Comptroller General of the United States, and Office of Management and Budget 

(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements.

The following sections discuss our opinion on CFTC’s financial statements; our consideration of CFTC’s 

internal controls over financial reporting; our tests of CFTC’s compliance with certain provisions of 

applicable laws, regulations, and contracts; and management’s and our responsibilities. 

Opinion on the Financial Statements 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission as of 

September 30, 2008 and 2007, and the related statements of net cost, changes in net position, custodial 

activity, and budgetary resources for the years then ended. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of the Commodity Futures Trading Commission as of September 30, 2008 and 2007, and 

its net costs, changes in net position, custodial activity, and budgetary resources for the years then ended, in 

conformity with U.S. generally accepted accounting principles. 

The information in the Management’s Discussion and Analysis is not a required part of the financial 

statements, but is supplementary information required by U.S. generally accepted accounting principles. 

We have applied certain limited procedures, which consisted principally of inquiries of management 

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Acting Chairman and Inspector General of the 

U.S. Commodity Futures Trading Commission: 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission 

(CFTC) as of September 30, 2008 and 2007, and the related statements of net cost, changes in net position, 

custodial activity, and budgetary resources (hereinafter referred to as “financial statements”) for the years 

then ended. The objective of our audits was to express an opinion on the fair presentation of these financial 

statements. In connection with our fiscal year 2008 audit, we also considered CFTC’s internal controls over 

financial reporting and tested CFTC’s compliance with certain provisions of applicable laws, regulations, 

and contracts that could have a direct and material effect on these financial statements. 

Summary 

As stated in our opinion on the financial statements, we concluded that CFTC’s financial statements as of 

and for the years ended September 30, 2008 and 2007, are presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles. 

Our consideration of internal control over financial reporting would not necessarily disclose all matters in 

the internal control that might be material weaknesses as defined in the Internal Control Over Financial 

Reporting section of this report. However, we noted no matters involving the internal control and its 

operation that we considered to be material weaknesses as defined in this report. 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed 

no instances of noncompliance or other matters that are required to be reported under Government Auditing 

Standards, issued by the Comptroller General of the United States, and Office of Management and Budget 

(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements.

The following sections discuss our opinion on CFTC’s financial statements; our consideration of CFTC’s 

internal controls over financial reporting; our tests of CFTC’s compliance with certain provisions of 

applicable laws, regulations, and contracts; and management’s and our responsibilities. 

Opinion on the Financial Statements 

We have audited the accompanying balance sheets of the Commodity Futures Trading Commission as of 

September 30, 2008 and 2007, and the related statements of net cost, changes in net position, custodial 

activity, and budgetary resources for the years then ended. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of the Commodity Futures Trading Commission as of September 30, 2008 and 2007, and 

its net costs, changes in net position, custodial activity, and budgetary resources for the years then ended, in 

conformity with U.S. generally accepted accounting principles. 

The information in the Management’s Discussion and Analysis is not a required part of the financial 

statements, but is supplementary information required by U.S. generally accepted accounting principles. 

We have applied certain limited procedures, which consisted principally of inquiries of management 
132 CFTC

regarding the methods of measurement and presentation of this information. However, we did not audit this 

information and, accordingly, we express no opinion on it. 

Internal Control Over Financial Reporting 

Our consideration of the internal control over financial reporting was for the limited purpose described in 

the Responsibilities section of this report and would not necessarily identify all deficiencies in the internal 

control over financial reporting that might be significant deficiencies or material weaknesses. 

A control deficiency exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent or detect misstatements 

on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, 

that adversely affects CFTC’s ability to initiate, authorize, record, process, or report financial data reliably 

in accordance with U.S. generally accepted accounting principles such that there is more than a remote 

likelihood that a misstatement of CFTC’s financial statements that is more than inconsequential will not be 

prevented or detected by CFTC’s internal control. A material weakness is a significant deficiency, or 

combination of significant deficiencies, that results in more than a remote likelihood that a material 

misstatement of the financial statements will not be prevented or detected by CFTC’s internal control. 

In our fiscal year 2008 audit, we did not identify any deficiencies in internal control over financial 

reporting that we consider to be material weaknesses as defined above. The Exhibit presents the status of 

the prior year significant deficiency. 

Compliance and Other Matters 

The results of our tests of compliance described in the Responsibilities section of this report, exclusive of 

those referred to in FFMIA, disclosed no instances of noncompliance or other matters that are required to 

be reported herein under Government Auditing Standards or OMB Bulletin No. 07-04. 

The results of our tests of FFMIA disclosed no instances in which the CFTC’s financial management 

systems did not substantially comply with the (1) Federal financial management systems requirements, (2) 

applicable Federal accounting standards, and (3) the United States Government Standard General Ledger at 

the transaction level. 

* * * * * * * 

Responsibilities

Management’s Responsibilities. Management is responsible for the financial statements; establishing and 

maintaining effective internal control; and complying with laws, regulations, and contracts applicable to 

CFTC.

Auditors’ Responsibilities. Our responsibility is to express an opinion on the fiscal year 2008 and 2007 

financial statements of CFTC based on our audits. We conducted our audits in accordance with auditing 

standards generally accepted in the United States of America; the standards applicable to financial audits 

contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 

OMB Bulletin No. 07-04. Those standards and OMB Bulletin No. 07-04 require that we plan and perform 

the audits to obtain reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes consideration of internal control over financial reporting as a basis for 

designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing 

an opinion on the effectiveness of CFTC’s internal control over financial reporting. Accordingly, we 

express no such opinion. 
CFTC 133

F INANCIAL SECTION

 

An audit also includes: 

• Examining, on a test basis, evidence supporting the amounts and disclosures in the financial 

statements; 

• Assessing the accounting principles used and significant estimates made by management; and 

• Evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In planning and performing our fiscal year 2008 audit, we considered CFTC’s internal control over 

financial reporting by obtaining an understanding of CFTC’s internal control, determining whether internal 

controls had been placed in operation, assessing control risk, and performing tests of controls as a basis for 

designing our auditing procedures for the purpose of expressing our opinion on the financial statements. 

We did not test all internal controls relevant to operating objectives as broadly defined by the Federal

Managers’ Financial Integrity Act of 1982. The objective of our audit was not to express an opinion on the 

effectiveness of CFTC’s internal control over financial reporting. Accordingly, we do not express an 

opinion on the effectiveness of CFTC’s internal control over financial reporting. 

As part of obtaining reasonable assurance about whether CFTC’s fiscal year 2008 financial statements are 

free of material misstatement, we performed tests of CFTC’s compliance with certain provisions of laws, 

regulations, and contracts, noncompliance with which could have a direct and material effect on the 

determination of the financial statement amounts, and certain provisions of other laws and regulations 

specified in OMB Bulletin No. 07-04, including the provisions referred to in Section 803(a) of FFMIA. We 

limited our tests of compliance to the provisions described in the preceding sentence, and we did not test 

compliance with all laws, regulations, and contracts applicable to CFTC. However, providing an opinion 

on compliance with laws, regulations, and contracts was not an objective of our audit and, accordingly, we 

do not express such an opinion. 

______________________________ 

This report is intended solely for the information and use of CFTC’s management, CFTC’s Office of 

Inspector General, OMB, the U.S. Government Accountability Office, and the U.S. Congress and is not 

intended to be and should not be used by anyone other than these specified parties. 

November 12, 2008 

Exhibit

U.S. COMMODITY FUTURES TRADING COMMISSION 

Fiscal Year 2008 – Status of Prior Year Comments 

The status of the prior year significant deficiency is presented below. 

Internal Control Over Financial Reporting Fiscal Year 2008 Status 

Significant Deficiency 

Recording Accruals and Preparing Financial 

Statements 

Resolved.
O t h e r A ccompanying I nfo r mation

Summary of Audit and Management Assurances .... 135

Management Challenges...................................... 136
CFTC 135

F INANCIAL SECTION

Summary of FY 2008 Financial Statement Audit

Audit Opinion: Unqualified

Restatement: No

Material Weakness Beginning Balance New Resolved Consolidated Ending Balance

Financial Reporting 0 0

Total Material Weaknesses 0 0

Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance: Unqualified

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Financial Reporting 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance: Unqualified

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

No Items to Report 0 0

Conformance with Financial Management System Requirements (FMFIA § 4)

Statement of Assurance: Systems conform to financial management system requirements

Non-Conformance Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Federal Information 

Security Act 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA)

Overall Substantial 

Compliance

Agency Auditor

Yes Yes

1. System Requirements Yes

2. Accounting Standards Yes

3. USSGL at Transaction Level Yes

Summary of Audit and

Management Assurances
136 CFTC

Management Challenges

Management Address Inspector 

General’s FY 2007 Assessment

The Commission has addressed or is addressing the 

concerns identified in the FY 2007 Performance and 

Accountability Report. In FY 2007, the Inspector General 

(IG) identified two “serious management challenges” 

facing the Commission: 1) Modernization of Electronic 

Market Surveillance, and 2) Exchange Trading Revolutions.

The following is the IG’s FY 2007 assessment for each challenge and the Commission’s actions taken in FY 2008 to 

address these challenges.

Challenge #1, Modernization of Electronic Market 

Surveillance

FY 2007 IG Assessment: “Last year we stated that the migration 

to trading on largely electronic exchanges challenged whether the 

agency has sufficient information on technology infrastructure 

and staff to efficiently and effectively conduct timely surveillance 

of these dynamic and economically essential global markets. 

Continued expansion of electronic trading leads us to restate this 

concern and to emphasize the need for the CFTC to modernize 

and develop enhancements to its electronic market surveillance 

technique to establish new procedures for training its staff (who 

historically relied on trading floor based surveillance of derivatives markets) on how to carry out its regulatory mission under 

this new industry paradigm of electronic exchange trading.

The existing CFTC electronic market surveillance system relies 

on data systems that are the outgrowth of late twentieth century 

technology. It is suitable for an update in the twenty-first 

century. We applaud the agency’s current efforts to develop an 

updated market surveillance system. Yet there remains a valid 

concern that both staff and new agency systems will be challenged if growth in electronic trading continues at its current 

rate. Our concern is further heightened by the second year of 

stagnant budgetary resources. This lack of funds will impact the 

agency’s ability to invest in technological modernization, and to 

effectively maintain its electronic oversight of the largely electronic exchanges under its regulatory purview.”

FY 2008 Actions Taken or Actions in Progress

The Commission is committed to further developing its 

new Trade Surveillance System (TSS). Due to the rapid 

expansion of electronic trading and continuing innovations in the futures industry, the CFTC is currently modernizing its legacy trade analysis platform and system, (which 

includes data files, legacy applications, canned reports, 

etc.), with new database technologies and commercial 

software products in order to keep pace with the everchanging industry in an adaptive and responsive manner.

When fully developed and implemented, TSS will ensure 

all users unqualified and immediate access to trade data 

and a system that provides responsive and flexible trade 

practice and regulatory analysis.

As part of this effort, the Commission’s OITS and DMO 

developed and executed a multi-year TSS Acquisition Plan.

Completed tasks include modernizing the computer environment used to process trade level data and awarding a 

contract to Actimize, a vendor that is providing a solution 

that includes an initial trade practice violation detection 

model (wash trading) and a data analysis and research 

tool. It is expected that the Actimize solution will be implemented in the last quarter of 2008. However, development 

of additional trade practice violation detection models and 

further development of the data analysis and research tool 

will be an ongoing, multi-year process. The Commission 

intends to award a contract to supplement and support 

the CFTC’s current TSS development and implementation 

efforts. The contractor will work directly with business 

users and CFTC technical staff to develop business requirement documents, technical specifications, project plans, 

testing plans, and other project artifacts used to support the 

CFTC’s trade practice surveillance program.

