U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 


1155 21st Street, NW, Washington, DC 20581 


Telephone : (202) 418-5110 


Facsimile: (202) 418-5522 


www.cftc.gov 

Office of the February 21,2014 Inspector General 

TO: 	 The Commission 

FROM: 	 A. Roy Lavik ARJ,_(j.,... 
 Inspector General 


SUBJECT: 	 Review ofthe Conm1odity Futures Trading Conm1ission's Response to 

Allegations Pertaining to the Offic e ofthe Chief Economi st 

In January 2013, the Chairman requested our review of issues arising within the research 

program in the Office of the Chief Economist (OCE). We opened a preliminary investigation 

and did not find evidence of illegal disclosures of confidential information by OCE employees in 

economic research papers or otherwise. However, concerned that OCE research and publication 

had ground to a halt, we determined to convert the preliminary investigation to a review of 

research and publication processes in the OCE. In December 2013 we provided a discussion 

draft of our report to the full Commission. The draft report concluded that delays in the 

publication of economic research reports were unacceptable, identified potential legal 

deficiencies in the Agency's current publication processes, and rec011m1ended that the Agency' s 

processes in thi s regard be both legal and prompt. We hoped to stimulate corrective action. 

We thank CFTC management for its February 2014 response to our discussion draft; 

however, much ofthe response is devoted to legal arguments rather than corrective action. We 

stand by our original lega l analysis, but an extended exegesis on the law seems pointless here. 

The discussion draft made clear that " we do not seek to reduce thi s matter to a mere legal issue." 

The problem, succinctly, is that the Agency as of February 20,2014, has cleared for publication 

only seven of24 pending OCE economic research papers over the past 14 months, with four of 

the seven cleared for publication yesterday. We are pleased with yesterday's progress, but 

fourteen months does not seem prompt. 

The principle point is that an economic regulatory agency is potentially blocking itself off 

from the future input of highly qualifi ed academics to assist the agency in its tasks . Published 

research is the coin ofthe realm in academia. Imped iments to such research will likely decrease 

future useful expertise. That is our focus - rather than contesti ng different interpretations of, for 

instance, section 18 ofthe Commodity Exchange Act. 

Time is the issue here. We care not how that time was divided internally; the 

Commission is the relevant unit. And it is the Commission that will bear the potential onus of 

obtaining any less input of relevant expertise going forward. 

Our report is attached. I appreciate your continuing support of this Office. 
Recipients: 

Mark P. Wetjen Bart Chilton 

Acting Chairman Commissioner 

Scott D. 0'Malia 

Commissioner 

Recipients (continued) 


Joseph R. Cisewski, 


Co-Chiefof Staff & Co-Chief Operating Officer 


Jonathan Marcus 


General Counsel 


Anthony C. Thompson 


Executive Director 


John L. Rogers 


Chief Information Officer 


Sayee Srinivasan 


Chief Economist 


Attachment: 


Review ofthe Commodity Futures Trading Commission's Response to Allegations Pertaining to 

the Office ofthe ChiefEconomist (with appendices) 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Review of the Commodity Futures Trading 


Commission's Response to Allegations Pertaining to the 


Office of the Chief Economist 


Prepared by the 

Office of the Inspector General 

Commodity Futures Trading Commission 

Februarv 21. 2014 - c 

This CFTC OIG Report is subject to the prov~s~ons of the 

Privacy Act of 1974, 5 USC § 552a, and has been redacted as 

determined by the Commodity Futures Trading Commission. 

The z:edac:tions are not determined by the CF'l'C OIG. 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

Executive Summary 

ln D~cemb.:r 20.12, Lhe Chicago Mercantile Exchange ('CME") 1 ;,tllege:ti that certain 

publications by CFTC economists revealed .infonnmi.on in violation of Section 8{a)( l )

2 of the 

Cmnmodity Exchange Act (the Act). 5 CME further questioned why the CFTC \VUS permitting 

outsitle e.:unomisb to ac~..:ess CFTC data. why the CFTC \va~ permitting the publication of 

academic articles using that data, and finally, the adminh.trative process by which the CFTC was 

employing these outside economists. 

The Office of General Counsel (OGC) at Jhe request of Chaim1an Gensler began an 

adminbtrative review of the Office of the Chief Economi~t (OCE). Res )onsibHitv for the 

administrative review was a:-,signed to the Deputy General Counsel for (b l (b Jl :) The 

administrative resiew revealed that there had been poor record~keeping w1t regarc to the so~ 

calle.d "on-boarding" process for OCE economists."" The deficiendes included inadequate 

documentation of security clearances. issue~ regarding nondisclosure agreements. and non~ 

submission of e.mploymcnl data to the National Finance Centc.r. as well us incomplete personnel 

forms\ one contract lucking the contrador's signature, and l1lhcr admiHistrative error:-;. There 

were no indications of fraud by OCE economist:\, or that OCE economists were not actually 

appointed hy the Chief E;:onomist, just a number of adminb4rative error\ pertaining to the 

Agency\; :-;o~callcd on-boarding processes. The review also uncovered information security 

concerns. Specifically, personally owned extema! hard drives and thumb drives were found in 

dose vicinity to the ~.,;omputers that served the OCE econombts. ln additi(JU, badge~-. for former 

crr:rc OCE economists were located in the Chief Economist\ desk. 

On Dccenibcr 7, 2012. the assigned Deputy General CounseL in coi'tsultativn with the 

Chairman's Office, instructed the Chief Economisl to direct the OCE economists ''to 

immediutely cease sharing, puhiishtng, dhtributing:, or otherwise making avallahle any paper;. or 

1C?I.1E Group. Inc., is the J)(lldin(!; company for five exchanges, CME. the Bom·d !)fTrad~- oftht' City of Chicago. 


1nc.. rhc Kcw York Mercantile Ex.-.:hangc, rhe Commodity Exchange, lnc., and the l3onrd of Trade of Kan:ms City. 


:>.1issoun. ln.:. The Future of CFTC: Persp({Cii'>'tW on Cu.\'!un,er Pmrcctions, ! I3'h Cong., !"Sess.. Testimony of 


Ten::locc A. Duffy, ExecutiYe Chairman & President. CME Group. Inc .. before the Subcommittee on General Farm 


Cnrnrnoditles and Risk .\buagenlent of tlw How:e Commi(t0e on Agr1~Ulturc (October 2, 20U) (<1Vaili1b"lc ,,t; 


lut p:t/agriculture_ house_ C.tW/~l te~/n:publ lcan~.clljricultm'£ ht 1u~c .!,)tYV/!'iJe~:ud !!hearing<>!Dullv !3 I 002. pdi). For a 


Jetaikd dcscrlplil;,n and lli»Wry. .~ee C\1E Group 2012 Annual Report. pagi.'·S 2~3 (availabk at: 


lntp:: '"'' w\\· ·'· 1m' llfiliJ p. C11 nil;' 1 ''<lS\')r~re lations/an mul~review/20 l 2/dm.•, nln<~•h/o: 1nc · g n •l!fl ·21\ I 2 · ;·lrtri'-1<~ 1,."cport pJI) 


All internet addrc~sc~ dtcd in this r\:port W\ChO l;ht vbil.cd on Fcbmaty 20,2014. 


' SecTi<)!l Rt. a)( I) prohibit;;; the Commission from "'publi~hl ing 1 data and inh)tlliation rh,·,t W<)Uld separately disdo~e 

the buc,J.m:~~ frunMctioJb tJl JHm"kct positions of any person and tn1de seu·t:ts or rmrne) of t:USl\JJl:lt:1':1." 7 USC 


12(<<)(!). 

) Lt:Her iru!H Mill'k YmHtg and knold Sa\nmn on behalf pf CME to D~n Bel'k<l'>itt, dateJ De~t:lllhcl' 14, 20 l2, i~ I(b')'('ii),'('b\'(?')('c) ,,, ,, '""'h'• here 

OCL: ccono!il!Jb include full time employees (FfE~), comultants, mid contradors 

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other product~ _\!enerate-d with Commission data to any non-Commission individu.als or parties.''5 

On December II, 2012. the Chief Operating OITiccr nolificd our OtTtcc ofthe CME complaint 

and ongolng administrative review. On December 12, 2012, CFfC staff terminated access to 

OCEnf..'t, ;md termin.<lte-d <K'f.'ess to all agency systems and databases for all OCE economists 

except for full-time employee economi~ls in OCE, 

On January 24, 2013, the Chairman wrote to Oill" Office in detail, described Civ·fE' s 

concerns and OGC's review, anJ statt:~J that the revi.ew thus far indicaled "lhere are issues 

wgarding the usc of non~puhlic data by OCE and visjting acadcmics.'' 6 The- Chairman also 

:~t-'lt~:d thm "th~:re appear t0 be l~;sues n~gardjng the rnannM in whid1 academic <.:onsultants and 

contractors were brought into the agency, their :o;tatus with respect to the agency. their aL·ccss to 

CFTC systems .and inftJrmation, and the adequacy of related documentation." The Chairman 

staled. "[have direcled the CFTC staff to suspend the external pubhcatwn ot research l.'Onducted 

or supported by OCE." The Chairman also stated that he directed CFfC staff ''to terminate 

access to non-public data by OCE personnel other than CFTC full~tlme employees within OCE." 

The Chairman stated that "all of thes.:- iss-ues \Varrant your review.'' We agreed, and opened a 

preliminary investigation. 7 

In February 2013, Agency n1anagement issued stop work notices to 13 research 

economists working on contract and placed an additional eight research economists working as 

t'onsultants on hold. 8 For a year, OCE did not bring on ne-w t:r.:onomi.~ts.'o~ OCE did !l•)l even 

employ unpaid <.:onsultants and unpaid interns. We e:-.timate the total number of OCE economists 

between December 7, 2012, and January 2014, decreased from 39 to 11. 111 

In addition, in Febmary 20B the Office. of the Chairman in consultation with OGC 

form0d a tcdmkal committee of economists, statisticians, and others to revic·w 24 OCE research 

''See the Chairman·\ Letter to the lmpector Genernl, January 24, 201:\. attm::hed a!> Appendix ~;December 7, 2012 

email h~-~m (b)(B) (b)(7)(G) . attached a~ Appendix 3 

1

' See Appendix 2. 