The contractor will be responsible for developing, implementing, and testing additional trade practice violation 

detection models based on the trade level data received on 

a daily basis from the exchanges. The contractor also will 

be responsible for supporting business users in defining 

business requirements for the management of alerts and 

cases that are generated by the Actimize models. This 
CFTC 137

O T H E R ACCOMPANYING IN F O R MATION

includes the ability to conduct further analysis and investigation of the alerts which may require sophisticated 

queries and database views into the data that generated 

the alerts (e.g., suspicious trading activity between traders, 

brokers, and individual accounts). The contractor also 

will be responsible for working with CFTC management 

to develop work activity detail and summary reports. The 

Commission also is conducting market research into additional software products such as reporting tools that can be 

incorporated into TSS

As part of its effort to modernize its electronic surveillance capabilities, the Commission is exploring a plan 

to collect account ownership information from FCMs on 

a regular basis and to incorporate this information into 

TSS for trade practice surveillance and the Commission’s 

ISS (the Commission’s large trader database) for market 

surveillance. Although the transaction level data submitted 

by the exchanges to the Commission include transaction 

account numbers for the buy and sell side of each trade, 

the Commission does not have corresponding ownership 

information for these account numbers and therefore does 

not know who the trades ultimately belong to. Having 

account ownership information is the first step in linking 

TSS and ISS. Once account ownership information is available, The Commission’s market surveillance and market 

compliance staff will have the necessary information to 

see a complete picture of trading from reportable positions 

down to the individual trades and from individual trades 

to the ultimate traders, respectively. Staff will be able to 

identify who ultimately executed the trades and look for 

suspicious trading patterns across accounts.

Information technology investments, to further develop 

a state-of-the-art, sophisticated trade surveillance system, 

directly supports CFTC’s responsibility to ensure market 

integrity in order to foster open, competitive, and financially sound markets. More specifically, TSS will allow 

staff to detect novel and complex abusive practices in 

today’s high-speed, high-volume global trading environment. Moreover, TSS will fill a vacuum in inter-market 

surveillance which only the Commission can address, (e.g., 

NYMEX metal contracts and NYSE Liffe metal contracts.) 

Challenge #2, Exchange Traded Revolutions 

FY 2007 IG Assessment: “Exempt Commercial Markets—an 

area that in the past has not received significant agency 

resources—is increasingly demanding more attention. During 

the past year, members of Congress and industry leaders have 

expressed concern that, where Exempt Commercial Markets (that 

are largely electronic trading platforms) generate commodity 

prices that can impact the price discovery of equivalent exchange 

traded commodities, the CFTC ought to acquire greater awareness of those transactions, thus forcing the agency to reevaluate 

its previous regulatory model of focusing principally on designated exchange trading oversight. This expansion of the CFTC’s 

oversight mission—regardless of whether expansion is legislated 

through Congressional action or expanded within the existing 

agency regulatory scheme—may strain agency human resources, 

as well as electronic market surveillance systems.”

FY 2008 Actions Taken or Actions in Progress

Congress continues to revise and modernize the CEA 

to keep pace with the rapid growth and evolution of the 

futures industry. In 2008, Congress passed the Farm Bill, 

which amended the CEA and established a new exchange 

category—ECMs with significant price discovery contracts 

(ECM-SPDCs). Prior to passage of the Farm Bill, ECMs had 

no self-regulatory responsibilities and were not subject to 

any sort of regular oversight by the Commission. Under 

the Farm Bill, ECM-SPDCs will be required to comply 

with a set of CFTC Core Principles modeled after the CFTC 

Core Principles for fully-regulated DCMs. Likewise, the 

Commission will have many of the same oversight authorities with respect to ECM-SPDCs that it currently has for 

DCMs, including the imposition of large-trader reporting 

requirements and emergency authority to intervene in the 

operations of ECM-SPDCs.

Although the Commission is still in the process of proposing 

and adopting regulatory provisions that will fully implement the Farm Bill’s ECM-SPDC provisions, the additional 

burdens on the Commission’s resources will be substantial.

Commission staff will have to continuously monitor all of 

the ECMs (currently there are 19) to determine whether any 

of their contracts have become a source of significant price 

discovery. The actual determination of significant price 

discovery will likely entail industry interviews and a transparent process whereby the Commission will solicit the 

views of market users and the ECMs themselves. Finally, 

upon a Commission determination that an ECM contract 

is an SPDC, that contract will, from a resource perspective, 

entail the same amount of staff work as a DCM contract.
138 CFTC

A ppendi x

FY 2008 Commissioners.................................................139

Enforcement Litigation by Strategic Goal..........................142

CFTC Information Technology Systems ............................157

Glossary of Abbreviations and Acronyms ..........................158
CFTC 139

A ppendI CES

FY 2008 Commissioners

The Commissioners

Walter L. Lukken, Acting Chairman

Walter Lukken was appointed 

Acting Chairman by the 

Commission on June 27, 2007.

In September 2007, President 

Bush nominated Mr. Lukken to be 

Chairman of the Commission. He 

was first appointed Commissioner 

in 2002 and is now serving his 

second term due to expire in 2010.

Acting Chairman Lukken has testified several times before 

Congress and represents the agency as part of the President’s 

Working Group on Financial Markets. He works frequently 

with other domestic and foreign financial regulators.

Acting Chairman Lukken serves as chairman of the CFTC’s 

Global Markets Advisory Committee (GMAC). The GMAC 

was created by the Commission to provide an industry 

forum in which it can discuss the many complex and 

novel issues raised by the ever-increasing globalization 

of futures markets. In this role, he frequently represents 

the Commission before international organizations and 

forums, including IOSCO and CESR. He spoke before the 

U.S.-China Joint Economic Committee hosted by the U.S.

Department of Treasury on the developing role of derivatives markets in China.

Prior to joining the CFTC, Acting Chairman Lukken served 

for five years as counsel on the professional staff of the U.S.

Senate Agriculture Committee under Chairman Richard 

Lugar (R-IN), specializing in futures and derivatives 

markets. In this capacity, he was prominently involved 

in the development, drafting, and passage of the CFMA 

(H.R. 5660).

A native of Richmond, Indiana, he received his B.S. degree 

with honors from the Kelley School of Business at Indiana 

University, and his Juris Doctor degree from Lewis and 

Clark Law School in Portland, Oregon. Acting Chairman 

Lukken is a member of the Illinois Bar. 
140 CFTC

Michael V. Dunn, Commissioner

Michael V. Dunn was nominated to a second term as a 

Commissioner of the Commodity 

Futures Trading Commission by 

President Bush on June 16, 2006, 

and confirmed by the Senate on 

August 3, 2006. Mr. Dunn has served 

as a Commissioner since December 

6, 2004. On January 9, 2006, he 

was chosen by his colleagues to chair the Commission’s 

Agriculture Advisory Committee and on March 13, 2006, 

he was appointed chairman of the Commission’s Forex 

Task Force. 

Prior to joining the CFTC, Mr. Dunn served as Director, Office 

of Policy and Analysis at the Farm Credit Administration 

(FCA). Prior to this position, in January 2001 he served 

briefly as a member of the FCA Board. 

Prior to joining FCA, Mr. Dunn was the Under Secretary of 

Agriculture for Marketing and Regulatory Programs at the 

USDA. He also served as the Acting Under Secretary for Rural 

Economic Community Development and as Administrator 

of the Farmers Home Administration (FmHA) at USDA. 

Mr. Dunn has had a long involvement in agricultural credit 

dating back to the late 1970s, when he was the Midwest 

Area Director for the FmHA. He has been a loan officer and 

vice president of the Farm Credit Banks of Omaha and has 

served as a member of the professional staff of the Senate 

Agricultural Committee, specializing in agricultural credit.

At the USDA, Mr. Dunn also served as a member of the 

Commodity Credit Corporation and Rural Telephone Bank 

Board. He is a past member of the Iowa Development 

Commission and has served as the Chairman of the State 

of Iowa’s City Development Board.

A native of Keokuk, Iowa, and a current resident of Harpers 

Ferry, West Virginia, Mr. Dunn received his B.A. and M.A.

degrees from the University of New Mexico.

Jill E. Sommers, Commissioner

J

ill E. Sommers was sworn in 

as a CFTC Commissioner on 

August 8, 2007 to a term that expires 

April 13, 2009. Commissioner 

Sommers had worked in the 

commodity futures and options 

industry in a variety of capacities 

throughout her career. In 2005, she 

was the Policy Director and Head 

of Government Affairs for the International Swaps and 

Derivatives Association, where she worked on a number of 

OTC derivatives issues. 

Prior to that, Ms. Sommers worked for Chicago Mercantile 

Exchange, including overseeing regulatory and legislative affairs for the exchange. During her tenure with the 

exchange, she had the opportunity to work closely with 

congressional staff drafting the CFMA.

Commissioner Sommers started her career in Washington, 

DC in 1991 as an intern for Senator Robert J. Dole (R-KS), 

where she worked in various capacities until 1995. She 

later worked as a legislative aide for two consulting firms 

specializing in agricultural issues, Clark & Muldoon, P.C.

and Taggart and Associates.

A native of Fort Scott, Kansas, Ms. Sommers holds a 

Bachelor of Arts degree from the University of Kansas. She 

and her husband, Mike, currently reside in the Washington 

D.C. area and have three children ages 6, 5, and 4.
CFTC 141

A ppendI CES

Bart Chilton, Commissioner

Bart Chilton was sworn in 

as a CFTC Commissioner on 

August 8, 2007. He was formerly 

the Chief of Staff and Vice President 

for Government Relations at the 

National Farmers Union—one of 

the oldest and largest trade associations. 

In 2005, Mr. Chilton was a Schedule 

C political appointee of President Bush at the U.S. Farm 

Credit Administration where he served as an Executive 

Assistant to the Board. From 2001 to 2005, Mr. Chilton 

was Senior Advisor to Senator Tom Daschle, the Democrat 

leader of the U.S. Senate where he worked on myriad issues 

including, but not limited to, agriculture and transportation policy. 

From 1995 to 2001, Mr. Chilton was a Schedule C political 

appointee of President Clinton where he rose to Deputy 

Chief of Staff to the U.S. Secretary of Agriculture, Dan 

Glickman. In this role, Chilton became a member of the 

Senior Executive Services (SES)—government executives 

selected for their leadership qualifications to serve in the 

key positions just below the top Presidential appointees.

As an SES member, Chilton served as a major link between 

Secretary Glickman and the rest of the Federal work force 

at USDA.

From 1985 to 1995, Mr. Chilton worked in the U.S. House 

of Representatives as Legislative Director for three different 

Members of Congress on Capitol Hill. He also worked in 

the U.S. House as the Executive Director of the bipartisan 

Congressional Rural Caucus.

Mr. Chilton previously served on the Board of Directors 

of Bion Environmental Technologies, and the Association 

of Family Farms—where he also served on the Executive 

Committee and as Treasurer.

Mr. Chilton was born in Delaware and spent his youth in 

Indiana where he attended Purdue University from 1979 

to 1982. He studied political science and communications 

and was a collegiate leader of several organizations. Mr.

Chilton and his wife, Sherry Daggett Chilton, reside on the 

Western Shore of the Chesapeake Bay.
142 CFTC

Enforcement Litigation

by Strategic Goal

Enforcement Litigation by Goal One

Manipulation, Attempted Manipulation 

& False Reporting

■ In re Kelly

On October 25, 2007, the Commission simultaneously 

filed and settled an administrative enforcement action 

against Paul K. Kelly, a former gasoline trader for BP 

Products North America Inc. (BPPNA), for attempting 

to manipulate the price spread between the November 

and December 2002 unleaded gasoline futures contracts 

traded on the New York Mercantile Exchange (NYMEX) on 

October 31, 2002, the last day of trading for the November 

2002 unleaded gasoline futures contract. The order finds 

that Kelly was primarily responsible for obtaining physical, 

finished gasoline as well as components for gasoline for 

BPPNA’s northeast commercial needs. According to the 

order, unleaded gasoline was in short supply in October 

2002 and early November 2002, and Kelly was aware of the 

shortage. The order finds that despite the fact that BPPNA 

held a long position of 1,352 November 2002 unleaded 

gasoline contracts—52 more than its stated commercial 

need of 1,300 contracts—Kelly bought an additional 720 

November 2002 unleaded gasoline contracts through the 

course of the day on October 31, 2002. The Commission 

found that Kelly engaged in this conduct with the intent 

to affect the price spread between the November and 

December 2002 NYMEX unleaded gasoline futures 

contracts. The Commission assessed sanctions including: 

a civil monetary penalty ($400,000); and an order to 

comply with certain undertakings, including not applying 

for registration with the CFTC. In re Kelly, CFTC Docket 

No. 08-01 (CFTC filed Oct. 25, 2007). 