7Later in the Spring-. wi1h no rcvchnions of violation~ of Section 8 or oth~-r natutl'~ m rc~_nlation~ hy OCE 

cconomi:..ts, we convened our pre! imiu;<ry iuw:>:dg:1!i01lt-O a n:,'iew M review of research and puhlicatioil prm:ti(:~s 

in the Office of the Chief Economist. On April •1. :2013, CPTC puhlicly revealed thai it "h<1d not con!1rmed specific 

incident:; or improper or un:luthoriiKd data disclosure. but review is ()flgoing." Lynch. 5. "CME Group Sparked 

Shutdown ofCFTC's Acudernk R(~~ean.:h Program:· Rrurr:r.•· April 2, 2013 {avuHabk at: 

~ In addition, the Agenty determined nut to llppoint three additional re1.earch e•~on~>misli. in the appointment process 

at tbe tiruc. 

'f On Den;ml:>er .5, 2013, the CFTC pomed four job fl\hitions tn the Office of Chi.;;~f FconomiH on 'I'C'~J!>!JJl!hL!UI'· 

We view this a~ a po~itive development On December !6, 2013. the CFI'C announced the replacemem of the 

current Acting Chief Economist with the uppointmt:n! of Sayt~e SJ:iniva;,an as Acting ChiefEconnrubt 

(hltp:J/wwwxlk.gov/Pre~~RollnliPrt;"g'~k·:-t"·"'/pr6'94 !:n. ln uur experience, it is unu~ual for a Chairman w 

re-urgiil!lle <> CFfC opt:l'aliltg llllil or clivi~ilm within days 11f his Jepanw<:. 

~<l Between December 7, 2012. and January 2014, we <:.,timat<: thu number of full timu staff in OCE decrea>,d fmm 

!3 to nine, the number of OCE corJ~ulh:~nh dc,·reHst:d fr01n 10 to two" and OCE coutractoJ;, dropped from 16 to :tcro 

Our e·,tunate, arc bu~cd ou infonnatiou rC('~ivcd from Agency :.ta:I:T. 

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papers for information prote-cted under Section 8. and for other cont1dcntial or sensitive 

jnformation. A simple search conducted by our Office f(·vca1cd that 18 of the 24 papers \VL~rc 

available online, appw·ently prior to December 20 l2, and remain online today. 11 There is no 

indk·mion that the Agen1;;y sought to remove any OCE res..~arC"h papers from the Internet 12 

However, the December 2012 in;-,Lructiun fwm thl:.' a~signed Deputy General Counsel clt:ady 

prohibited all further publication and presentation absent prior permission. 1:< 

In any event, the Oft'i.ce of the Chairman (without a full Commission vote) inst.all.ed OGC 

with authority to make the final determination regarding \-vhcthcr OCE research papers could be 

publbhcd (following Committee review and clearance), and thl~ assignmcm fell to the a~signed 

Deputy General Counsel. Slnce Dcc,·mber 2012. the Committee has cleared ten papers for 

publication. OGC de;.m~d three papers for publication in October 2013, and four additional 

pupers m February 2014 (as of February 20_). 

Section l.t; of the Commodity Exchange Act require~; the CFTC to ··establish and 

maintain'' a ''research <md infonnation program" that disseminates "educational and other 

informational materials" to market users and the public. 14 Since 1976, OCE economists have 

impleme-nted th<; re.quircments of Section l8(a) by conducting ;:;cholarly rese~mch on topics 

authorited by the Chief Econom.i~t, and publishing: that research in academic journals..And 

throughout all that time, the research has included access to confidential information, including 

lrade and otht~r i.nformat.i•)n protected under Section 8 of the AcL \Ve bcli(~v.:- ~hulling Jown the 

OCE research program in December 2012 and permitting the shutdown to endure for over 14 

months has ri,.ked violating section l g of the Act, especia11y in the ab<.;ence of any significant 

movement toward restarting the pro_§.,rram. 

Section 8 prohibits the Commission from ·'publish[ing] data and information that would 

separately disdosc the business transactions or market positions of any person and trade se<..TCts 

or names of customers." 15 We find no indication in the law that the Commission's practice of 

pennttting OCE economist~ to use Section 8 data to conduct Independent ecnnornw research on 

topics approved by the Chief Economist violates Section 8. ·we find no indication in the law that 

the use of Section 8 data in the- preparation of academic articles- so long as the artkles do not 

contain iufunnation protected under Section 8 ~ violates Section 8. 

1

' ln addition tn th.-; 2-~1 p;1pcr<.:, tlw Agency identified three additJOnal .;cnnon1ic re~~·an;h pi1pl~r;; th;It tlwy -~et aside 

for later rcvic\V; aJ! rhree are avaihib!e ''nline. \-\'e also hK<lted nnlmc five additional economic re~carcb paper" 

published by CT"~rc economist<> during the past three years that -were not pending heforc the Committee. Two of 

thcs\' paper~ had b\'en reviewed by OGC prior to December 2012 

12 In respomc to our discussion dwfr, rhc nunagcment fespOlhC ~tares that one paper was removed from the fntcwet 

prior to rece1pt of the complaint frum CME. See Appendix 6, page 57, This removal \Vas ~ought after concerns 

'':ere r<li<>ed reg;:nding the pm<>ihlc u~e of information protected under .;,(·clion K, even th1.)11g:h Agency management 

determined that information protccwd undf:r ~ectiun ~ w;,~ not d1sdo;;ed in the economic research paper. fd 

n Sel' Appendix 3. 

1

-' 7 USC 22ta). Se...:tion lH aho n~lJUires the Commission w '>indude ialt:. annual report:. to Congr~:,:, plan~ and 

findings with respect to implemen1illg this section.'' 7 OSC 22(bj. 

1 ~ See fu. 2 

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We agree with the initial Hndings of the OGC review lhat the administrative employment 

record~ fur OCE economists contained administrative errors; however, we find no indication in 

the lu\v that errnr:" in ;ldministratiw paperwork standing alfln~·-. in th~: abMr.-nc-e nf any statutory or 

other material impediment to un appointmt:nt, altt.'.rs the :-tatus of otherwise properly appu.inled 

employees, consultants, or contractors. The authority of the Chief Economist to pennit OCE 

economists to 1:tmduc1 e~onnmic research using information protected under Section Xof the Act 

is not altered by such administrative ~;~nor. Hi 

\V~: also agree wilh the injtiaJ !'i11di11g" of OGC'" review that information security i:>.sucs, 

both physil:al and technological, arc present and need to be addrc:-.~ed; however, these sam.:: 

is~ucs are present Agencywwide, and need to be recognized and addressed as such. 

Jn December 2012, the Agency imposed a prior restraint on publication by all OCE 

economists. While it appears a publi~ employer may. consistent with the First Amem.iment. tt 

institute a prior restraint on pubht'ation by public employees writing as private citizens if certain 

requirements arc met, we find no precedent to ~upport the process the Agency has adopted here. 

The length of time Agency management has taken to review and approve ~..~eonomk: r<:'search 

papers is not acceptable. Whik we are sensitive to the complexities of the issues faced in 

connection with any valid pre~publication review of economic research by Agency employees, 

and \-lit' agr~t" that th!;) .Ag!;)ncy has an interest in protecting infonnation proteclc-d under Section 8 

from unauthorized disclosure, we empha:•ize that Agency management did not determine during 

their initial review, and has still not determined over 14 months later, that any research proposed 

or published by an OCE economist has contained information protected from disclosuTe under 

Section 8. 

TJuuughout our field work on this matter, we have repeatedly encouraged Agency 

management to begin permitting the publication of OCE economic research papers and to n::-•;tart 

the economK research program. Jn October 2013. some 10 rnonths after the initial December 

2()"12 shutdown. the Office of General Counsel approved thr~e papers for publication. On 

December 18,2013, we issued a dJscus'<ion draft to the Agency in order to prompt correctiveaction. Agency management responded on February 12,2014 (the managemem response). 18 In 

February 2014, four more papers were deured for publication (as of February 20. 2014). 

We recommend that the Agency restart the OCE research program. including OCEnct. as 

soon as feasible. We recommend that administrative deficiencies in record-keeping and security 

h We tlnd it interesting that though thc pn.:.ccdura! h1pst;~ h\l'gdy occurred in other admjni~trative units. OCE f)l_)fC 

th.;, hnmt of pCll,:,J!y for the'><: crr<ll'S. 

lJ "Congress ~hall make no Jaw respcl'ting an establi~hm~u! of religion. or prohibiting the free exen:is~ thereof: or 

at>riJging the freedom of speech. or of lh<.' pr<.·~~: m tht; ri;;ln 11f the people peaceably 10 il~~ernhle, and In petili11\l rhe 

g\)VCI'I!tl!t:l!! tin· u teclress t•f g!'leVi!HCe<' u.s" Cons!. amend. r. 

h The management response is attal~hed a~ AppunJi>: () ThD managl:'ment respon,,e, and other comment>. recdvd h1 

re~ponse to our di~cu~sion draft, pwrtrph:J clarifying cb;uJge" ;Jnd ''orrection~> of minor facts, however, llUf 

conclusion~ and rccommcnd~ltion·, arc not altered. 

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clearance<> in OCE be resolved in like fashion as currently resolved for other CFfC employees. 

\Vc believe infonnation and physical security issue~ are nvt unique to OCE, and should be 

addressed agency-wide. We recommend that the Commission assure the legality of any prior 

r\~vit'w prnct.'S:" for OCE rt:search papers and presentations, nnd that any prior review undertaken 

by the Agency be prompt. 

Finally, we stress the importance of economic research at CFTC, an econornlc regulatory 

agency, For over 35 years OCE has attraded sorne uf the highest qualified economists in the 

country· among hoth it;.: full~tirne staff and its limited term appointments. In order to continue to 

tUtract outstanding i>Chohm., the Commission must support lhc goals uf C1.":on0mic research 

coupled with academic integrity, and illUt't make any prc-dcanmce process (whether vohmtary or 

mandatory) a priority in terms of both legality and speed. 

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Table of Contents 


Executive Summary. . ..... H 


Table of Contents ... .. .. .. yji 


Introduction ............... .. 


Cl\-1E hsuc~ an Oral Complaint; OGC Indefinitely Halts all Publkatiun by CFTC 


Economist:;, after a Two-Day Review .......... ,. ........ .. 


Purth~r OGC Review Reveah. Informath:m Security Com.:ems and Prompts Further 


OCE Restricti.ons,. .................. ............................................ 2 


CME Submits Dctaikd Allegations ........................... . '"'"'"""""'"'"'"''""' "'"'' 3 


Scope and Methodology"" .............................. . .."6 


Background ......... ········-······-.... "."6 


History of Economic Rcst~arch by CFTC: St~ction 1.8 of the Commodity Exch<mgc 


Continuing Responsive Action by OGC . .... 4 


Act"" .... " .. " ...... " ...... ,, ...... ."6 

A Brief Hbtory of !he Offict~ of the Chid Ecom,mist . 7 


The CommiKslon'K Use of Information Protected under Section Xof the Commodity 


The Deci<>ion to Sl!<>pend Economic Research Risks Violating Section 1 Rof the 


OGC fv1anagement Con11ated Improper Administrative On-boarding Papenvork with 


The De-ci~;ion to Prohibit Puhlicati~m of Completed Research and In~>titute 

Introduction "23 


OCEnet.. """""···"""" """" .. 10 


Procedures for Publishing and Presenting OCE Paper\ (Pre-December 20 12} _....."""· ..... II 


Exchange /\.ct.. ............... .. ... 12 


Overview.. _ .... 12 


Aggregation und Section 8 ... "" 13 


Findings.................... , ........................ . "'"""' 15 


Con1n1odity Exchange .1\ct ,.................................................................... "" ........................... 15 


Improper A<:ces.s t0 and Improper l)sc of Information Pwtected under Section 8 ,.,,. 16 


Manda!urv Prior Review Raises Fir;.;t Amendment Issues.......................................... 20 


The First Amendment and Federal Employee Publications.. .. ..... 20 


Prior Restraints tmd the First Amendment... . 23 


>>>>> 

Prior RcsU'ai11b. and Mandatory PrJ or Review of Public Employee Publication;., .. 24 


[nformation Security Concern:; arc Agency~ Wide.,.., ........... "" ............................ "" ............ , ., ... 27 


CFfC's Remediation Effort<;.. ............ . ............................................ . .. 28 


Conclusions and Recommend}J.tiou:;; '" ............ . . .............................. ············ .... J I 


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APPENDICES .... 

Appendix l- The CME Letter ................................. .. 

Appendix 2 The Chainnan's Letter .. 

Appendix 3- December 7, 2012 email ... 

Appendix 4- A Partial List of Economic Research Papers ..................................................... . 


Appendix 5- OGC Review Memos for Four OCE Economic Research Papers ...................... 


Appendix 6-:V1anagement Response ..................................................................................... .. 


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Introduction 

CMF: I <sue< an Oral Complaint; OGC IndefiniW!y Halts all Pnblk•tion by CFTC 

Ecooo.mi'Sts after a Two~Dtty Review 

On or about 'Nednesday, Docember 5, 2012, nvo attomey"F. representing CME spoke with 

tbe:u-CFTC Geneml Counsel Dan Berkovitz to express concerns about a Jet::em publication by 

fonuer CFTC econouristl(biWI (bJU)(Ci 1 19 C!vf£ expiamed that it had received qne':i;tions 

from several market parttcrp:anfs, aud lliaf fie concem was that this paper revealed u?ide 

infOrmation in violation of Section 8 of the Couunodjty Exchange Ad. CME questioned ML 

Berkowltz regarding (bJ(6l.(bJ(7J(CJ 's status at CFTC, bow he received access to the material, ,1nd 

regarding wllllt co1ttro s were paced on tl1e use of CFTC d.;1t~t 

After beiu briefed on Civ.l.E's concerns, the Chamnan directed the Deputy General 

Counsel for l l( l ( l( ll ·1 , 

10 to revtew the situation in OCE_ OGC set out to 

examine the ac v1 es o :s emp oyees, contractors, and consultants. OCE economists can 

he employed as: regular elnJlloyees (full or parHfme). consnhrmts, or coutrn~:tors, and OGC 

learned thflt .Andre Kl.rilenk<L the fonner Chief Economist dld not 1..'110\V the particular 

emplo}mc-nt status of all the econoulisht iudtlding: soutc he had hired. Employees in tht~ Office 