■ In re McMahan

On March 18, 2008, the Commission filed an administrative enforcement action against Rockland P. McMahan, 

a cattle order buyer in Austin, Texas, charging him with 

reporting knowingly inaccurate and misleading information regarding a purchase of feeder cattle to the USDA, 

failing to produce to the Commission adequate records 

regarding the purported sale, and delivering to the 

Commission false, misleading, and/or knowingly inaccurate responses to routine inquiries and in reports or documents required to be filed with the Commission under 

the Act. “Feeder cattle” are young steers that are sent to 

feedlots for finishing into “fed” or “fat” cattle that, in turn, 

are sent to packers for slaughter. An “order buyer” of feeder 

cattle buys and sells feeder cattle and calves to and from 

ranchers and feedlots as a middleman. According to the 

complaint, a USDA market price reporter in Amarillo, 

Texas, contacted McMahan every week, seeking information about cattle purchases and sales for inclusion in the 

USDA’s weekly cash market feeder cattle report. In late 

October 2004, McMahan allegedly told the USDA price 

reporter that he had purchased 1,800 head of feeder steers 

weighing an average 725 pounds. As alleged, the USDA 

included McMahan’s reported purchase in its weekly cash 

market feeder cattle report, which is used as a source of 
CFTC 143

A ppendI CES

market information by producers, consumers, and distributors in the sale and purchase of, among other things, livestock, meat, and grain. The complaint further alleges that 

the CME incorporated McMahan’s reported purchase to the 

USDA in its calculation of the CME Feeder Cattle Index to 

which the CME’s feeder cattle futures contract cash settles.

As stated in the complaint, McMahan did not purchase or 

have a bona fide agreement to purchase any feeder steers 

weighing between 700 and 849 pounds—the required 

weight under the CME specifications for inclusion in the 

CME feeder cattle futures contract— and, thus, his direct 

report to the USDA, and indirect report to the CME, was 

false. While performing market surveillance, Commission 

staff questioned McMahan about the cattle he had reported 

purchasing. The complaint states that McMahan was not 

forthright in responding to the special call for information.

According to the complaint, McMahan did not advise the 

Commission that he had really purchased a mixed load of 

1,829 heifers and 930 steers weighing 900 pounds. The 

Commission received cooperation from the CME’s Market 

Regulation Department in connection with this matter.

In re McMahan, CFTC Docket No. 08-07 (CFTC filed 

Mar. 18, 2008).

■ CFTC v. Optiver US, LLC

On July 24, 2008, the Commission filed a civil enforcement action against Optiver Holding BV, two of its subsidiaries (Optiver US, LLC (Optiver) and Optiver VOF)), and 

three employees (Christopher Dowson (head trader of 

Optiver)), Randal Meijer (head of trading and supervisor 

of Optiver and Optiver VOF) and Bastiaan van Kempen 

(Chief Executive Officer of Optiver), charging them with 

manipulation and attempted manipulation of NYMEX 

Light Sweet Crude Oil, New York Harbor Heating Oil, 

and New York Harbor Gasoline futures contracts during 

March 2007. The complaint charges all defendants with 

19 separate instances of attempted manipulation involving 

the aforementioned energy futures contracts on 11 days 

in March 2007. The complaint further alleges that in at 

least five of those 19 attempts, defendants successfully 

manipulated certain of these energy futures contracts, 

causing artificial prices. In three of those instances, defendants forced futures prices lower, and in two instances, 

defendants forced futures prices higher. The complaint 

alleges that defendants profited by approximately $1 

million from their manipulative scheme. According to 

the complaint, the defendants employed a manipulative 

scheme commonly known as “banging” or “marking”’ the 

close. “Banging the close” refers to the practice of acquiring 

a substantial position leading up to the closing period, 

followed by offsetting the position before the end of the 

close of trading for the purpose of attempting to manipulate prices. The complaint further charges Optiver and van 

Kempen with concealing the manipulative scheme and 

making false statements in response to an inquiry from 

NYMEX. The defendants’ manipulative trading scheme 

involved three futures contracts listed for trading on 

NYMEX: the Light Sweet Crude Oil futures contract (Crude 

Oil, also referred to as West Texas Intermediate (WTI)), the 

New York Harbor Heating Oil futures contract (Heating 

Oil), and the New York Harbor Reformulated Gasoline 

Blendstock futures contract (New York Harbor Gasoline).

The settlement price for the Crude Oil, New York Gasoline, 

and Heating Oil futures contracts is derived by calculating the volume weighted average prices (VWAP) of 

futures trades conducted during the closing period for the 

contracts (from 2:28 p.m. to 2:30 p.m.). The defendants’ 

manipulative scheme involved the Trading at Settlement 

(TAS) contracts in Crude Oil, Heating Oil, and New York 

Harbor Gasoline contracts. TAS contracts are futures 

contracts, except that the parties determine at the initiation 

of the contract that the price of the TAS contract will be the 

day’s settlement price plus or minus an agreed differential.

A TAS contract which has been bought or sold can be offset 

by trading a futures contract in the opposite direction.

The manipulative scheme involved trading a significant 

volume of futures contracts in Crude Oil, Heating Oil, and 

New York Harbor Gasoline in the opposite direction of the 

associated TAS position, before and during the close of the 

contracts. The defendants’ goal in trading the large volume 

of futures was to improperly influence and affect the price 

of futures contracts in Crude Oil, Heating Oil, and New 

York Harbor Gasoline. As alleged in the complaint, the 

scheme ultimately permitted defendants to profit regardless of the direction of the market move, provided that 

Optiver’s futures trading in the close and before the close 

was in the opposite direction of the TAS position it had 

accumulated during the trading day. The Commission 

received cooperation from the U.K. Financial Services 

Authority and the NYMEX in connection with this matter.

CFTC v. Optiver US, LLC, No. 08 CIV 6560 (S.D.N.Y. filed 

July 24, 2008).
144 CFTC

Enforcement Litigation by Goal Two

Commodity Pools, Hedge Funds, Commodity Pool 

Operators, and Commodity Trading Advisors

■ CFTC v. Baldwin 

On November 11, 2007 the Commission filed an injunctive 

enforcement action against Elizabeth Baldwin charging her 

with commodity pool fraud. The complaint alleges that, 

from at least January 2004 to the present, Baldwin, doing 

business in her name and in the name of the Newportant 

Group, fraudulently solicited and obtained more than 

$500,000 from members of the general public to invest in 

a commodity pool. As alleged in the complaint, Baldwin 

represented to at least one pool participant that their 

funds would be pooled for the purpose of trading futures 

contracts and that the pool had been making monthly 

profits from three to 10 percent. The complaint further 

alleges that these statements were false because the pool 

lost money trading in all but one month. According to the 

complaint, Baldwin fraudulently represented to customers 

that their funds would be held in segregated trading 

accounts at futures commission merchants. However, the 

complaint alleges, Baldwin maintained trading accounts 

in her own name only and never maintained an account 

at the futures commission merchants in the name of the 

pool. The complaint also alleges that Baldwin provided 

pool participants with false monthly account statements 

and illegally acted as a CPO without being registered with 

the Commission. On the same day the complaint was 

filed, the court entered a statutory restraining order freezing 

assets and preserving books and records. The Commission 

received cooperation from the NFA, the Rhode Island State 

Police, the Newport Police Department, and the Rhode 

Island Department of Business Regulation in connection with this matter. CFTC v. Baldwin, No. 07 CV 10270 

(S.D.N.Y. filed Nov. 13, 2007).

■ In re Roane 

On January 24, 2008, the Commission simultaneously filed 

and settled an administrative enforcement action against 

Robert Lee Roane finding he committed commodity pool 

fraud. The Order finds that, since the fall of 2005 and 

continuing through 2006, Roane solicited the public to 

invest approximately $780,000 in a commodity pool by, 

among other things, falsely representing his past success as 

a futures trader and claiming to have a foolproof system.

To the contrary, his past trading of commodity futures had 

not been successful. The Order finds that Roane, in his 

handling of pool participants’ funds, lost the majority of 

the funds in trading and misappropriated approximately 

$166,500, of which he used $137,900 to pay for personal 

expenses and the remaining $28,600 he used to repay 

other participants. The order also finds that Roane violated 

the Act and Commission regulations by acting as an unregistered CPO. The order also finds that Roane committed 

further violations in his operation of the commodity pool, 

including failing to operate the pool as a separate legal 

entity, accepting funds for the pool in other than the pool’s 

name, commingling pool funds with his own, and failing 

to provide disclosure documents to pool participants. The 

Commission assessed sanctions including: an order to pay 

restitution (approximately $609,000) and a civil monetary 

penalty ($130,000); a permanent trading ban; and an order 

to comply certain undertakings including never applying 

for registration with the Commission. The Commission 

received cooperation from the Richmond Division of the 

Federal Bureau of Investigation (FBI) in connection with 

this matter. In re Roane, CFTC Docket No. 08-03 (CFTC 

filed Jan. 24, 2008).

■ CFTC v. Lake Shore Asset Management Limited 

On February 19, 2008, the Commission filed a second 

amended complaint in its continuing litigation against 

Philip J. Baker and the companies he controlled, registered CPO and CTA Lake Shore Asset Management Limited 

(LSAM), and the Lake Shore Group of Companies Inc., Ltd.

(Lake Shore Group)—collectively, the Lake Shore Common 

Enterprise. The second amended complaint adds charges 

against several additional entities, alleging that Baker, 

LSAM, the Lake Shore Group, Hanford Investments Ltd.

(Hanford), and at least 12 commodity pools controlled 

by Baker, operated as a common enterprise under variations of the name Lake Shore Alternative Financial Asset 

Fund. The complaint alleges the defendants defrauded 

hundreds of commodity pool participants who collectively invested at least $300 million to trade commodity 

futures contracts on U.S. futures markets. Specifically, the 

second amended complaint alleges that the Lake Shore 

Common Enterprise fraudulently solicited pool participants by misrepresenting the profits and losses incurred 

by the commodity pools and distributing false account 
CFTC 145

A ppendI CES

statements to participants showing they were earning 

substantial profits when, in fact, the trading accounts in 

the name of the pools collectively lost approximately 

$37.5 million from February 2002 through June 2007.

The second amended complaint requests that Hanford 

and the commodity pools be required to repay all the 

pool participant funds they received because they have no 

legitimate interest in the funds. In addition, the second 

amended complaint charges that the defendants siphoned 

millions of dollars from the fraud for their benefit, alleging 

that the Lake Shore Common Enterprise misappropriated 

pool participants’ funds by improperly charging incentive 

fees, by fraudulently transferring more than $10 million in 

profits from accounts maintained at Sentinel Management 

Group, Inc. (Sentinel) to an account owned by Hanford, 

and by transferring more than $1 million from pool 

accounts at Sentinel to Anglo International Associates 

Ltd. (Anglo) for purported operating and administrative 

expenses. As alleged, Baker benefited from these transfers because he controls Hanford and Anglo. The second 

amended complaint requests that Anglo and Hanford be 

required to repay all the profits and fees they received on 

the ground that they have no legitimate interest in them.

Like the Commission’s original complaint filed against 

LSAM on June 26, 2007, the second amended complaint 

also charges the Lake Shore Common Enterprise with 

violating the record keeping and inspection requirements 

of the Act and Commission regulations. The Commission 

received cooperation from the United Kingdom’s Financial 

Services Authority in this matter. CFTC v. Lake Shore Asset 

Management Limited, No. 07 C 3598 (N.D. Ill. amended 

Feb. 19, 2007).

■ CFTC v. Cocoon Trade, Inc., et al. 