.JB,;IIli'\-f'-X("CUtive Director (OED) initially were not able to inRam OGC whether J( J J( :) 

~~~~~) (bJ W<:h n couU'tldor or n consultant however. he did have- a CFIC ern;·~·~-~·~·-iiij\Jiiiiii=~ network access. Employees ·w-ithiu OED Also itiit uot irnmediately know i (t,U (b l J(CJ 

had a C'FTC buHding badge. 

By December 7, 2012, the assigned Ot£ deputy was tmahle to obtain detailed 

iti10rumtiou mi staffit1.g: hi OCE. 21 At dose ofbusiness on December 7. 1012. tlh.: OGC Deputy. 

in consultation with the Chairnum"s Office. "directed the ChiefEconomist to insure that all OCE 

employees, consult;mts, and 'C\l-fltractors c-ease sharing. publishing, distrihnting" 01' otherwise 

making available any papers or other products generated wjtb Coun:uissjon t:Wta to any uonCommis:;ion iudivtduai or pm1ies,"'21 

On Deet;,_>tnber 10,2012, the General Cmmsel notifierl th-e Ct'1mmi,.sion-ef:t; hy email of 

Cl\1Fs phone call of Decemlu 5 aiid the d~cisiou t-o suspend OCE publications. The Cillriil did 

not de~i',;r!be the Chammm's involvem_ent The ChiefOpenning Officer fmwarded 1lie General 

(\mnsei's ,::mail to tbis Office the same day. Meanwhile. ()OC's revie-w comiuue<L 

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Further OGC Review ReveaL., Information Security Concerns and Prompt<i Further OCE 

Restrictions 

On or ahnut De-cember l0. 2012, an OGC attorney con~ulted \V'ith the Chif.'f Ec·onomist 

regarding trade data used by OCE t.'\.Vnomists. She learned that OCE used a dedicated :1erver to 

store trade dala to facilitate its work. The Chief Economi!'t could not tell her what was on the 

sen-er, nor could he tell her who had access to the server. The :.:erver W.:lti physically accessible 

by anyone with access to the OCE offices, whh..:h rn.cans any CFTC employee or authoriz.ed guest 

with a tcrnporary pa;;;s card. The server could be llsed on I y \Vilh a valid CFTC uscmarne and 

pUi>SWOl'd. 

The OGC attorney learned that information could be removed from the server through 

any thumb drive or external hard dnve. Thumb drives and an external hard drive that may nol 

have been CFTC-purchased or approved v,;e-rc found ncar the server. 

23 The OGC attorney 

removed the thumb drives and external drive. and gave them to CFTC information technology 

personnel with expertise in forensic analysis-. The fore-nsics team (usually assigned 

Enforcement~rclatcd forensics examinations) was tasked with cxmnining the OCE server. 

The Chief Operating Offi.cer briefed the Chaim1an. on these new information security 

issues, and the Chairman informed that "lo jn December 12. 2012, the CFTC terminated access 

loth.: agen..:y ~ystt~ms ~md databases. including OCEm:t, of all individual~ in the OCE research 

program other than full-time agency employee:-. within OCE." 24 

Separately, OGC learned that OCE economist-s may have blocked (or attempted to block) 

system administrator access to the OCEnct by ODT computer specialists assigned to the .<..ystem; 

thi~ n:;sertioo wa~ dbputed. We focused on this allegation during our fiehlwork, All 

intcrvlcwccs with knowledge agreed that ODT did experience a delay in acccs:".ing OCENet 

when their usual method of access. did not work We are not sure whether the usual method of 

access was altered by OCE and, tf so, whether it wa<> done tor the purpose (lf sornehow wresting 

control of OCEnet from ODT. What we learned from staff was that there were alternative 

methods of access to OCEnet, and -;raff in ODT was well aware of these methods because they 

had set up OCEnt~t. ODT was able to access OCEnet afte-r a relatively brief delay, and in any 

event they were able to access OCEnet on the same day they first attempted access. 

~-' OlJl persormd mhmned U\ thJ.t equipment used for OCEnel wa\ nof aJw:.~ys Uo~..·umentet.L induding external hard 

drives. 

,, , \ I' , - ~LT 1 ppcllliX L 

2 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

CME Submit• Detailed Allegations 

CME documented its concern') in a letter dated Dcct.~mber 14, 2012 (CME letter). ?s The 

kt.1-:~r stated that CME ht""came concerned when it reviewed an <trticlt" '\:-rHiuthor~~d hy Andrei 

Kirilenko.''26 CME did not identify the t.itk of this art ide. The Jetter also addressed a :1econd 

article ctHmthored by Kirilenko concerning the "Flash Crash" ?010 _!:inally. the 

CME expressed concern regarding a third article, authored b. (b)(6),(b )(7) 'on the 

subject of high-frequency trading. ulr.... r:J... \ ______,

CME a~:-;erte~l that "the use of Sl~ction S data inclw.ling trade S(;Ct'eh> for the 

preparation of non-Commis~ion ;.,ponsort:·d publications violate;., Section 8." ~'~ CME aHcgcd that 

''the Commission's Chief Economist has both used Section 8 data and provided acce::;s to Section 

8 data to non-CFTC economists and their assistants for purposes of publishing acudemic 

research," and again asserted that such access would violate Section 8. 2

') CME included a li~·.t of 

seven issues it believed to be raised by this conduct: 

1. 	 Has the Commission authorized its Chief Economist to use Section 8 data for 

purposes of his academic research? Is the choice of research topic revje\ved in 

advance by any officer of the Commission'! lf so, which officer? Are the 

Commissioners given any advance notice that the research is be-ing conducted? Are 

the Commissioners required to give formaJ approval before the n:scan.:h is publbhcd7 

., 	 If the Commission has authorized its Chief Economist to use Section 8 data for 

purposes of his acadt:mit' resean;h, what is the statutory or other legal basb for that 

authorization? 

3. 	 \Vhat system of supervision is in place to review any such research before 

publio;.cation, and what was done in the Last~s rcfe.rem:ed above? Who approved the 

publication of Dr. Kirilenko's research? Who approved the <.;election of individuals 

to whom the data was provided? ln what form was the data provided? What 

specific data clements were provided? \Vhat safeguard~ \Verc employed to protect 

the data that wJ:-. cxpo;.;ed to non-Commjssion employees'1 Did Dr. Kirtlenkl) or 

anyone cbc at the CFTC utilize data aliasing mechanisms to protect identifying data 

dements? What data is allowed to leave CFTC premises? lf MJ, "\vhat was done to 

protect that data after it lcavt;.s the premises'! Is the data provided to third parties 

;~·. See Appendix I 

;.; Andrei Kiriknko served as Chief E.:onomi:-;t frum De.:ember 2010 until December 20!2: he WH$ an economi~t 

with OCE from May 2DOX !o December 2010. He received h1s PhD in E~;ono1nic<> from ilw Uni·v~·r~ity 0f 

Pennsylv::mia, \\there he specialized in Fi11HI1<.:C" Cnrrcntly he ..crve~ as Profcswr of the Practice of Fimm<:e 111 the 

MIT Sloan Center for Finance and Po!ky 

'' Avo<ilahlc here:I(b)(6),(b )(?)(C) 

n CME Letter (Appendix 1). 

~" ld. 

3 

U_s_ Commodity futur.;;s Trading Commlss1on REDACTED 


Office of the luspector General byCFrc 


reviewing the research as part of a peer revietv proce"';"? \Vh.at _proces";es are in 

place to provide assnrance That fill data provi-ded to thtrd parties ts returned to the 

CFTC' and is not used by third parties for any reason not authorized by the CFTC? 

4. 	 Absem specific Commisston authorization. doe;; the Chief Economist have 


autho·.rity k' u.w Se-ction 8 data for purposes of his acadcmi<: research? 


5. 	 Has tire Conunlssion or the Chief [l.)(!nomjst .authorized non..Cmmuission 

~.:.'tuployees. mdudlng ''academics" or their assistants, to have access to St:'ction 8 

data for any purpose? 

6_ 	 If so_ iOr what pmpose. subject w what limitations and protections .and 1mder what 

legal authority? 

, , 	 If the C.Jlllllli&sion or its Cbief Economist providt:& So..-..:tiou 8 data tv nou-c 

Commission employee "ac3demit;;s.'t bmv rlnf;'s tbeCommissJon select wlllch nonColltndssiuo e~::nployee •'academics'' to £1vor v,:!th Sedion fi data fm their p1ivate 

re:search? 

Continuing R~ponshe Action by OGC 

OGC drafted a new and murc struugiy ·.vm:dt'tl uun-di:'>-C]o~ure agreement aud cii>taim:d 

non-disclosure agreelllents from most OCE employees, consultants~ and contractors~ including 

those employees fDr whom an NDA was ah-cady ou fik 30 Multiple flaws ill · · ,., 

eepin~ for OCE economists were eventually revealed. With regard t (b)(6),(b) 

staff ju OED -concluded that be was properly appoluted hut his SF5~ \ ed 

in aU reg<Rds. 11 Foi oue OCE c-onsultant there was no record ofon-boarding 

dnctunent~tion oth-er than the reqmred deanmce doctmrenhttiou, 

On January 24, 2013~ Chairman Gensler tbnnaHy n:quested assistance from <fur Office. 52 

The ChaiiTil<lli stated that a review of the OCE research pl<-:Jg:tanl indi~:11!ed '"there are issues 

regrtrJiug the U~te vf uvu-puhik data by OCE and visiting acad~;<llltc\:!:. ,. The Chalm1a11 stated: 

A<:h:htionally, there appear to be i'i'mes regarding the manner in whi-ch 

academic cnnsultants: and contractors were brought into the agency. theu status 

with respect to the a~t.'tK')t. their acc\'SS t(! CITC systerns and information. and the 

adequacy ofrelated documentation. 

)>)We receinxl oo i:udiU~tinn that the langw.g~ oi tlie e:u~;ting NDi\.s was deficient 

1' cember 17. 10l:L a CfTC se-cuntyo:fiker completed a repeat ;;ecur-ii:y deat.utce re:po · b 6 

uiiitg no ilk>l!l::ii or concems. ;\:u: initial security cleurunce bad bten ~ompk1ed ptiot 1 (b)(6), s1mi 

FfC, aho with Ito COtlCer'i):} Ul' H!.tl#':i\ 11Dteci. 

s-e: Th<: ClL:1inu.'!Its l..:tt1!1 i.i allwJu:d as Appendix 2. 

4 
U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector General byCFFC 

Ihe Chainnan stated that he had "directed the CFTC staff to '<>Spend the external 

publication of research conducted or s:npplJtied hy OCT.," and terminated '"acct:Ss to no11~pnbl1c 

data by OCE persmmel other than CfTC fuU-time employees wlthin OCE.'. TI1e Ch3innan 

:;;,t.ated tlmt CFTC's '"revi.ew of tlle matter is ongolng,'' that it Include-d revi,.;-w of"the human 

resmm::es. procurement.logisti("s~ data~ a:ud h:ga:l is::~ucs xaised by the OCE research progra:m," 

and that the Agency "1viH take any fut1her steps that we deem appropriate_'' The Clmirman 

ijtated that he believed rhat ''all ofthese issues warrant your rcvii:mr." On or abom JamlM)' 30. 

2013, the C'hahman publicized hls refi:uall'o mu office. ~md briefed the press, Congress. and the 

:'5taff of OCE OED rep<H'ted that in February 2013, it ts:sued stop 'WOJk orders: for 13 OCE 

e~;ouomists \Vorking on contract. JIDd placed on hold eight OCE ~:ou::;_uitauts. H 

The Deputy General Counsel fm (b )(6),(b) mstwcted CFTC OIG that: l) >Omeone 

with mcomplete on-boardtng_papenvorK _or orl-t_n}f:!l\dllg papenvork wlth adrninistmtlve errors) 

is not property appointed: 2) auyoue not pmp~trly appuiuted may not nccess CFTC' dnta prutedtJJ 

m1de-r Section tt and 3) anyone not properly appointed may not publish or present economic 

research produced during a period of tmpn}per documentation_ These considerations apparently 

played a role in the decrease in OCE contractors and commltants, as well as the continued 

shutdown of OCE resear<:h~ and cessation ofpublication and presentation by OCT e<:ouomists. 

Data security concerns also played a rolt\ if not v.'ith regard to publication, at lea~t xvith n.:gmd ro 

the shutdown of OCEneL 

e would refer the rnatter " ·~ " . ·t in the n· '"."~(Ill of 1.{arket (b )(6),(b) ppropriate aggregation. 4 ere were co oftrade data in a proposed econm.me

· , "llh IR lh \I I " Thd!t ')( 

n:::.carch pap 

OvetMlghl (D1 )).(b' I ~paper was reviewed by (b)(6),(b) 

J' . l(b o lective y had 

~:um60 veaxs e , · 

6 ,b aii<l] (b )(6),(b) 

6), ChiefEconomist b IIII l\16\lb\! ·' 

an concluded thatlh (b )(6),(b )(?)(C) )aper presente no mstances ofmisuse of iutbnnahon 

protected und er Sect 

~evertheless, in Febnuny 20 l3, the Offic-e (tf the Chairman in consultation with OGC 

formed a technical cotn1llittee of economists, statisticians~ and others to review 24 OCE research 

paper< (iuclnding th (b )(6),(b )(?)(C) aper) for intbnru1tion protected under Section 8, and 

for other confidentia or senst ve 111 orumtiotL Eighk't'll ofthe 24 papers were already readily 

available online, ond other economic resean::h papers were available ontim; hut not included on 

13 See fn.lO arul accmnpanying text 

2

--' 1~pega1ion :i;1; tJ;;:ed lo rm1;:,:k the iru::tividual identity of ftnTLS or indivulooh. 

"ln Fe (b )( ) (b)(?) """~"'"""L1rili<d lh.1tlh\Olr a;itial revi.ew "did no: re;,e;,l tnnJ (b )(6), ( tc•d 

rene""" 6 , paper,orauyotherpaper.' See,\ppendh::6.page:;,5:-5;,. · · 

"" In Fetl 

1 

f"·\-- . -. ~ _ t;rulagl:l"tn~J inf.-:>ttnet~ thiH tl1 (b) ( 6), (b)(7)( lap,er 'W1B pres.ented or jnl~h;;h.:-{1 <>n !1:\:ree occa&wns pnox to revtew hy i\!,t~tJu:-y ;.l;tff m flit- ( O\ ID!O 03'10 m _ycz, Sev Appe;:uhx 6, ,page"-: nwJ 

fn.272. 

5 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

the Jist of 24..li The Office of the Chairman installed the Offkc of General Counsel with 

authority to make the final determination regmxHng whether OCE res~· .,.1, mlt.l be 

published, and this aS>ignment fell to the Deputy General Counsel fo (b)(6),(b) In June 

20l3. the. Committet: ,,-;teared three papers for publication. and de~ll'~~ <l..ll < s~wen after 

that. In October 2013. the OGC appruvi:.'U three papers for publii:ation. OGC cleared f(JUr 

additional papers for puhlicmion in February 2014 (as of February 20). 

Scope and Methodology 

Due to staffing limitations and competing priorities, fieldwork for our review began in 

March 2013. Our objective was to address the following concerns raised by the Chairman in his 

January 2013letter, to wit: "issues regarding the use Qfn~m~public data by the OCE and visiting 

academics," and "is~:mes regarding the manner in which academk consultants and contractors 

were broughl into the. agency, their status with respect to the agency. their i.l('Cess to CFTC 

systems and information, and the adequacy of related documentation." 

In order 10 cmnpl.ete our review, we interviewed on:r 30 individuab in tht~ Office of the 

Chief Economist. the Office of General Counsel, the Offke of Data Technology, lhe Off1ce of 

Security and Emergency Management {within tl1e Oftlce (lf l.ogi;.;tks and OperatiOn\), and 

within the Office of the Exe~utive Director, employees in the Offke of Human Resources and 

the Procurement sub-office within the Office of Finandal Management. Some witnesses were 

1merv1e\.ved on multiplt' occasions. We reviewed available hiring documents for OCE 

economists for the past three years, and reviewed relevant economic rcseaJch paper& prepared by 

them. We researched peJ1jncnt legal principals and the history of the Ofl1cc of Chief Eeonomi'<t, 

Background 

History of Economic Research by CFTC: Section 18 of the Commodity Exchange Act 

Last year the CE;t held two hearings on the subject t~f" Commodity Puts 

and Calls. The national admini,l.'trator had statf!d at tlutt ttmc that previous 

studit<'i ofputs and calls had been conducted by the Agriculture JkpartmerU. l 

subsequeml:v learned that the studies 1-cere made, believe it or not, in 1934/ 

Worse. the 1934 sltld)' 1-ras based on data and iJ~/(nmation gathered in 1927 · 

1930',, 

This is but a single e.tample <.~l the kind <l nal"ve and meaningless research 

conducted by the CEA in l'ital areas entrusted to its responsihili('r'· 

6 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

·Legisbtive History of the Commodity Exchange Act of I974.·'x 

The Commodity Futures Trading Commi:.,sion Act of 197439 included new seed on 18,'10 

which provide;; ::ts fnllow;<>: 

Section l S. Research and Information ProKrams; 

The Commission ~hall establish awl maintain, as part of its ongoing 

ope-rations, research and information programs to ( l) determine thl' feasibility of 

tradjng by ..:umputcr, and the expanded use of modern informatiun ystem 

technology, clcclronic dala processing, and modem communication :.,y:-.tcms by 

commodity exchanges, boards of trade. and by the Commis::;ion it::;elf ffJr purposes 

of improving. strengthening, facilitating, or ret;;ulating futures trading operations; 

(2) assbt in the development of educational and other infonnation materials 

regarding futures trading for dissemination and use among producers, market 

users, <md the general public; and (3) carry out the general purposes of this Act. 

Rcgardk~ss of wht~ther section 18 wa<.; a direct response to the testimony quoted at the 

start of this section, in adopting it Congress dearly intended for the CFTC to include as purl of 

its operations. a robust research program. It is equally dear that Congress intended that the 

It"~t'arch program i.tH:lude t'conomi\.0 research. 4 t 

A Brief History of the Office of the Chief Economist 

Section 18 of the Act mandate<; tho production and dissemination of economic research, 

and the Commissjon ha,; complied since its creation. The name and organilational placement of 

the Office of Chief Eco11omist has VHried during the CFIC's hi~tory, but ccunomi..: research 

activities have been described in nearly every Commission annual report: 

• 	 The Commission's 1976 annual report included a description of the '

1

Division of 

Economics and Education," and described research on ''electronic data processing" and 

oth(!f topics, induditlg topics dealing with econornics.42 

• 	 The CFTC 1977 annual repm1 reported that the new Office of Chief Economist '·began a 

research program to determine if futures markets really work in the national interest and 

;s Svnntc Comn:utt(:e on Agrkulturc and Forestry, Heanng 011 s_ 2485, S. 257H. ,)- 2H37, and HR. Ul 1}, 93''1 Cong. 

2d Se\~ .. May 21 and 22. J 974, pg. X I J. 

-'9 Puh. L 1'\o_ 93-463, RR STAT. 13~1) (Oct. 2.11974). 

-l'' /d. at nx. 416. codiji;:d at 7lJSC 22(a) 

-1-l I ,egi\lative hbtory include\ n:cognitiun that '\;ornputcril<'d trading; may well be the wave of the future. hut 1\iiJ..ll,)' 

4llt:~liol:h uf both tedt!!ologk<tl <.~l!d economic fea~ibility n1U'i-1 be ;mswered befoJ<:: 11 ~;an ur -..Jtou!ti ht: implemented:' 

~t'RepL No. 93-975, 93'd Cong." 2d S¢ss.. 52 (April 4, [97,1) (quatirrr: Mr. Cuhlwd\, AJmlnbtmtur of flte 

Commodity Exchange Authority). 

-~-~ 1976 CFI C Atm. Rep. page~ 100- !03. 

7 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

to develop hctte-r puhlic understanding of how and why the n1arkcts function:·-+:< OCE 

'·carries the major cvrc rcsponsibilily for analyzing and improving compclitive 

perfonnance and increasing public under')tanding of futures markt.~t contributiom to the 

alloc:Jtion of hask· resources."+1 

• 	 The CFTC 197/S annual report stu ted that OCE "sponsors long-term research into the 

functioning of futures markets to ensure that the markcb. :m: as competitive as 

possihlt."t~ It referred to completion of"prolccts pertaining to ... a longer-term 

understanding of futures market:-: functions,'' J\ 

• 	 From 19H4 through 1994, CFTC annual reports contained the recitation that OCE 

"conducts economic re~earch a.; part of the Commission·s mandate under the Commodity 

Exchange Act.''47 

• 	 CFTC ;mnual reports hetween 200 I and 2006 stated that OCE economists pre.\ented 

papers or published paper._, stating: ;;[sjtaff m.embers write and review papers for 

professiunaJ journals and participate in a va.rie.ty of indu;,try mec·ting;, and semimu:s."·•~ [n 

2004-~ CFfC's annual repm1 contained a detailed description of rese;:trch performed. 49 

• 	 More recent CFTC anrwul reports state that "[(Jhe Chief Economist provides economic 

~•upport and advice lo the Commis:-..ion, conducts research on policy issues facing the 

ngency, and provides education and training for Commission staff.'' so 

Cf-tC currcnlly ~tales on its public website: 

OCE \:onducts research on major policy issues facing the Commission; 

assesses the economic impact of regulatory changes on the futures markeb.. and 

other sectors of the C(.;OH()my; parl.kipa!.es in the developmt.:nt of c~)mmbsion 

J1 l\177 CFTC Ann RpL page\ 3K~19, 77~fG 

41 /d. at Sf!. 

4 

'' 1'178 CFTC Ann. Rp1. ';)6. 

.U< Jd. 

XI This quote is found in CF1'C annual report..; from l984through (and inclutling) 1994_ 

4.!1 1995 CFTC Ann. Rpr. 48. Reference to pr~csented p:1pers by r~'SCilrch economists h found in 2001 CF1'C Arm. 

Rpt 6:'\, ~002 Cf•1'C Arm. Rpt. Kt 2003 CFTC Ann. Rpt. 67,2004 CFTC Ann Rpt 65_ 2005 CFfC Ann. Rpt.35, 

2006 crTC Ann. Rpt. ~2 

49 CFTC's 2004 AnnU<11 Report Sl<~tl'd: 