On March 28, 2008, the Commission filed a civil enforcement action against Kenneth L. Branch and his company, 

Cocoon Trade Inc. (Cocoon) charging them with fraud in 

connection with their operation of a commodity pool and 

management of individual trading accounts. The complaint 

alleges that since at least 2005 through February 2007 

defendants fraudulently solicited at least $1.4 million from 

at least 39 individuals to invest in commodity futures. The 

complaint further alleges the defendants misappropriated 

at least $941,897 of investor funds to pay purported profits 

to investors and to pay for personal expenses. Branch, who 

is a felon who served 12 years in federal prison on drugrelated charges, is alleged to have falsely claimed to be a 

successful trader, promised profitable returns, and failed to 

disclose the risks of trading commodity futures. Contrary 

to his claims of being a successful trader, Branch sustained 

monthly losses, except for one month, with overall net 

trading losses in the hundreds of thousands of dollars.

The complaint alleges that Branch disappeared in February 

2007 and pool participants have not been able to obtain 

their funds since that time. According to the complaint, 

Branch was imprisoned in late 2007 on a parole violation stemming from the felony drug conviction. Branch 

was released on April 2, 2008. On April 4, 2008, the court 

entered a statutory restraining order freezing assets and 

preserving books and records. The Commission received 

cooperation from the Securities Division of the Maryland 

Attorney General’s Office in connection with this matter.

CFTC v. Cocoon Trade, Inc., No. DKC 2008-789 (D. Md.

filed March 28, 2008).

■ CFTC v. Sucarato 

On April 22, 2008, the Commission filed a civil enforcement action against Robert J. Sucarato d/b/a New York 

Financial Company (NYFC) charging him with commodity 

pool fraud. The complaint alleges that Sucarato fraudulently solicited at least $1.5 million from at least five 

individuals to participate in two commodity pools or 

“hedge funds” and concealed trading losses by issuing 

false account statements to participants in the pools. The 

hedge funds—the NYFC Diversified Strategic Fund and the 

NYFC Strategic Fun—operate under the management of 

NYFC and purportedly invest in a variety of instruments, 

including commodity futures and options. According to 

the complaint, beginning in at least September 2004 and 

continuing to the present, Sucarato, as president of NYFC, 

fraudulently solicited individuals to participate in his hedge 

funds by falsely claiming, among other things, that: 1) he 

has managed the Funds since 1993 with approximately 

$7 billion in assets; 2) his funds routinely outperformed 

the market, having achieved a 10-year compounded return 

exceeding 1,800 percent; and 3) that NYFC is a registered 

investment adviser and portfolio manager. In support 

of his misrepresentations, Sucarato allegedly used a false 

audit report purportedly prepared by a major accounting 

firm reflecting that NYFC had a net worth of over $800 

million. Sucarato sought to create the false impression that 

NYFC is a successful, well established capital management 
146 CFTC

firm with offices in New York and Chicago and staffed with 

more than 20 experienced traders. However, as charged 

in the complaint, Sucarato’s New York or Chicago offices 

were mere virtual offices. Since at least April 2007, pool 

participants, whose performance reports reflected their 

investments had increased in value, have demanded that 

Sucarato liquidate their accounts and return their funds.

The checks issued by Sucarato to cover these redemption 

requests were returned for insufficient funds. On the same 

day the complaint was filed, the court entered a statutory 

restraining order freezing assets and preserving books and 

records. CFTC v. Suarato, No. 08-1932 (JBS) (D.N.J. filed 

April 22, 2008).

■ CFTC v. Safevest LLC, et al. 

On May 1, 2008, the Commission filed a civil enforcement 

action against Safevest LLC and its owners and officers, 

Jon G. Ervin and John V. Slye. The complaint alleges 

that since at least May 2007, the defendants solicited 

more than 500 members of the public to transfer more 

than $25.7 million in funds to participate in an illegal 

commodity pool. Contrary to their representations, defendants did not deposit customer funds into an account for 

trading commodity futures and misappropriated virtually 

all customer funds. According to the allegations in the 

complaint, defendants deposited client funds into bank 

accounts controlled by Safevest and misappropriated those 

funds. In addition to using client funds to pay their personal 

expenses, the complaint alleges, defendants misappropriated funds by using funds from some pool participants 

totaling at least $18.5 million to pay off other pool participants in a manner characteristic of a Ponzi scheme. On 

the same day the complaint was filed, the court entered a 

statutory restraining order freezing assets and preserving 

books and records and also ordered the appointment of a 

temporary receiver. The Commission received cooperation 

from the Los Angeles Office of the SEC, the U.S. Attorney’s 

Office for the Central District of California, and the FBI in 

connection with this matter. CFTC v. Safevest LLC, et al., 

No. SACV08-00474 (C.D. Cal. filed May 1, 2008).

■ CFTC v. Hudgins 

On May 13, 2008, the Commission filed a civil enforcement action charging George D. Hudgins (d/b/a George D.

Hudgins L.L.C.) with fraud in connection with his operation of a commodity pool, which traded exchange-traded 

commodity futures and option contracts. Specifically 

the complaint alleges that since at least January 2005, 

Hudgins made numerous material misrepresentations 

and omissions of fact to induce pool participants and 

prospective participants to invest or remain invested in 

the pool. These included false representations about 

how long the commodity pool was in existence, the size 

of the commodity pool’s assets, and the historical profitability of the pool. For example, the complaint alleges that 

in a January 2007 presentation to participants, Hudgins 

declared that the pool had an investment portfolio of 

approximately $80 million, when, in fact, the net value 

of the accounts associated with the pool was negative 

$100,199.38; i.e., the accounts were operating at a loss.

As alleged, the accounts associated with the pool suffered 

losses of more than $25 million from 2005 through 2007.

On the same day the complaint was filed, the court entered 

a statutory restraining order freezing assets and preserving 

books and records. The Commission received cooperation 

from the U.S. Attorney’s Office for the Eastern District of 

Texas in connection with this matter. CFTC v. Hudgins, No.

608CV187 (E.D. Tex. filed May 13, 2008).

■ CFTC v. States, et al. 

On July 14, 2008, the Commission filed a civil enforcement 

action against Robin States d/b/a Infinity Online Investors 

Group (Infinity) and his common-law wife, Bernadette 

Bowden, charging them with fraudulent solicitation and 

misappropriation of commodity pool participant funds 

and with false statements. The complaint alleges that 

from approximately October 2004 through approximately 

September 2005, Robin States, living and operating out of 

Nova Scotia, Canada, fraudulently solicited, accepted, and 

pooled approximately $650,000 (U.S.) from at least 900 

members of the general public in the United States and 

throughout the world to participate in a commodity pool 

that purported to trade in a commodity futures, options, 

precious metals, and foreign currency-based investment 

program. In his solicitations, Robin States purportedly 

used aliases including “Gregory Hampton” to hide his 

identity, fraudulently guaranteed daily profits, and misrepresented the management and operations of Infinity in 

order to create an impression of legitimacy. States also 

allegedly failed to adequately disclose the risks of trading 

commodity futures and options. States utilized a Web site, 
CFTC 147

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www.infiinty-oig.com and telephone calls to solicit pool 

participants. That same Web site purportedly permitted 

pool participants to track their investments which consistently reflected the accrual of daily profits. In actuality, as 

alleged in the CFTC complaint, States never engaged in any 

trading, but rather ran a “Ponzi scheme,” paying “profits” 

to existing pool participants with money obtained from 

newly-solicited participants. At the same time, States and 

Bowden misappropriated more than $600,000 (CAN) of 

the pool’s assets to use for personal expenses, including 

gambling. The complaint also alleges that States operated 

as a CPO without being registered as such and failed to 

provide pool participants with required disclosures, documents, and account statements in accordance with the 

Commission’s regulations. The Commission received 

cooperation from the Nova Scotia Securities Commission, 

the British Columbia Securities Commission, the Quebec 

Autorité des Marchés Financiers, the Ontario Securities 

Commission, the Alberta Securities Commission, the Royal 

Canadian Mounted Police, and the Autorité des Marchés 

Financiers of Francein connection with this matter.

CFTC v. States, et al., No. 1:08-cv-22027-DLJ (S.D. Fla. filed 

July 14, 2008).

■ CFTC v. Bame, et al. 

On August 26, 2008, the Commission filed a civil enforcement action against Forward Investment Group, LLC 

(Forward), and its sole manager, Robert D. Bame charging 

them with committing commodity pool fraud. The 

complaint alleges that Forward and Bame provided to 

one or more pool participants or prospective participants 

a forged and false “daily” commodity trading statement 

purportedly issued by a FCM. The trading statement, as 

alleged, falsely indicated that the Forward account had a 

total net liquidating value of more than $77 million on 

December 14, 2007. However, the complaint alleges the 

actual net liquidating value of the account on that date 

was $4,486. The complaint also alleges that Bame willfully and fraudulently misrepresented to a staff member of 

the NFA the number and identities of the participants in 

the Forward pool enterprise, and that the enterprise only 

had $400,000 in cash contributions. As further alleged, 

Bame controls the commodity trading of the Forward 

account, which sustained trading losses of approximately 

$595,000 from February 2007 through May 2008. On the 

same day the complaint was filed, the court entered a statutory restraining order that, in part, preserved books and 

records. The Commission received cooperation from the 

NFA in connection with this matter. CFTC v. Bame, et al., 

No. CV 08-05593 (C.D. Cal. filed Aug. 26, 2008)

■ CFTC, et al. v. Choi 

On August 27, 2008, the Commission, jointly with the 

Commissioner of Corporations of the State of California 

(State of California), filed a civil enforcement complaint 

charging Jinsup Choi (a/k/a Gene Choi) with fraudulent 

solicitation, misappropriation of customer funds, and 

making false statements. The complaint alleges that from 

at least June 2002 through April 2007, Choi, doing business 

as Futures Investment Group, fraudulently solicited 

approximately $19 million from approximately 83 individuals in and around Los Angeles, California, to purchase 

futures contracts. Specifically, the complaint alleges that 

Choi falsely represented that customer funds would be 

pooled with the funds of other customers for the purpose 

of futures trading and falsely represented that he could earn 

an eight to 10 percent profit per month trading futures and 

that customers would split evenly such profits with him.

In addition, the complaint alleges that Choi did not invest 

customer funds in futures at all and he failed to disclose 

that he converted customer funds to his own personal use.

In fact, Choi did not generate any profits from engaging 

in futures transactions, but rather conducted a large Ponzi 

scheme by paying alleged interest and profits to customers 

with monies paid to Choi by other customers, according to 

the order. He then falsely told customers that the interest 

and profits paid to them were generated from futures 

transactions. To lull customers into a false sense of security 

that their funds were not at risk and to prevent customers 

from complaining to federal and/or state authorities, Choi 

mailed his customers false account statements. The CFTC’s 

action relates to Choi’s guilty plea in United States v. Jinsup 

Choi, aka Gene Choi, Cr. No. 08-00108 (C.D. Calif.) on 

January 28, 2008 in which Choi pled guilty to a criminal 

information charging him with violating Federal wire fraud 

laws. The Commission received cooperation from the U.S.

Attorney’s Office for the Central District of California, the 

FBI, and the Commissioner of Corporations of the State of 

California in connection with this matter. CFTC, et al. v. 

Choi, No. SACV08-965 (C.D. Cal. filed Aug. 27, 2008)
148 CFTC

■ CFTC v. Phoenix Diversified Investment Corp., et al. 

On September 23, 2008, the Commission filed a civil 

enforcement action against Michael A. Meisner (Meisner) 

and his company, Phoenix Diversified Investment Corp.

(Phoenix), charging them with fraudulently soliciting 

participants in the Phoenix commodity pool, which traded 

exchange-traded commodity futures, and misappropriating participant funds. Meisner allegedly solicited pool 

participants by claiming that Phoenix owned a valuable 

software program that dictated trading patterns in the 

futures markets and guaranteed high profits. Meisner 

allegedly made several material misrepresentations and 

failed to disclose material facts to induce prospective pool 

participants and pool participants to invest or remain 

invested in the pool. These included false representations 

about the past profitability of the pool and the actual value 

of the pool. For example, according to Phoenix, account 

statements provided to at least 12 pool participants dated 

March 31, 2008, those 12 participants had a cumulative 

balance of over $4 million in the Pool. However, between 

March 31, 2008 and April 22, 2008, Phoenix refused to 

honor pool participants’ requests for withdrawal of funds 

and several Phoenix checks were returned for insufficient 

funds. Meantime, Meisner wrote letters to his pool participants advising them that Phoenix was out of money, the 

trading accounts were depleted and he used pool participant funds to support his lifestyle. As alleged, the trading 

accounts associated with the pool suffered losses of more 

than $5.8 million between May 2003 and April 2008. On 

the same day the complaint was filed, the court entered a 

statutory restraining order freezing assets and preserving 

books and records. The Commission received cooperation 

from the State of Florida, Office of Financial Regulation, 

and Bureau of Financial Investigations in connection with 

this matter. CFTC v. Phoenix Diversified Investment Corp., et 

al., No. 08-cv-81044-KLR (S.D. Fla. filed Sept. 23, 2008).