OCE staff members cominue to present their re~enrch findings at industry conferew..:es and 

ucaderu!c Mnuul meeting::;. and fr<'.quently have tho~e. findings published in relbreed ncad~cmic 

journals. During: FY 2004, M:1ff p;1p~J·>: pn;>:entt;d c.r puhli~hed in thi~ way covered topics rc!ilting 

11:. J)rke di<>c<JVGf)', hedging and risk aversion, the >hcory of stor;1gc. dectronk VCI'SU~ <!pen ourcry 

!rmlwg. illld far:tor~ affecting derivative~ market succc;;:.. or fuilur~:. Pupcf;; Wc1c <KcCj)tcd fur 

publication or publbhed in m:ademic JOUttl<Jb such <1~ 'lllc .lournul of Finance, Thl!' .loumaf of 

B1.~siness, The .fourn14/ o{ Futures Markers, and 11u: Sourlu:m hcow>min,· ./mm1a!. 

2004 CFfC Ann. Rpt. 65. 

50 This quote i~ found in Cf<TC mmuul reporh for 2009~201 L h appear~ that only the 2007 and 200S atmua\ reporb 

contain no reference \\ihatsocvcr tu economic re~carch conducted hy OCt:: 

8 
U_s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the luspector Geuerai byCFrc 


rulem;ll;iugs; provlrles expert economic suppoti aurl advice to other CFTC offices: 

conducts special stndte-s Hnd ev?lh1HJiort~: and pHrticipate<s in the in-house training 

of staff on matterH rebted to futures, O}}tlons, swaps. and Iisk mmm1JetneHt 51 

The CFTC's 2013 Presidem':; Budger and Petftwmance Plan listed among OCE\t Fiscal 

Ye-i'lr 201! ac.cornplishments the following: "'Composed at least 7 working paper~ on 

Cot:llfiiission cu1euted tvpks Iilllde available to the public with 25 presentations and 3 

publications,'' 52 \Ve found no reference to OCE publications or pre}.entations in CFTC's 2.014 

budget docume-nl'. 53 

CFTC ctnrently posts four OCE res.earch papers Nl its public website~ 54 the papers are 

p-ublished witb disclaimer~ 5

5 such as: ''This paper reflects the oplnions of its authors only, and 

not those of the CFTC, the SEC, the C onm1issioners, or other staff upon either Commission. AH 

remaining etTors and omissiou:>, jf <HJ)< arc th~t authors· soie rt:sponsibility'" 56 and "[t]ht! views 

expressed m this paper are those of the authors only and do not retle<:t the v1ews of the CFTC or 

its staff:)S"l 

Cunent and fmmer CFTC economists publish papers in a variety of !Omnais, indndlnu; . 11 w . . ­ the Joumal ofAltematJve Investments,: the Energy J-oumal, and the JoumaJ ofFunu·es 

51 CFTC, NJ! J Pte,;id.tw '.;· BN,1get and Pt:;jonnance- PlaK avallable m 

http>f\\W\\'.c ftc. CJ:)\"/tx:pon:s/pre;,f-Aldu.;v·10!1;"1-0! J p'l'e~id~rtH~i'-udg.::-rOS02 .hhnl 

-"1f'F1T' )(}( 4 ?tt,·s_ir_f,pnt '_<: fh~rlgt~t am! Petfonnam:e PimL avatiable ttf· 

A Bulmk&ahut. Haigh. and Rolle. Ctn_<m,.;t;,-;'i.tt'<H and EJUiti#_,. A "l1-·ftwki!t ofOnr ' 7 • June 9. 200K Thib pa f•i:l' Will> 

p~xblhl:ied in ;be .k.u-mal of Al;enlfltive InvestnlenB, i 2{3):61 75 {avallable on the CFTC pt.t1Jlk \A 'ebf,si~te~:7,;'c;;:V7Co 

htl·-·:;iWW\\·J,;Ik.hl{JViHiwllv·rvn ··;,/-- ubtf\:/;{f:~l:xmtcftciJoctm:rcutFfile!amrJYkrl0'~0Mt -;:- .tu.;jtJ{:ii)i;, -dJLI (b) (6), (b)(7) 

(b)(6),(b)(7)(C) "''C"'-'---' 

:riA paper i~ on t:he liM of 

~r~,pe~.~~T.<o'-r~r~•"''we~"c'"''l"'"''~.~.~n"rnfi,,~to""'.ce~."J.-,~co~t'-tl"'tu~·"o'p~ap"tl~,cn~re">"w~t~e~,Tt"n'r"•"''"rur"m'·~ 

A DisclaiUle.tY, tbat are ·'reasonably l)tnn:Uuent" au<! tiut Wll'l'ey ·fum: "ihe views >:xpJ-essed itt the article do nC>t 

n<:ct;t.'r<Ri!y r2pre~rr1 tbe 'Aevt;:; of rl:te agency.'' rue required by regulatioo .at 5 fTR 26·1." 80'7i'h) 

( b )(6 ), ( b )(7)(C) 

(b)(6), (b)(7)(C) this paper is 011 

tne Ht 01 papers mr J"C\'le'W oy me- Coat:mti:~). 

77 Hat~h. Hr;umionL illid 0\~eJ-.:Llhl Price Price Discovery and L:7' gt' FilfiH"f;S T-tvdi'r fnt<Jm.__~!iom in tlte 

EnPix_y Campiff'l (working !Nlp.-:r, April28. 2005} This paper ts avaiil1bk m1 rhe CFTC pubh.: web;.;{te: 

1

:n Sf!e fu5-t 

A Buhnksahin, Lee, Moser, and Robe:, Phymiul J!rirk~:f CveldirhHH, ropmc p,wr,<cr3rm·.,ry•, and the ff!T[ J:5n;,tf 

The Energy Jorn:nat Vot J.;L ;.J~,, ·} (20 U) ThiHrtidt• \\;!:;, Energy JnfQn:ttt!i••u 

Agrm:y (~n"': fn.6l ), 

9 
U_s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector General byCFrc 

Markets, eo The Ferleral Res1;rve Board and the Ener@:y futbrm;ttlon Agency <:urrently publish 

papers co-authored by CFfC OCE eeononust;;;:. 61 Of eonrse. economists in OCE are not the- only 

CFTC economists writing and publishing papers addressm_g: e<"onomic thou~ht as it pertains to 

fnnm~s tr~ding. A p3rt.ir1l hst of 10;) economic research papers ;luthored by OCE economists, 

Cofll.missioners, and other CFTC ~::uwloyee::~~ is attached as Appendix 3. 

OCED<I 

OCEnet \l.':;to; <1 :'5tand<!lone computer network created in 2008 ln ~~ssist :minter-agency 

collaboration to conduct energy market re:searcb ush1g CFTC and uther data.62 The Com1nission 

kept the netvrork separate for secm"ity pmposes; it did not want to grant individuals fmw other 

agenciea ac.;::ess to tbe entire CFfC network. OCEuet al~o pem1itted users to nm co;uplex . d 63 progranlS necessary to ana Iy:ze econmmc ata. 

With regard to i.nter-ageucy eollaboration. other agencies would identify the data they 

wanted to review and request that it be transf€-rn:d fiom the CFTC network to 1he stand-alone 

server. A CFfC employee would load the requested data onto an extema] hard drive and then 

tramf'er it to OCEuet. For additional security, the server and desktops were plai:ed in a separate 

room: keys were provided to designated indhd.dtmls in OCE 

Over timt:, int.e1mngeucy use appears to have dwpp..,l ofi: while .imemalttse by OCE 

economists incre.as<.>d. As overall demand for OCEnet f!J.X."W, additional equipment was. pwvtded 

for its use_ Vlhat hegru1 a~, approximately five desktops (and n se.rver) g:t"E"N to ne.arly r,venty, 

The advantages vf OCEnet for res.earch purposes were many: like- any sen~"er, it ~?tored -data so 

<Jl Anlench_ :Fisbe_ and Hru.ns, Wkv do Exptnng Futures and cm,Ji Prices Dh:erge_lar Gmi>l ,t!m kers'i. Joumal of 

FnnF~ . Vnl.:ll. k<n&6 120!01. 

(b)(6). (b)17)(c) 

~b~)(16~).~(lb~l11~7~'11g,IC~;;:;,;;;,;;;;;:;;;;;;;;;;;,~;;;;;;;;;;:;:~i,:J:;;;:";;;:;;~:i:ape~;,~ currently '1utUCJ mvu"'" ~ 1 , • ·- L..t:'<', ''"m"t:J, I A.faJ h Coudinons, rOII&c.;;m•m 

Actiuty, and the WTI~Bnmt Spread. No·nu:nf:.er ~012 (a>:ailab!e at 

h.ftp:/:'-;:,~ir\Y.ei.1.ZO',-.-"fmalK4'··markc;;s:nmorts: PJ ev.m1ations:2(}l 2PaperHmntV.'1"I.pdt). 

Gl The result of this coUaboratioR is avnilabte here. 

ru The Fetlen1! Re<;erv.;- Boat<l \FRB) oilers similar researdt capabiliti.;c<;; tv n•> >!C(•n<•tni:w., Jg wr.-t>~ite !'t8tes· 

"Econonlist;, at the Federnl Reserve Bo11nJ wnd,fct mtmvativ<: re!5e-:trt:il on a bt<Md muge oftopics iu econnnJi;:." aml 

finaoc€. In <tddition to pres€ututg their research to poltc:;Tnllken., Boa..rti <S:ononw>ts slmre th€ir r~;seatdl at academ1c 

conferences am! publ.ihl1.it m peer-re-.;]ew~d joumah. and o!her sdwl.ruiy outl.ets:' The 1'1'-..B economisffi: . condu\:t re+etn:dt and other analys:i:> un bi.glt-petfi:Jtmanct cot.rqm1er serren;, v.-1lich run OOrh 

Umrx :utd Window!\ ()J)eratin~ systcnD, Tht:!le t.~:l"Vet$ off~;~· a fuU ;.t#te of eo;:onqux:-tr~o;: md 

statishc<>l wftware packag.es on both platfonm. 1 Econonnt.ts and technical staff regularly re"aew 

and improve. as needed, the .;ap:t~..'i!y lU.:d ~v~d of proc-~s<n4 n:nd the mng:e of$()ffware a·vailabJe 

to Boatd economistt. for tlicir :r>;~ean::h. S-;Y:!ral hmu:ired ffi"1tmsers .con:ring: a muge of topic;. fiX>U"! 

mi.::ro~Jevel haul:lng!ilnaucial data to agg:rega1e t:oocroeconoJnic thue scrie'o :;;tario;tic;, are aY<~i1allte 

for "L"it: by ecotiDtnisi"'> in their resenrck 

lO 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

that it did not need to be separately loaded onto the many desktops: it was faster. me;;mjng that 

the manipu1alion and study of datasets ('ould occur more quickly: and it contained unique 

programs for the manipulatioJ1 of data. Additionally, it allowed OCE to bring on outside 

t:.c·0nnmjsts to do reseurc·h \Vhile limiting access to the CFTC n ..~twork. 

By late 20! 1, the Office of Data and Technology had enhanced control over the network 

in order to increase information security. A new system of indiv·!Jual user 3.\:l:otmts had been 

established; previously, acce:-;s for all u;.;ers had apparently been via a single log-in and 

pa5sword.M \Vhilc inft)rmation security increased, physical se-cnrity de-clined; OCEne-t 

computers and server were moved front a separate, lockabk room to a cummon area. Thi' 

decrease in physicaJ security occurred, apparently. bLx:ause the original justification for physkal 

security of the i>Cf\'Cf and desktops was no longer suppot1ed; OCEnet was no\-v being used 

primarily by CFTC economists rather than individuals from other agencies, OCEnet continued 

operatiny: in this manner until it was shut down in December 2012. 

Procedures for Publishing and Presenting OCE Papers (Pre-December 2012) 

Tht~ Chid f<J.:onomisl approved all topics for economi.c n~;:;can:h p~1pcrs wlittm by OCE 

economists working as employees, contractors and consultants. ('5 For cmHractors, the cconomk 

research issue was determined in advance and was described in the contract For consultants and 

employees. the proct"ss •)f st~lecting a topic for economic rc~sc~n\.~h was !l•)l detc-rmi.twd 111 

advance. Rather, potential topic:' could be suggested by the Chief Economist, hy any 

CnmmissioneL Division Director, or ;my Cfl'C employee-, including OCE economists. 

Rcgardlc~is of tho source, all research topics required approval of the Chief Economist 

Prior to December 2012, submission of a completed research paper to the Chkf 

Economist was 11ol strictly required; however, OCE economic research papcrA were subject to a 

rigorous academic review process and Vv'C- believe most if not all papers were separately {and 

voluntanly) submitted to the Chief Economist lf the paper indudtd aggregated trade 

information protected under Section R, the Chief Economist would refer the paper to the Office 

of General Counsel for fwther re\'iew. OOC would assi :n the paper to a staff level att<~rney. 

Most rtxently. tht~ staff attorney assigned (b)(6),(b)(7) had more than25 years experience at 

CFTC. The OGC attorney reviewed trade uta m t_ e economic research paper for conformity 

with accepted aggregation standards for other ~ ' ' · ions. ln case or doubt. the OGC 

attorney would seck advice from an economist (b )(6),(b )(7) ) in the Division of M~U'kct 

Oversight (DMO) with expe11he in trade data aggregation standards for Commission 

publicatitms. and ove.r 35 years experience at CFTC. This proce.ss uf voluntary internal review 

h<ld been in pl<1<:e :;ince at least the 1990s. 

t>-i '\l~t;m~ ac~_:ount~ were -.epunttc ti·0m the username and password account~ w 11\):ess the CFl'C netW1Jrk f!.\'!O<:rally. 

ODT and OCE retained administrmive iH;¢t;;;;; w the new ~ysteltl 

'~ Wt: an· not aware of ail)' puhlications by CFfC intcms -iu OCE. 

11 

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(b )(6),(b )(7)(C) s paper on high frequency trading." went through this >rocess rior 

to pub reauon. r was revrewed by the Chief Er•onomist. by the staff attorney (b )(6),(b )(7)(C) m 

OGC. and by rhe e-conomist m 01\1.0 (b )(6).(b )(7) , and W3S cleared for puhhca mn. 

'~onduded dmt th~ p3per did not inch e m onnatJon protecte-d under Section 8. 

The Cmmnission's Use of Information Protected under Section 8 ofthe Comtnodity 

Exchange Act 

Qyeryiew 

Section 3 oftbe Commodity Exchange Act reads as fuU;;.nvs: 

For the efficienl cxl.!cutlou of lhc pruvisiuu:o. ofthis Act, and ln order to 

provid.: mHnmatiou for the use of Congress, the Commis::aon m.ay make such 

invest1gations as it deems n,.;ce::>sary to ase-et1affi the facts regarding the operations 

ofhoards of trade and other persons subject to the provistons ofthls Act. Tite 

Commi&'3ion may publish from tim.e to time the results ofany su~h im'estigation 

and such general statistical intOmntion gathered therefrom a."i it deems ofinterest 

to tl1e public: Provided.. That except as othe-rv.:ise specific.aHy authorized in this 

Act, 1he Colllllli:ii5tull may not publi~h data and inf0nll:lltiou lha~ would :stcpi:lialdy 

disclose the business transactions or market positions ofany person and trade 

5'-,t:'crets L)f nauH~s of customers, . 

Commodity Exchange Act, Sect10n 8(a)(1 ): 7 USC§ 12(a)(l). 

In briet the Act grants th<> Commission ·wide discre1lmt to Jnves1igate and pltblish the 

results of such investigatior.Ls. It also coBttl'in.q a prolUhition; the Commission may not 4 'puhl1sh 

data and intbm1ation that would separately disclose the business transactions or market positions 

of any person .and trade secrets ofnames of customers. "' 67 11tis restriction ts a limited one~ a 

stahttory pr~hibitiou against publkatk•ll is W)t a& &trit:'1 ft$ a statutoty prohibition a,g:aiust 

dlsdosttrt".6" 

In Freeman v. Se!igsr:m,UJ the Federal Court of Appeals for the District ofColmnbia 

Cttc:uit addressed whether Section 8 prohibt1ed comphanc.e \Vith a subpoena nl a judicial 

proceeding, and determined that the ·tequcsted inforumtion protected rmder Sectioo 8 111Ust be 

disclosed. Ofcourse thi:i\ is not the situation here; however. the ;:.ourfs discn&sion ofthe history 

"Avuih>hle lre<e' l(b)(6),(b)(7)(C) 

ii1 CEA, Se<;tio11 S(a)(l); 7 USC w::c. 12(a)(I). 

6S In re Enghmd, 375 F3d 1169. 1!SO (C..~'"D.C, :004} fr·?r;;·gc.'r:;mg existing precedem that '"general \t.~tutvryba.n." 

vn pubtkati<m do oot b.u limited disclosure inju.dictal pnx::eedmgs'" and recognizing the dit'fer.ouce bervteen 

lltarurory pwhibillort'> ;lg;lilH! publication, v.hlcll are less stri~t and statutoty ptlObibttiou:i cai:etwrk:J]!y bmrinsdisdo,;ttre) 

'"' F.-ewtan l', Se[jg"H.m, 4\:J:t F 2tl 1326 (C"AJ)"C, 196S), 

12 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

and meaning of Se-ction His informative. The court stated that "the language used and the 

statutory setting plainly reflect Congressional conccm with widespread dissemination of 

jnformatlon not otherwise availabJe~to the public.'' 71J The com1 Ktated that "[t!he b(u· to 

public·ation is !'inked to. and should be read against the bat.:kdrop of, the SeC"retm-y'" duties llnder 

the Act to furnish information and Juta ab(JUt future;-, truJing and commodities to the con~.:erned 

public at large." 71 

TI1e Freeman court went on to state that the !.egb,lativc history of Section 8 ''docs 

e-stablish as a matter of fair implication that the prohibition was not intended to embrace the 

:-.cparate and limited kind uf djsdosure that arises in judicial procccJings."'2 Whib:: the court in 

Freeman did not address the usc of SLx:tion 8 data ·within the Agency, we believe that an cguaHy 

''fair implication·· lo thal drawn by the court in Freeman is that the prohibition to publi:~h "was 

nor intended to embrace the ;.;ep<-U"aLe and limited kind of disclosure" that arises when individuals 

employed hy CFfC and physically present at the CFTC are granted access to information 

protected under SectionS in the course of their work for the Commission. ln fact. we would not 

expect a com1 to interpret Sertion 8 to prohibit the Commission from sharing data protected 

under Section 8 from rmy person as determined by the Commission necessary to carry out the 

Commission's mbsion unde-r lhe Commodity Exchange Act, so long as the disclosure is not 

public" We note that lhe Com.n1.ission's regulatjons and PTivacy Act notices indicate thJt J 

number of non~public disclosures of information protected under Section 8 may be permissible. 77' 

We also note that no penalty is provided for violations of Section 8; however, the theft of 

confidential government information, including hu1:>iness information, may he a criminal offense 

in certain circumstances under 18 t;.S,C. 641. JJ. 

Aggregation and Section 8 

Section 8 prohibits the Commission from ''publishUngj data and infom1ation that \vould 

septtrately dtsdose the business transactions or market po~Hintb of any persnn and Lmde secrets 

or names of cu,tomen• .'1-i:'' but it does not prohibit publication of aggregated and anonymlzed 

u·ade data. The Commission recognizes this distinction when it publishes aggregated and 

;n Id. at I349. Indeed. mon; recem cu;;es lmve ~1atet! simili.trlj- that in adopting the prohibition "gains! publication itt 

S~Ctiun 1:\, '-Cong:n:~~ \>,-·a~ t:oliCt."'IiCd >with 'wide.,prcad dL;,,.:;mination Of il'tforrtlJl£iOJi !lOt o(ht!Wi~c av:11lable tO the 

public'. _:- lr1 n: Eni]lond. supnr 375 F.3d at I JRO fquotin~ Freeman v. Seligson. suwJ, 405 F2d at 1349). 

71 !d. 

72 /d. 

Tl The Commi:>:>ion's Privacy Act Syst~nF Nt)tk~~ fDr r~cord ';y~t~m~, including: system~ that include lnf<1J'Illi1-tion 

pr<)t(lC\cd under Sc-etitJI\ S, may lw found at 78 fed. Reg. 5974 (Feb. 2, 20 J !) 

"

4 U.S. ~'· JJi Gi!io, 53XF.2d 972 (2d Cir. 1976), CPI't dt'l1ial.wh tiOIJr, /,upo v. U.S., 429 U,S. 103X (1977). The Fir<.:! 

A.ltWUdll!Citt r~nHfiCiillt>l!;, pf <tlt~;;mpting to penali/e under I 8 U.S.C. 6..J-1 dhcb-.tl!c:s ol C<l!tfitit:t!lia! guvernmem 

inlnrmution have been noted in cuse luw. SN:, U.S. v. Trutm[1 Dmh Iiunp, 629 V2d YOi:\. 925uml n.l7 (ilY' Cir. 

!980); U.S. v. Vincen::i. !981< U.S. Disc LEX'IS 17436 *::;7.-*29. 

>See {n. 2. 

13 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

anonymir:ed trade data in its Bank Participation (BPR) and Comn1itment~ of Traders Reports 

(COTR). The Commission h~h stakd: 

For thr purpose.<> of protecting the confidentiality of pnrticip~1nts' l:m:->ine~:.: 

tnmsactions or market p(JSi.tions as required unJI:'r Section 8(a)(l) of the CEA, the 

Commi-lision has historically created guidelines for various market information 

report'! (e.g., Bunk Participation Report~ C'BPRs") and Cornmitm~nts of Traders 

("COT") repo1is) that prevent rnarket participants and the public from reverseengineering aggregate data to detennine the pfrrticip~ult.;; that submitte-d the- data. 76 

[n other words. the Commission routlndy publi:shc:.; business transaction~ and market positionsbut it aggregates ;,md anonymizes that data to prevent anyone from discovering the identity of the 

firms in the aggregated dataseL 

Spedtkal\y, the llPRs "aggregate large-trader positions of banks participating in various 

financial and DOll-financial C00l!110dity fUtUfCS,.,, flilld] includes data for every market \VhCfCfive or more banks hold reportable po:.-.itions." 77 The Commission goes on to :_.,tate: 

For purposes of protecting the confidentiality of participants' market positions (as 

required under § 8(a) of the Commodity Exchange Act), when the number of 

bank::-. in .:i.ther catcg•JTY {U.S. Banks or Non-U.S. B~mks) i.r-Ic~s~ than h)ur. the~ 

number of banks in each of the two categor1es is omitted and only the total 

number of banks is shown for that market. 7 

'1< 

CFTC also publishes its Commitment of Traders Reports (COTR) 79 in a manner that, in 

its opinion, docs not result in disclosures that violate Section 8. Th~.:- Cornmission describes the 

COTR as '·a weekly breakdown of each Tuesday's open inlcrcsl for markets ·in which 29 or more 

traders hold positions equal to or above the reporting levds established by the CFTC:'f,v The: 

following destription b ava1labJe on the CFfC website: 

Reports are aYailable in both a -;hort and long format The short report 

shows open interest separately by reportable and nonreportablc posiLions. For 

reportable positions, additional data is provided for commercial and noncommercial holdings, s.prcading, changes from the previous report, percents of 

open interest by category, and numbers of trader~. 

"~'' 75 Fed. Reg. 7nl3Y (Dec. 7, 2010) (available a1 

".' CFfC, lkmk hmi<'ipotion R<"pmr Explanatory Notes, available at: 


http::/WW\V .cftc.gov /MarkctRcpon .Jft.m '> P: ni!C ip;~ti•~1l Re:ru!1_stE xp!,, !MtorvNotes/index htm. 


iJ !d. 


~~ 'llu:: Lofllflll'\'\ion':. COTR dut~:s back to 1924. 


5

°Cf<TC. About the COT Repom, available at 


t!i!JLE:"Y.!Y~,!.Jlh:,$2Yti~Jg_rk;~1:J5S.P9rJ::ft~P.!Jl!Jlitm<;e!JJ~pJTm<J£X!'!!J:\h\:.41!Jl~:(S!J!i~ll~!It;i£gL;t~mJ~. 

14 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


The long report in addition to the information in the short report. ~tlso 

groups the data by crop year, where appropriate_. and shows the concentration of 

position.-.. held by the largest four and eight traders. The Supplemental report is 

published fnr Futur.;:s-and-Options-Combined in St;;len.;:d agricultural m.arketf. 