■ CFTC v. CSA Trading Group Inc. 

On September 29, 2008, the Commission filed a civil 

enforcement action against CSA Trading Group Inc. (CSA) 

and Michael Derrick Peninger, individually and doing 

business as the Cooper River Group, charging them with 

fraudulent solicitation and misappropriation of commodity 

pool participant funds and with issuing false statements 

to pool participants. The complaint alleges that, from at 

least October 2002 through January 2007, the defendants, 

among other things, fraudulently solicited and accepted 

directly, and through others, more than $1 million from at 

least 20 individuals to participate in purported commodity 

pools. Defendants’ fraudulent solicitation practices allegedly included misrepresenting Peninger’s prior trading 

successes, guaranteeing profitable returns, claiming that 

Peninger’s trading system eliminated the risks of trading 

commodity futures, falsely representing that individual 

funds would be pooled and traded, and failing to disclose 

the risk of trading commodity futures. Contrary to defendants’ representations, as alleged, Peninger and CSA failed 

to open a single account for the commodity pools and 

instead misappropriated almost all of the approximately $1 

million of pool participants’ funds. Defendants used the 

misappropriated funds to pay back pool participants and 

to pay for personal expenses and other business ventures.

Defendants concealed their fraud by issuing false account 

statements reflecting profitable returns and providing oral 

assurances to participants that they were making money.

The Commission received cooperation from the SEC in 

connection with this matter. CFTC v. CSA Trading Group 

Inc., et al., No. 2:08-cv-03297-CWH (D.S.C. filed Sept. 29, 

2008).

■ CFTC v. McCall Business Group, LLC, et al. 

On September 26, 2008, the Commission filed a civil 

enforcement action against Tyrone “Cauzae” McCall; 

McCall Business Group, LLC (MBG); and MBG Global, 

LLC (MBG Global). The complaint alleges that defendants 

fraudulently solicited at least two churches and 17 members 

of the public to invest over $1.3 million in predominantly 

commodity futures through a commodity pool. Contrary 

to Cauzae McCall’s representation, only a fraction of the 

commodity pool participants funds were traded; the 

majority of the funds were misappropriated. According to 

the allegations in the complaint, as of at least September 

2003 through March 2008, Cauzae McCall misrepresented to his clients he was capable of producing yearly 

profits between 18 percent and 60 percent trading futures 

when in fact he sustained huge losses trading futures. The 

complaint also alleges that Cauzae McCall deposited funds 

from commodity pool participants into bank accounts 

controlled by the defendants or Cauzae McCall’s wife, 

Terrilynn McCall, and misappropriated those funds. The 

funds were misappropriated to pay personal expenses and 
CFTC 149

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to pay off other commodity pool participants in a manner 

characteristic of a “Ponzi” scheme. The complaint further 

alleges that only a nominal amount of funds invested 

through MBG and MBG Global were actually traded.

Specifically, the complaint alleges that from October 2004 

through August of 2006 and October 2007 through April 

2008, $333,000 of pool participant money was deposited 

into trading accounts. Cauzae McCall withdrew approximately $202,000 for personal and business expenses 

and sustained approximately $127,000 in losses trading 

futures. The Commission received cooperation from the 

Richmond Division of the North Carolina Department of 

the Secretary of State, the Securities Division and the U.S.

Attorney’s Office for the Western District of North Carolina 

in connection with this matter. CFTC v. McCall Business 

Group, LLC, et al., No. 3:08-cv-445 (W.D.N.C. filed Sept.

26, 2008).

Commodity Trading Advisors, Managed Accounts, 

and Trading Systems

■ CFTC v. Rolando 

On January 15, 2008 the Commission filed a civil injunctive action against Diego Mariano Rolando of Buenos Aires, 

Argentina (a/k/a Roclerman and ROC d/b/a IA Trading.

com, Inc. (IA Trading)), charging Rolando with defrauding 

hundreds of customers worldwide in a $43.8 million 

investment scheme. The complaint alleges that Rolando: 

1) fraudulently traded customer funds in commodity 

futures and options contracts; 2) provided false account 

statements to customers; and 3) supplied false customer 

contact information to a U.S. clearing firm to hide his 

fraudulent scheme from customers. In all, the complaint 

alleges that Rolando solicited approximately $43.8 

million from more than 400 customers in South America, 

Europe, and the United States. Specifically, the complaint 

alleges that Rolando utilized the Web sites IATrading.com 

and Roclerman.com to solicit customers to open trading 

accounts. He allegedly told customers that he would 

trade securities on their behalf, however he traded tens 

of millions of dollars in customer funds in commodity 

futures and options contracts, without customer knowledge or authorization to trade in the commodity markets.

Indeed, according to the complaint, it appears that some 

customers signed and completed account documents 

which limited the defendant’s authority to trade securities. The complaint also charges that to further promote 

his scheme, Rolando allegedly provided false customer 

contact information and false trading advisor names to 

the U.S. clearing firm holding customers’ accounts and 

clearing trades to circumvent customer protection policies 

and programs. Rolando provided false contact information on as many as 200 of the 420 customer accounts.

Finally, Rolando is charged with providing his customers 

with written materials containing misrepresentations and 

omissions of material fact regarding their investments and 

IA Trading’s role and business relationship with the U.S.

clearing firm. On the same day the complaint was filed, 

the court entered a statutory restraining order freezing 

assets and preserving books and records. CFTC v. Rolando, 

No. 3:08-cv-00064-MRK (D. Conn. filed Jan. 15, 2008).

Fraud By Futures Commission Merchants, 

Introducing Brokers and Their Associated Persons

■ CFTC v. Sentinel Management Group, Inc., et al. 

On April 28, 2008, the Commission filed a civil enforcement action against registered FCM Sentinel Management 

Group, Inc. (Sentinel) and its president and chief executive officer, Eric A. Bloom and former senior vice-president, 

Charles K. Mosley, charging them with fraud and segregation violations involving their handling of $562 million in 

commodity customer segregated funds. Sentinel, which is 

also registered as an investment adviser with the SEC, unlike 

a typical FCM, did not trade futures contracts on behalf 

of any customers. Rather, it purported to provide shortterm money management services to various institutional, 

corporate and individual customers. Among other things, 

it managed segregated customer funds for other FCMs, 

allowing the customers of those FCMs to invest funds at 

a slightly better rate than they could obtain in other shortterm programs, while claiming to observe the Commission’s 

legal requirements that FCM customer funds be segregated.

The complaint alleges that Sentinel, Bloom, and Mosley 

committed fraud and misused commodity customer segregated funds from at least May 21, 2007 through August 

17, 2007. According to the complaint, Sentinel improperly commingled its commodity customers’ assets with its 

own assets and the assets of others. It also improperly used 

commodity customers’ assets to secure a Sentinel loan with 

the Bank of New York, removing as much as $444 million 
150 CFTC

of commodity customers’ securities from segregation to 

collateralize its loan. As alleged, Sentinel was not authorized to encumber or remove customer securities from 

segregation in this manner. Further, as alleged, Sentinel 

falsely reported to the Commission that, among other 

things, Sentinel had no amounts payable from September 

2005 through July 2007. CFTC v. Sentinel Management 

Group, Inc., et al., No. 08CV2410 (N.D. Ill. filed April 28, 

2008).

Illegal, Off-Exchange Transactions

■ Saxon Financial Services, Inc. 

On October 3, 2008, the Commission filed a civil injunctive action charging Saxon Financial Services, Inc. (Saxon), 

which also does business as Saxon Consultants, Ltd., with 

fraud in connection with off-exchange unleaded gas and 

foreign currency options. The CFTC’s complaint alleges 

that, since at least July 2006 and continuing through the 

present, Saxon fraudulently solicited and continues to 

fraudulently solicit customers in Canada and Europe to 

trade in off-exchange oil, gas, and forex options contracts 

with Saxon and its affiliated businesses, either GIFG (Suisse) 

SA or Merchant Capital Markets S.A., both of which are 

foreign firms purportedly based in Geneva, Switzerland.

The complaint alleges that Saxon defrauded the customers 

through deceptive sales solicitations that misrepresented 

the likelihood of profit and the risk of the trading. For 

example, in July 2007, a Saxon broker told a Canadian regulatory investigator posing as a prospective customer that 

if he bought unleaded gasoline options as recommended 

by Saxon, he could expect to see a 300 percent return in 

three months. Saxon is not registered with the CFTC in 

any capacity, nor is it registered “overseas” as at least one 

broker allegedly represented in solicitations. On the same 

day the complaint was filed, the court entered a statutory 

restraining order freezing assets and preserving books and 

records. In connection with this matter, the Commission 

received cooperation from: several Canadian regulators, 

specifically the New Brunswick Securities Commission, 

the Alberta Securities Commission, the Saskatchewan 

Financial Services Commission, and the Ontario Securities 

Commission; the U.S. Marshals Service; and the SEC’s 

Atlanta office. CFTC v. Saxon Financial Services, Inc., No. 1 

07-CV-2436 (N.D. Ga. filed Oct. 3, 2007).

Statutory Disqualification

■ In re Worldwide Clearing, LLC 

On January 2, 2008, the Commission filed a Notice of 

Intent to Revoke Registration against Worldwide Clearing, 

LLC (Worldwide), a registered FCM. The Commission seeks 

to determine whether Worldwide is subject to disqualification from registration based on the entry of a district 

court consent order of permanent injunction against it.

CFTC v. Int’l Currency Exchange, et al., No. 1:05-c-8446-

RMB-MHD (S.D.N.Y. filed Sept. 14, 2007). The consent 

order finds that from November 2004 through at least June 

2005, International Currency Exchange, Inc. (IC Exchange) 

solicited members of the general public to open accounts 

to trade forex options. In soliciting prospective customers, 

IC Exchange knowingly or recklessly made misrepresentations regarding the risks and rewards of trading forex 

options. The consent order finds under its introducing 

agreement and in the course of conduct, IC Exchange 

acted as Worldwide’s agent in soliciting customers to 

open accounts with Worldwide for the purpose of speculating in forex options and that, as a result, Worldwide is 

liable for IC Exchange’s fraud. The consent order prohibits 

Worldwide from seeking registration with the Commission 

in any capacity and imposes a $130,000 civil monetary 

penalty and restitution of $670,000 on Worldwide. In re 

Worldwide Clearing, LLC, CFTC Docket No. SD 08-01 (CFTC 

filed Jan. 2, 2008).

■ In re Liberty Financial Trading Corp., Inc., et al. 

On January 23, 2008, the Commission issued a Notice 

to Revoke Registration against registered IBs Liberty 

Financial Trading Corp., Inc. (LFTC) and Liberty Real 

Assets Investment Corporation (LRAIC). The Commission 

seeks to determine whether LFTC and LRAIC are subject 

to statutory disqualification of their registrations based on 

the entry of a district court consent order of permanent 

injunction against them. CFTC v. Liberty Financial Trading 

Corp., Inc., et al., No. 04-61235-CIV-LENARD/TORRES 

(S.D. Fla. filed Apr. 24, 2007). The consent order found 

that LFTC (from at least early 2002) and LRAIC (from 

about June 2004), operating as a common enterprise, 

fraudulently solicited at least 930 retail customers to trade 

commodity options contracts, resulting in losses of at least 

$10 million. The order also found that LFTC and LRAIC 
CFTC 151

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misrepresented the profit potential and risk involved in 

trading commodity options contracts; failed to disclose 

their performance record; and misrepresented the actual 

performance of customers’ accounts. To settle the action, 

LFTC and LRAIC were ordered to pay a total of $6.5 million 

in civil monetary penalties and restitution totaling $9.783 

million and were prohibited from registering with the 

Commission in any capacity. In re Liberty Financial Trading 

Corp., Inc., et al., CFTC Docket No. SD 08-02 (CFTC filed 

Jan. 23, 2008).

■ In re Glase, et al. 

On June 30, 2008, the Commission issued a Notice to 

Revoke Registrations against John C. Glase, Sutherland 

Group, Inc. (Sutherland), formerly known as Carnegie 

Trading Group, Ltd., Inc. (Carnegie), and Skibo Asset 

Management, LLC (Skibo). Sutherland is a registered 

IB and CTA, Skibo is a registered CTA and Glase is registered as an AP and listed as a principal of both Sutherland 

and Skibo. The registration revocation action against 

Glase and Sutherland is based on previous fraud judgments and monetary penalties entered against Glase and 

Carnegie. The action against Skibo, which is not subject 

to the aforementioned judgments, is based on statutory 

grounds that provide that Skibo’s registration may be 

revoked if its principal’s registration (i.e., Glase’s) has been 

or could be revoked. The Commission’s Notice alleges 

that Glase, Sutherland and Skibo are subject to statutory 

disqualification of their registrations based on a judgment 

entered by the U.S. District Court for the Northern District 

of Ohio on June 27, 2006 after a bench trial. CFTC v. 

Carnegie Trading Group Ltd., et al., No. 1:04 CV 1403, 

Memorandum Opinion (N.D. Ohio filed June 27, 2006).

In the judgment order, Glase was held liable as a controlling person of Carnegie for the fraudulent acts of certain 

Carnegie employees in connection with the solicitation 

of and trading recommendations to commodity options 

customers. He also was found directly liable for failing to 

supervise diligently Carnegie’s employees. The June 27, 

2006 judgment, among other things, ordered that Glase 

and Carnegie disgorge earnings in the amount of $32,850, 

pay certain listed customers $229,971.31 as restitution, and 

pay a civil monetary penalty of $98,550. In re Glase, et al., 

CFTC Docket No. SD 08-03 (CFTC filed July 30, 2008).

■ In re Beacon Rock Capital, LLC 

On September 18, 2008, the Commission filed a Notice 

of Intent to Revoke Registration against hedge fund 

Beacon Rock Capital, LLC (Beacon Rock) and simultaneously issued an Opinion and Order revoking Beacon 

Rock’s CPO and CTA registrations. The CFTC’s Opinion 

and Order finds that Beacon Rock’s conviction in the first 

criminal case in U.S. history against a hedge fund for 

engaging in fraudulent market timing justifies revoking its 

registrations. On April 3, 2007, the U.S. Attorney for the 

Eastern District of Pennsylvania charged Beacon Rock with 

engaging in a scheme to defraud mutual funds and their 

shareholders in connection with the short-term trading of 

mutual funds. United States v. Beacon Rock Capital, LLC, 

et al., No. 2:07-cr-00142-ER (E.D. Pa.). According to the 

criminal charges, through this scheme, Beacon Rock 

allegedly made in excess of 26,000 market timing trades, 

resulting in approximately $2.4 million in net trading 

profits. As stated in the CFTC’s order, Beacon Rock pled 

guilty to the criminal charges on April 4, 2008, and on May 

8, 2008, the U.S. District Court for the Eastern District of 

Pennsylvania sentenced the firm to three years of probation and a $600,400 fine. In re Beacon Rock Capital, LLC, 

CFTC Docket No. SD 08-04 (CFTC filed Sept. 18, 2008).

■ In re Philadelphia Alternative Asset Management 

Company, LLC 

On September 24, 2008, the Commission issued a Notice 

to Revoke Registrations against PAAM, a registered CPO.

The action is based, in part, on fraud judgments entered 

against PAAM. The Commission Notice alleges that 

PAAM is subject to statutory disqualification of its registration as a CPO based on a default judgment entered 

against PAAM in the U.S. District Court for the Eastern 

District of Pennsylvania on August 13, 2008. CFTC v. 

Philadelphia Alternative Asset Management Company, LLC,

No. 2:05-CV-02973-MMB. The District Court’s August 

13th order found that the defendant, from at least the fall 

of 2002, through at least May 2005, fraudulently solicited more than $280 million from individuals to participate in a commodity pool, trading commodity futures 

and options. The order also found that PAAM issued 

fraudulent trading account statements; misrepresented 

its trading record to prospective participants; and misap-
152 CFTC

propriated pool funds. PAAM was ordered to pay restitution of approximately $276 million in addition to a civil 

monetary penalty of $8.8 million. The August 13th order 

also imposed trading and registration bans on PAAM. In 

re Philadelphia Alternative Asset Management Company, LLC., 

CFTC Docket No. SD 08-05 (CFTC filed Sept. 24, 2008).

Enforcement Litigation by Goal Three

Financial, Supervision, Compliance 

and Recordkeeping

■ CFTC v. One World Capital Group, LLC, et al. 

On December 13, 2007, the Commission filed an injunctive enforcement action against One World Capital Group, 

LLC (One World), a registered FCM, and its president, John 

Edward Walsh, charging them with inability to demonstrate compliance with capitalization requirements and 

with failure to maintain required books and records. The 

complaint alleges that, since at least November 28, 2007, 

One World has been unable to demonstrate that it has 

maintained at least $1 million in adjusted net capital, the 

minimum requirement needed for FCMs that are Foreign 

Currency Dealer members of the NFA. As of December 10, 

2007, the complaint charges, One World failed to demonstrate that it had any net assets. While One World appeared 

to possess $554,000 of funds held in customer accounts, 

since at least November 2, 2007, the NFA has been 

receiving complaints from customers alleging that they 

are unable to get their funds back from One World. The 

complaint alleges that the amount claimed outstanding by 

customers exceeds $4 million. The complaint also alleges 

that Walsh conceded an inability to identify all of One 

World’s customer liabilities. Furthermore, the complaint 

charges One World and Walsh with failing to maintain 

books and records as required by a Commission regulation. On the same day the complaint was filed, the court 

entered a statutory restraining order freezing assets and 

preserving books and records. The Commission received 

cooperation from the NFA in connection with this matter.

CFTC v. One World Capital Group, LLC, et al., No. 07C 7002 

(N.D. Ill. Dec. 13, 2007).

■ CFTC v. Forex Liquidity LLC 

On December 13, 2007, the Commission filed an injunctive enforcement action against Forex Liquidity LLC (Forex 

Liquidity), a registered FCM, charging it with being undercapitalized and also with failing to maintain required 

books and records. According to the complaint, as of 

November 30, 2007, and perhaps earlier, Forex Liquidity’s 

net capitalization was below the minimum required by the 

Commission. As a Forex Dealer Member of the NFA offering 

to be the counterparty to retail customer foreign currency 

transactions, Forex Liquidity is required to have a minimum 

adjusted net capital of $1 million; instead, according to 

the complaint, as of December 7, 2007, it had an adjusted 

net capital deficit of approximately $11.6 million. Forex 

Liquidity is also alleged to have been unable to produce 

required financial documentation regarding its assets and 

liabilities. For example, according to the CFTC’s complaint, 

Forex Liquidity represented in reports and discussions with 

NFA that its assets at one time included a $35 million 

ABN-AMRO bond located in Switzerland. The complaint 

further alleges that Forex Liquidity represented to the NFA 

that the ABN-AMRO bond (or its proceeds) were transferred to a U.S. registered broker dealer, Commonwealth 

Financial Network (CFN); however, CFN does not have an 

account for Forex Liquidity and the account number that 

the defendant provided to NFA was fictitious. Accordingly, 

the CFTC also charged Forex Liquidity with failure to 

maintain books and records of its business transactions, 

specifically, current ledgers that accurately reflect its assets 

and liabilities. On December 14, 2007, the court entered 

a statutory restraining order freezing assets and preserving 

books and records. The Commission received cooperation from the NFA in connection with this matter. CFTC 

v. Forex Liquidity LLC, No. SACV07-1437 CJC (RNBx) (C.D.

Cal. filed Dec. 13, 2007).

■ In re MF Global Inc. 

On December 26, 2007, the Commission simultaneously 

filed and settled an administrative enforcement action 

against MF Global Inc. (MFG), a registered FCM, and 

Thomas Gilmartin, a registered AP of MFG, finding that 

they committed supervision and recordkeeping violations arising out of their mishandling of hedge fund 

accounts that were carried by MFG and managed by Paul 

Eustace and the PAAM. On the same day, the receiver ad 
CFTC 153

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litem for PAAM announced that he had settled his action 

against MFG and Gilmartin arising from the same misconduct. The Commission’s sanctions include civil monetary 

penalties against MFG and Gilmartin in the amounts of 

$2 million and $250,000, respectively, and an order that 

Gilmartin never apply for registration or claim exemption 

from registration with the CFTC in any capacity. The court 

also approved a settlement for the receiver ad litem, which 

requires MFG and Gilmartin to pay a total of $75 million, 

consisting of $69 million for the benefit of the receivership 

estate, which the receiver manages on behalf of investors 

in the funds traded by Eustace and PAAM, and $6 million 

to reimburse the estate for the litigation costs of pursuing 

the claims against MFG and Gilmartin. The Commission’s 

order finds that Eustace opened trading accounts at MFG 

and another firm for an off-shore hedge fund Eustace and 

PAAM managed known as the Philadelphia Alternative 

Asset Fund, Ltd. (Offshore Fund), which was registered 

in the Cayman Islands and had more than $250 million 

in assets. According to the Order, Eustace and PAAM 

concealed mounting, massive trading losses in an Offshore 

Fund trading account at MFG by restricting internet access 

to that account. Eustace and PAAM also backdated execution dates of certain trades executed through MFG in order 

to bolster the apparent profitability of the Offshore Fund.

The Offshore Fund ultimately sustained net losses of 

approximately $133 million in its accounts at MFG. The 

Order finds that MFG and Gilmartin failed to diligently 

supervise the handling of the Offshore Fund accounts 

and that they failed to respond to indications of questionable activity by Eustace. The order further finds that MFG 

failed to follow its procedures for opening accounts and 

transfers of trades and failed to provide sufficient guidance 

concerning potential conflicts of interest. According to the 

Order, MFG also failed to have sufficient internal controls, 

policies and procedures concerning external communications with third parties and changes to Internet access of 

account information. MFG also failed to institute sufficient internal controls, policies, and procedures to detect 

and deter possible wrongdoing. Lastly, the Order finds that 

MFG and Gilmartin failed to comply with order taking and 

recordkeeping requirements. In re MF Global Inc., CFTC 

Docket No. 08-02 (CFTC filed Dec. 26, 2007).

Both settlements arise out of the Commission’s June 22, 

2005 lawsuit charging Eustace and PAAM with hedge 

fund fraud. The Commission’s complaint in that matter 

alleges that Eustace and PAAM committed fraud by, among 

other things, providing false account statements to investors to hide trading losses in several funds they managed.

The CFTC’s action froze all the assets under the control of 

PAAM and Eustace and preserved more than $70 million 

for return to investors. The CFTC’s action also resulted 

in the removal of Eustace as the trader for PAAM and the 

appointment of a receiver for PAAM and the receiver ad 

litem who prosecuted the estate’s claims against, among 

others, MFG and Gilmartin. CFTC v. Eustace, et al., No.

05CV2973 (E.D. Pa. filed June 22, 2005).

■ In re Paradigm Capital Management LLC 

On February 14, 2008, the Commission simultaneously 

filed and settled an administrative enforcement action 

against Paradigm Capital Management LLC (PCM), a 

registered CPO, finding that PCM failed to distribute 

and file its commodity pools’ annual reports in a timely 

manner. Specifically, the Order finds that PCM, as a CPO 

for commodity pools that operate as funds-of-funds, failed 

to distribute to pool participants and file with the NFA 

one or more of its commodity pools’ annual reports in a 

timely manner, in violation of a Commission regulation.

The Commission assessed sanctions including: a cease and 

desist order; and civil monetary penalty ($75,000). In re 

Paradigm Capital Management LLC, CFTC Docket No. 08-04 

(CFTC filed Feb. 14, 2008).

■ In re LJH Global Investments, LLC 

On February 14, 2008, the Commission simultaneously 

filed and settled an administrative enforcement action 

against LJH Global Investments, LLC (LJH), a registered 

CPO for commodity pools that operate as funds-of-funds, 

finding that LJH failed to file annual reports on time for 

commodity pools it operates. The Order finds that LJH 

claimed exemptions from annual reporting requirements 

for these pools because it claimed that it offered or sold 

participations in the pools solely to qualified eligible 

persons. However, according to the Order, a CPO for 

exempt pools must file the pools’ annual reports with 

the NFA and distribute the reports to pool participants 

either 90 days or, if the CPO receives an extension, 150 

days after the end of the pools’ fiscal year. Specifically, the 

Order finds that, between FY 2002 and FY 2005 (ending 

December 31), LJH failed to file and distribute the required 

annual reports for certain pools in a timely manner. The 
154 CFTC

Order further finds that, in two of its pools’ annual reports, 

LJH failed to provide appropriate footnote disclosure 

and failed to present and compute those reports in accordance with GAAP. The Commission assessed sanctions 

including: a cease and desist order and a civil monetary 

penalty ($125,000). In re LJH Global Investments, LLC, 

CFTC Docket No. 08-05 (CFTC filed Feb. 14, 2008). 

■ In re BNP Paribas Commodity Futures, Ltd. 

On March 11, 2008, the Commission simultaneously filed 

and settled an administrative enforcement action against 

BNP Paribas Commodity Futures, Ltd. (CFL), a commodity 

futures broker regulated by the U.K. Financial Services 

Authority that carried accounts that traded on U.S. futures 

markets. The Order finds that CFL failed to provide to the 

Commission timely and accurate account information for a 

reportable large trader account, as required by Commission 

regulations. To comply with the Commission’s reporting 

requirements, CFL filed a report identifying an account 

that had become a reportable large trader account, known 

as a “Special Account.” However, the large trader report 

filed by CFL misidentified the account controller and 

used an account reporting number that was not unique, 

which violated the Commission’s reporting rules. The 

Commission assessed sanctions including: a cease and 

desist order; and civil monetary penalty ($25,000). In 

re BNP Paribas Commodity Futures, Ltd., CFTC Docket No.

08-06 (CFTC filed Mar. 11, 2008).

■ In re Alaron 

On April 18, 2008, the Commission simultaneously filed 

and settled an administrative enforcement action against 

registered FCM Alaron Trading Corporation (Alaron) 

finding that it failed to diligently supervise its employees 

handling of certain accounts. Specifically, the order 

found that from at least July 2004 until February 2006, 

Alaron failed to supervise diligently its employees in their 

handling of certain accounts managed by an unregistered CTA, as well as certain other accounts in which they 

allowed unauthorized trading of customer accounts by an 

IB. The Commission assessed sanctions including orders 

to pay a civil monetary penalty ($180,000) and restitution 

($119,295). Alaron was also ordered to comply with its 

undertaking to strengthen its supervisory system for overseeing its APs’, employees’, and agents’ sales solicitations 

and maintenance of customer accounts traded by third 

parties. In re Alaron, CFTC Docket No. 08-10 (CFTC filed 

April 18, 2008).

■ In re Rosenthal Collins Group, L.L.C. 

On August 26, 2008, the Commission simultaneously filed 

and settled charges of compliance and supervisory violations against registered FCM Rosenthal Collins Group, 

LLC (RCG). The order finds that, from April 2003 through 

December 2005, RCG failed to enforce its compliance 

procedures and failed to diligently supervise employees in 

their handling of disbursements from a customer account.

RCG’s compliance rules and procedures prohibited the 

issuance of third-party checks, unless they were approved 

by RCG’s Compliance Department or were for payment of 

a customer’s bona fide business expenses. RCG’s compliance 

rules and procedures also prohibited cash disbursements 

to customers unless the customers were approved by RCG’s 

Compliance Department to receive such cash payments.

The order finds that RCG disbursed cash to an employee 

of a NYMEX floor brokerage operation, even though that 

employee was not an account holder authorized to receive 

cash from the account. RCG also disbursed numerous 

checks from the same customer account to third parties 

without the appropriate approval. The Commission 

assessed sanctions including: a $310,000 civil monetary 

penalty; and an order that RCG comply with its undertaking to implement enhanced supervisory procedures to 

monitor and enforce compliance rules and assure adherence to rules governing disbursements from customer 

accounts. In re Rosethal Collins Group, L.L.C., CFTC Docket 

No. 08-12(CFTC filed Aug. 26, 2008)

■ In re Mansur Capital Corporation, In re Persistent 

Edge Management LLC, and In re Stillwater Capital 

Partners, Inc., et al. 

On September 24, 2008, the Commission simultaneously filed and settled administrative enforcement actions 

against: 1) Mansur Capital Corporation (Mansur); 2) 

Persistent Edge Management LLC (Persistent Edge); 

and 3) Stillwater Capital Partners, Inc. (Stillwater I) and 

Stillwater Capital Partners, LLC (Stillwater II) (collectively 

Respondents), finding that these registered CPOs failed to 

file and distribute one or more of their commodity pools’ 

annual reports in a timely manner. Specifically, the Orders 
CFTC 155

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find that Respondents, each of whom are or were CPOs for 

pools that operated as funds-of-funds, failed to distribute 

to pool participants and file with the NFA one or more of 

its commodity pools’ annual reports in a timely manner, in 

violation of a Commission regulation. The Commission 

assessed sanctions, including; cease and desist orders; 

and civil monetary penalties (Mansur $75,000; Persistent 

Edge $120,000; and Stillwater I and Stillwater II, jointly 

and severally, $135,000). In re Mansur Capital Corp., 

CFTC Docket No. 08-15 (CFTC filed Sept. 24, 2008); In re 

Persistent Edge Mgmt. LLC, CFTC Docket No. 08-16 (CFTC 

filed Sept. 24, 2008); and In re Stillwater Capital Partners, 

Inc., et al., CFTC Docket No. 08-17 (CFTC filed Sept. 24, 

2008).

Trade Practice

■ CFTC v. Sarvey, et al. 

On January 9, 2008, the Commission filed a civil enforcement fraud action charging two CBOT floor brokers, who 

trade in the Five-Year Treasury Note futures pit, Edward C.

Sarvey and David G. Sklena. The complaint alleges that 

Sarvey took advantage of volatile trading conditions in the 

Five-Year Treasury Note futures pit on April 2, 2004, immediately following the Federal government’s release of the 

March 2004 employment statistics at 7:30 a.m. CST, which 

showed a greater number of new jobs than U.S. financial 

markets had expected. Within 90 seconds after the statistics became public, prices of Five-Year Treasury Note futures 

contracts dropped by more than one point—equivalent to 

$1,656.25 per futures contract—in fast trading. According 

to the complaint, Sarvey held customer orders to sell a 

total of 2,474 Five-Year Treasury Note futures contracts.

The complaint states that the price of Five-Year Treasury 

Note futures contracts recovered before Sarvey sold any 

contracts on behalf of his customers. According to the 

complaint, after the market recovered, Sarvey noncompetitively sold 2,274 contracts for his customers to Sklena at a 

low price that had traded a few minutes earlier, rather than 

offering to sell those contracts at the then-higher prevailing 

market prices. As a result, the complaint alleges, Sarvey 

cheated and defrauded his customers by as much as $2.1 

million. The complaint also alleges that Sarvey “indirectly 

bucketed” his customers’ orders by simultaneously buying 

485 contracts for himself from Sklena at a low noncompetitive price. According to the CFTC’s complaint, Sarvey 

profited more than $357,000 by immediately selling those 

contracts at a profit in the prevailing market. The CFTC’s 

complaint alleges that Sklena accommodated and aided 

and abetted Sarvey in defrauding the CBOT customers and 

indirectly bucketing the customers’ orders. According to 

the CFTC’s complaint, Sklena, who entered the day with 

less than $25,000 in his trading account, reaped a windfall 

profit of approximately $1.65 million at the expense of 

Sarvey’s customers. The complaint also names LawrenceBonfitto Trading Company, which had been registered 

as a FCM from 1994 to 2004, and its principal, Joseph 

Bonfitto, as relief defendants. According to the complaint, 

Bonfitto and his company, which cleared Sklena’s trades, 

took approximately $650,000 of Sklena’s profits from the 

alleged fraudulent trading, but are not entitled to these 

funds. The Commission received cooperation from the 

CME Group, Inc. in connection with this matter. CFTC v. 

Sarvey, et al., No. 08C0192 (N.D. Ill. filed Jan. 9, 2008).

■ In re Karvellas and In re Maloney 

On April 8, 2008, the Commission simultaneously filed 

and settled separate administrative enforcement actions 

against two NYMEX brokers, Steven Karvellas and Thomas 

Maloney, findings that they fraudulently allocated trades 

to their personal accounts and deprived their customers 

of the opportunity to profit. The orders require Karvellas 

and Maloney, in total, to pay $437,500 in penalties and 

permanently prohibit them from trading in the commodities markets. In an extensive cooperative law enforcement effort, the Commission and NYCDA conducted an 

investigation of abusive trading practices on the NYMEX.

Karvellas, a registered floor broker and former board 

member of the NYMEX, and Maloney, also a registered 

floor broker, each were found to have separately diverted 

profitable transactions to their own accounts that had 

been filled for customers. Karvellas was also found to have 

ordered the destruction of an order ticket to conceal his 

involvement in the scheme. The Commission assessed 

sanctions including: cease and desist orders; permanent 

trading bans, orders to comply with their undertakings 

to never apply for registration with the Commission; and 

orders to pay civil monetary penalties (Karvellas $375,000, 

and Maloney $62,500). The Commission received cooperation from the NYMEX in connection with this matter.
156 CFTC

In re Karvellas, CFTC Docket No. 08-08 (CFTC filed April 

8, 2008) and In re Maloney, CFTC Docket No. 08-09 (CFTC 

filed April 8, 2008).

■ In re Perez 

On August 26, 2008, the Commission simultaneously filed 

and settled an administrative enforcement action against 

Alvin Perez, a former NYMEX Compliance Department 

Clerk, for disclosing non-public information to NYMEX 

floor brokers. The Order, which recognizes Perez’s cooperation in this matter, found that he disclosed to NYMEX 

floor brokers material non-public information regarding 

investigations and proposed regulatory actions, which he 

obtained in his capacity as a NYMEX employee. In a related 

matter, Perez pled guilty to the state crime of Commercial 

Bribe Receiving in the Second Degree for the same underlying conduct, for which the NYCDA has recommended 

a sentence of probation. The Commission assessed sanctions, including ordering Perez to comply with this undertakings to never: apply for registration, seek exemption 

from registration or act in a capacity requiring registration with the Commission; and act as a principal, agent, 

or any other officer or employee of any exchange, registered futures association, self-regulatory organization, or 

person registered, exempted from registration, or required 

to be registered with the Commission. The Commission 

received cooperation from the NYCDA and NYMEX in 

connection with this matter. In re Perez, CFTC Docket No.

08-11 (CFTC filed Aug. 26, 2008).

■ In re Tremblay

On August 28, 2008, the Commission simultaneously 

filed and settled an administrative enforcement action 

against Ryan Tremblay, who was formerly registered 

with the Commission as a floor broker. The order finds 

that Tremblay, acting as a clerk in the natural gas ring 

of NYMEX, fraudulently allocated futures trades to his 

personal account and deprived customers of the opportunity to profit. In a related criminal matter, Tremblay 

pled guilty on June 12, 2008, to the misdemeanor state 

crime of attempting to violate the anti-fraud provision of 

New York’s General Business Law for the same underlying 

conduct and received a sentence of a conditional discharge.

The Commission assessed sanctions including: a cease and 

desist order, permanent trading ban, and a $50,000 civil 

monetary penalty. The Commission received cooperation from the NYCDA and NYMEX in connection with this 

matter. In re Tremblay, CFTC Docket No. 08-13 (CFTC filed 

Aug. 28, 2008).

■ In re Sempra Energy Trading LLC 

On September 4, 2008, the Commission simultaneously 

filed and settled an administrative enforcement action 

against Sempra Energy Trading LLC (Sempra) for trading 

card violations involving natural gas futures trades on 

the NYMEX. The order finds that on certain trading 

days between August and November 2004, Sempra’s 

floor brokers violated a CFTC regulation by failing to 

properly and accurately prepare trading cards in order to 

process trades that were made after the contract was no 

longer trading. According to the order, the trades were 

“EFS” trades, which involve an exchange of futures for, 

or in connection with, a swap. Collectively, these trades 

involved positions of several hundred lots. However, on 

each of the trading dates at issue, the trades took place 

outside of the permitted time period. The trading cards, 

therefore, did not accurately reflect the actual trade dates 

or listed trades entered out of exact chronological order in 

violation of CFTC regulations applicable to trading cards.

The order concluded that because the Sempra floor brokers 

undertook their actions within the scope of their employment; Sempra is liable for its floor brokers’ violations. The 

Commission assessed sanctions including: a cease and 

desist order and $175,000 civil monetary penalty. The 

Commission received cooperation from the NYMEX in 

connection with this matter. In re Sempra Energy Trading 

LLC, CFTC Docket No. 08-14 (CFTC filed Sept. 4, 2008).
CFTC 157

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CFTC Information Technology Systems

Integrated Surveillance System (ISS)

User: Market Oversight

Functionality: ISS collects futures and options position data 

for large traders from reporting firms and open interest, 

volume, price, and clearing member data from exchanges 

that is used to monitor future and options trading in order 

to detect any market anomalies that may occur.

Regulatory Statement Review (RSR)

User: Clearing and Intermediary Oversight

Functionality: RSR Express is a tool used by the Commission 

staff to review monthly and annual 1-FR and Focus reports 

from firms and to monitor the financial status of firms and 

the changes to that status over time.

Stressing Positions at Risk (SPARK)

User: Clearing and Intermediary Oversight and Market 

Oversight

Functionality: SPARK is a tool used by Commission staff to 

perform “what if” analysis to determine the effect of market 

movement on maintenance margin.

Filings and Actions (FILAC)

User: Clearing and Intermediary Oversight and Market 

Oversight

Functionality: FILAC manages data associated with the 

approval organizations, products, rules, foreign filings, and 

actions.

Exchange Database System (EDBS)

User: Market Oversight, Enforcement, Chief Economist

Functionality: EDBS is used for trade practice surveillance, 

trading analyses, statistical studies, and research projects 

for the Commission.

Trade Surveillance System (TSS)

User: Market Oversight, Enforcement, Chief Economist

Functionality: TSS is a new system that will enable CFTC 

staff to conduct surveillance in the rapidly expanding area 

of electronic trading, both intra and inter-exchange and 

across side-by-side platforms. TSS will retain the important legacy data and functionality of EDBS, which it will 

gradually replace.

Project eLaw 

User: Enforcement, General Counsel, and Proceedings

Functionality: The eLaw Program is an automated law office 

that seamlessly integrates technology and work processes 

to support Commission managers and staff in their investigative, trial, and appellate work.
158 CFTC

Glossary of Abbreviations and Acronyms

A Guide to the Language of the Futures Industry

http://www.cftc.gov/educationcenter/glossary/

Because the acronyms of many words and phrases used throughout the futures industry are not 

readily available in standard references, the Commission’s Office of External Affairs compiled a 

glossary to assist members of the public. 

This glossary is not inclusive, nor are general definitions intended to state or suggest the views of 

the Commission concerning the legal significance, or meaning of any word or term. Moreover, 

no definition is intended to state or suggest the Commission’s views concerning any trading 

strategy or economic theory.

Glossary of Acronyms

AE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Actuarials Exchange, LLC

ALJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Administrative Law Judge

AP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Associated Person

API . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Application Program Interface

BM&F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bovespa S.A._Bolsa de Valores, Mercadorias e Futuros

BP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .British Petroleum

BPPNA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BP Products North America, Inc.

BTEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BrokerTec Futures Exchange

CBOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chicago Board of Trade

CCORP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Clearing Corporation

CCX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chicago Climate Exchange, Inc.

CDXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodities Derivative Exchange, Inc.

CCFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chicago Climate Futures Exchange

CEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Exchange Act

CESR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Council of European Securities Regulators

CFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CBOE Futures Exchange

CFL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BNP Paribas Commodity Futures, Ltd.

CFMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Futures Modernization Act of 2000
CFTC 159

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CFTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Futures Trading Commission

CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chief Financial Officer (CFTC)

CIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chief Information Officer (CFTC)

CME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chicago Mercantile Exchange

CME AM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CME Alternative Marketplace, Inc.

COMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Exchange Division

COOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Continuity of Operations Plan

COSRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Council of Securities Regulators of the Americas

COT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commitments of Traders

CPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Pool Operator

CSCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Coffee Sugar and Cocoa Exchange

CSRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .China Securities Regulatory Commission

CSRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Civil Service Retirement System

CTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commodity Trading Advisor

DCIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Division of Clearing and Intermediary Oversight (CFTC)

DCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Designated Contract Market

DCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Derivatives Clearing Organization

DHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of Homeland Security

DMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Division of Market Oversight (CFTC)

DOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Division of Enforcement (CFTC)

DOJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of Justice

DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of Labor

DOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of Transportation

DTEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Derivatives Transaction Execution Facility

EC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .European Commission

ECM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exempt Commercial Markets

ECM-SPDCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exempt Commercial Market-Significant Price 

Discovery Contracts

EDBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exchange Database System

EPFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exchange Place Futures, LLC

ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Energy Transfer Company

ETF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exchange Traded Fund

ETP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Energy Transfer Partners, L.P.

ETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Electronic Trading System

EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .European Union

FARM BILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Food, Conservation, and Energy Act of 2008

FASAB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Accounting Standards Advisory Board

FB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Floor Broker

FBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Bureau of Investigation

FBOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Foreign Boards of Trade

FCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Farm Credit Administration

FCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Futures Commission Merchant

FCOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .FutureCom

FECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Employees Compensation Act

FEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Emergency Management Agency

FERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Employees’ Retirement System

FIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Futures Industry Association

FILAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Filings and Actions 

FISMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Information Security Management Act

FIXML . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Financial Information Exchange Markup Language

FLETT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Flett Exchange
160 CFTC

FMFIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Managers’ Financial Integrity Act

FMHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Farmers Home Administration

FOREX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Foreign Currency

FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Financial Services Authority

FT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Floor Trader

FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Trade Commission

FTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Full-time Equivalent

FXTRADE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .FxTrade Financial, LLC

FY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fiscal Year

GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Generally Accepted Accounting Principles

GAO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Government Accountability Office

GCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Guaranty Clearing Corporation

GFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .GFI Group Inc.

GFI FOREXMATCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .GFI Group Inc., ForexMatch

GMAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Global Markets Advisory Committee

GPRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Government Performance and Results Act

HSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Houston Ship Channel

HSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HoustonStreet Exchange, Inc.

IB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Introducing Broker

ICAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ICAP Commodity Derivatives Trading System

ICAP ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ICAP Electronic Trading Community

ICAP HYDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ICAP Hyde Limited Trading System

ICC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Intermarket Clearing Corporation

ICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .InterContinental Exchange 

ICE US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ICE Futures U.S., Inc.

IMAREX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .International Maritime Exchange

INTRADE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .INTRADE Board of Trade

IOSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .International Organization of Securities Commissions

ISS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Integrated Surveillance System

IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Information Technology

JO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Judgment Officer

KCBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Kansas City Board of Trade

LCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .London Clearing House

LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Limited Liability Corporation

LONGITUDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Longitude, LLC

MACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .MidAmerica Commodity Exchange

MATCHBOXX ATS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Matchboxx Alternate Trading System

MDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Management’s Discussion and Analysis

ME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Merchants Exchange

MFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .MF Global Inc.

MGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Minneapolis Grain Exchange

NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .North American Free Trade Agreement

NFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .National Futures Association

NGX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Natural Gas Exchange

NIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .National Institute of Standards and Technology

NODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nodel Exchange, LLC

NQLX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NQLX LLC

NTP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NetThruPut

NYCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York Clearing Corporation

NYCDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York County District Attorney’s Office

NYCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York Cotton Exchange

NYFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York Futures Exchange
CFTC 161

A ppendI CES

NYMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .New York Mercantile Exchange

OCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Options Clearing Corporation

OCX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .OneChicago Futures Exchange

OFM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Financial Management (CFTC)

OGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of the General Counsel (CFTC)

OHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Human Resources (CFTC)

OIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of International Affairs (CFTC)

OIG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Inspector General (CFTC)

OITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Information and Technology Services (CFTC)

OMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Management and Budget

ONXCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .OnExchange Clearing Corporation

OPEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Optionable, Inc.

OPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of Personnel Management

OPTIONS ATS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Options ATS, LLC

OPTIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Optiver US, LLC

ORB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other Retirement Programs

OTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Over-the-Counter

PAAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Philadelphia Alternative Asset Management Company, LLC

PBOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Philadelphia Board of Trade

RCG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rosenthal Collins Group

RER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rule Enforcement Review

RFED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Retail Foreign Exchange Dealer

RGGI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regional Greenhouse Gas Initiative

RSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regulatory Statement Review

SEBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Securities and Exchange Board of India

SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Securities and Exchange Commission

SESC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Securities and Surveillance Commission of Japan

SFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Security Futures Product

SL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Spectron Live.com Limited

SPARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Stressing Positions at Risk

SRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Self-Regulatory Organization

SFFAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Statement of Federal Financial Accounting Statement

STORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Storm Exchange, Inc.

SWAPSTREAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Swapstream Operating Services, Ltd.

TCX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade Capture Exchange

TFS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Traditional Financial Services Pulp and Paper Division

TFSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TFS Energy, LLC

TREASURY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of the Treasury

TS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TradeSpark, LP

TSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade Surveillance System

UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .United Kingdom

US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .United States

USAID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Agency for International Development

USDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.S. Department of Agriculture

USFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .US Futures Exchange

USSGL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .United States Standard General Ledger

VWAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Volume Weighted Average Prices

WBOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Weather Board of Trade

WTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .West Texas Intermediate

WXL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .WeatherXchange Limited

XBOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exempt Boards of Trade

YELLOW JACKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Yellow Jacket Software, Inc.
162 CFTC

Page Photo Credits

Clark Day Photography; Pages II, 113, 114, 138 (photo 1), 139 (bottom photo), 140, and 141

Artistic Photography/Josie Kerns; Pages 30, 34, and 74

Andrew Campbell Photography; Pages 37, 46, and 135

Central Photography/Jim Ivy; Page 45

Fulton Studio/Ken Jones; Page 56

AP Photos; Pages 2, 3, and 5

SEC Photo; Page 4

CFTC Photos; Pages 9, 18, 91, 139 (top photo), 142, 157, and 158

Acknowledgements

This Performance and Accountibility Report was produced with the energies and talents of Commission staff. To these 

individuals, the Office of Financial Management would like to offer our sincerest thanks and acknowledgement.

We would also like to acknowledge the Office of Inspector General and KPMG, LLP for the professional manner in 

which they conducted the audit of the Fiscal Year 2008 Financial Statements.

We offer our special thanks to The DesignPond, in particular Sheri Beauregard and Michael James, for their outstanding 

contribution to the design of this report.

Photo Credits and Acknowledgements
Additional copies of the Commodity Futures Trading Commission FY 2008 Performance and Accountability Report

are available by contacting the Office of Financial Management:

Office of Financial Management

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Telephone: Emory Bevill, 202.418.5187 or Lisa Malone, 202.418.5184

Fax: 202.418.5414

E-mail: ebevill@cftc.gov or lmalone@cftc.gov

Web: http://www.cftc.gov/aboutthecftc/cftcreports.html

The CFTC’s Strategic Plan is available on the Web at: 

http://www.cftc.gov/aboutthecftc/cftcreports.html
C OMMODITY F UTURES T RADING C OMMISSION

Three Lafayette Centre • 1155 21st Street, N.W. • Washington, DC 20581

202.418.5000 • www.cftc.gov