tUld, in addition to show.ing an the Jnfonnation in the short format, shows 

positions of lndex Traders. 31 

On November 20, 2013, the Cornmbsiun anno1mved a new weekly swaps report that is 

modeled on the COTR. In an announcement the Commission stated: "TfJ prevent the disclosure 

of individual market participants' positions and proprietary trading strategi~:s, the CFTC Weekly 

Swaps Report is prepared using a t'Crics of statit'ticW screens, hcl~lng to ensure that the values 

presented do not inadvertently reveal confidential information. 11 

~ 

While aggregation of information protected under Section 8 has heen standardized for 

purposes of various CFTC market publications, no aggregation standards have been set for 

research papers by OCE economists, Our intcn'iews indicated that any review of OCE rcs<-arch 

papers for possible impermissible disclosures of information protected under Section 8 can be 

complex, requiring an t~xamination of context to detenninc whctht~r aggregated trade data in an 

economic research paper may be reverse cng.inccre.d by reference to publicly available data or 

otherwise to permit the reader to ascertain the identity of the trader. 

Findings 

The De-cision to Suspend Economic Research Risks Violating Section 18 of the Commodity 

Exchange Act 

ln December of 2012, the OGC, in consultation -vvith the Office of the Chairman. 

"directed the Chief Economist to ensure that all OCE employees, consultants, and contractors 

cease sharing, publishing, dbtrih!Jting, or othcr1.vise making available any papers or other 

products generated with Commi;,sioa data to any non~Con:unission jndjviduals or pani.t:.s:·in fn 

{l.dditiou, CFTC tenninatcd access to agency systems and dataha<.cs, including OCEnet, to all 

OCE personnel other than C}1'C full-time cmploycc5 \vithin OCE. 84 The OCE .research program 

as it existed prior to December 2012 remain:... halted over a year later, OCEnet has not been 

revitalized (or repla~ed with comparab,le res.earch capa~ilit~es), and the Agenc~'i has not approved 

rnosl of the economiC research papers It dec1dcd tu rcvtew m December 2012. · 

~: ld 

tz CFfC Press Release 6780· J 3 (av:dlabk at: llliJoJL""~;lliJ;J;oi!Isi'!iR2S'!>l!f!£ill<:l!2"'">1!1IfilJillcLlJ 

~~See Appendix 2. 

s.~u 

~~ 1\cscarcb by OCE cnmomi~t~ to support other ongoiug Agcucy work contuluc:-.. 

15 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


We rc;tlil:c that section 18 docs not specifically require the Commi'-sion to conduct 

economic research through the publication ~md pre:-;entation ofjuricd economic rcs.carch; 

however, it has been the practice at CFrC for over 35 years. Historically. the CFTC has staled 

th:Jt thr Office nf Chief EC"onomist performs a Commission mandate through th~·· publication of 

independent economic research. a :;tute!i11:'nt wilh which we strongly agree. lih To jeopardize Lhl.':' 

sponsol).hip ofjuried economic research is to limit knowledge Imparted to Congre.ss, to the 

public. and to the Commission itself on economic issues impacting trilllons of dollars··- such as 

high frequency trading. 

W~: believe the OCE shutdown pott~ntiaUy violated S~:ction 18 of the Commodity 

Exchange Act. The duration of the shutdown increases this polcntlaL 

OGC Management Conflated Improper Administrative On~boarding Paperwork with 

Improper Access to and Improper Use of Information Protected under Section 8 

As previously stated, OGC managem.:.nt condud.:.d that someone wilh incomplete 

paperwork is not properly on board, and that someone not properly on board may not access 

CFfC data protect\.~ under Section 8. OGC further concluded that someone who was not 

properly on board may not publ.ish or present e.conomic research papers produced during a period 

of jmproper documentation because the employee was never properly authorized to view 

informmjon prott'ctcd under Section 8, When we specifically reqw..'~!ed precedent f•)r this 

interpretation, we were told this interpretation derives solely from the language of Section g. 

Multiple witnesses told us their understanding was that on-hoarding documentation was relevant 

to the comidcration whether an OCE economist could vie:\v information protected under section 

8, and conduct, present and publish research basc.d on such acccs~. We reviewed multiple 

spreadsheets prep<u·ed by OED showing the on~boarding status of each OCE economiE>t which 

jndicatcs to us that the policy wa~ al the least being considered, if not irnplcm.:ntcd. However. 

the Chief Operating Officer maintained that this interpretation was never adopted by the 

Commission as an official policy. 

Instances of administralive errors leading 10 on~hoarding failure included examples such 

as the t~1ilure tore ) r, in:mce Center (NFC) infom1ation regaJding unpaid 

consultants. "

1 Po (b)(6).(b )(7)(C) it appears thu,t t'tvo of three required signatures were in 

place on hi:s SF52 g f Economist\ signature), but the third individual tasked 

with signing it·- the OHR employee only partially ;.,igned her signature. lt also appears that the 

SF52 was mostly but not fully completed. In the personnel records we reviewed. we also noted a 

M See fn.47 and accompanying text 

w; NFC b 11!~ ft:dt:ral entity th<tl ptnce,,es CFTC's payroll. Even though Ul!puiJ cvn~ukul.b «!<:: ll.Pt paid, their 

fnh•rnlution h apparently ;,uppt•sed 10 be sent on to NFC anyway. 

ss OHke of Personnel Mrmngcmcm (0Ptv1) StundHrd F(lt\l! (SH 52, Requc~>t for Pcr~onnd Action. Avaihtble hvrt.. 

t!i!JLE:"Y.!Y~,!o.U?J!l,g.\.::t:[L~:E!!2!J?!JLJHJ!tJn.n~tf. 

16 

----------------------------

it was brought to the attention of management at t 

There was also an econmni<>L (b)(6),(b)(l) 

U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector General byCFrc 

unmherofun'limHxi Sf<'\1s nnd SF50s.s9 For one OCE cootrnctoL OED staff rletennined that the ~- ~ 

contract was not signed by tbe contraeror. 

Another instr~u\:e ofadministrative irregularity invol-..-ed the OCE t"<'OIK•mi:'.tl(b )(~). I 

ITE')I_91 Former Chief Ecouvwist Jat:ue:;; f,cfuser r'tquested network access for this econoW!3l on 

~. 2010, hut his contmcr with C "'"' executed until (b)(6).(b)(7) 

Contcllipotaueotm tccord/j tclating to (b)(6),(b)(7) on-boarding · ne vo ·access indicated that 

netvvork access was not granted until :u:- cou xact was s.i.f?Ued: however. tbe delay appears to have 

heeu du~ to ted:utkal difl'icu11ies, and not due to the fact that 'the e'l'(r_uomisL lhongh appointed by 

the ChiefEconolllist, was not yet tu1der coni:ract In f.act_ we fuund no iuilicatiuu ofan awareness 

that the submission for network ac.cess pred.~ted (b )(6),(b )(7) ontract date, and no indkation that 

e me. 

92 for whom it initially appeared CFTC had 

no records at all~ yet he had already pu ts a paper as a CFIC employee. Staff in OED 

eventually locate (b )(6),(b )(7) ::.ecurlty dearanc-e, but they were never able to locate an SF52 

showm~ his appoi pa1d consultant. 

We interviewed Agency employees in the Office of Human Resources (resp<Jnsible for 

adnU.nistrati:ve on-boardiur.r for consultants tllid employees),_ the Procurement Office (respons:ihle 

f0r nd.milli~trativ..: uu-bc•urding for contractms), and the s~'{)tuity Oflic-~ (re-:~ponsible fur security 

dearanct."S for aH employees. collliultants, contractors and others). We were totd lhat OCE 

e<:'onomish \Vere pr{)('e~sed the ;;mue as: other employees. consultants, and contradors at Cf'TC. 

V·/e did leam dud, iJCJ:asionaliy. OHR or Procurement would find thm an OCE e;;onomist 

seleded by the C11ief Economist and submitted as a consultant or as a contractor bad already 

b-('tll proec;;E;(;d or was ;-tkemiy helng processed by the other Office--- that is, th(' ChtefEconon:Us.t 

woold sobmit the same individual to be hired as both contractor nnd consultant tJt the same time. 

apparently intent on getting the- person onboarde-:1 as quiekly as possible. 

111ese parallel on-boarding processes were uot characterized by OHR or Procurement 

employees as a fatal flaw to th<:~ 1u(lividua1'& flhiHty to <:ome on board as a CFTC employee. 

consulrant. or contractor. But they were definitely an ru:llloyttnct>. After dhtovery ofa dual 

proc<:ss. it appears that the OCE ccon<nni:.t ::<it.uply would re:rnain in the status processed furthest 

:t OPM SF 50, Notifi.::ation efPctl<onnet Acli<m. AvaU.ahle here: lml"'-lJi.ll2!J..!!.~.i!!!:"""llll:!ill.\!1illl!l!!li!lfEI!!H· 

90 We offer no oplmon au tire legal et"fect of till» missing sigr:.arure .as it pertains to tlre contractual re!AtlDtuhip 

between the "Ont:rnctor 

- and CFTC

"J(b)(6).(b) [iug;adwcr b)l 6i.ibii711C 

(b)(6).(b)(7)(C) awlll (b 6 b 1711Ci 1,. ""'''""Y wor>::i m""I(b)(6). 

l(b)(6),(b :7)(c-) I 

(b )(6 ). (b)(7)(C) 

(b)(6 ). (b)(7)(C 

' 1 >rrrH:ltmte o 

(b)(6),(b)( 


, - (b)(6). (b)(7)(C) 


(b)(6).( 


17 


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to con1pletion at the time of discovery. We were also told that the Chief Eco o is · d been 

very aggressive trying to onboard economists, with the early submission of (b)(6),(b)(7) or 

network access prior to offii..~ial on-boarding appearing to be the most serious examp e. 

Because there wa<> no inJkatiun of tJ:aud ur bad fajth by the e<:onomjsts, or evidence thut 

the appointments by the Chief Economht were unauthorized, the nature of the administrative 

errors appeared lo us to be non~substantive, and capahle of heing 11xetl. Other than the 

submission of individuals to be l'Onsultants and cuntl:adors at the same time, there appeared no 

explanation for tho adrninistralive errors lhat would indicate OCE employees were tre-ated 

diffcn:mJy tltan other agency employees as it p,;rtains to admini~trativc onboarding, \Ve did not 

investigate if similar deficiendc:.; in the admini:.;tratiw. on-boarding paperwork have been found 

for employees, consultant;;,, and contractors in other CFTC Divisions. 

We did ask lf deficiencies in security clearances for other CFTC employees have been 

encountered, which in our view would be a more serious matter. We learned that during a fairly 

recenl period in which CFTC implem.:-ntcd m~w security badges, CFTC employees agenq'~\-vide 

were found with lapsed security clearances. for some long~tenn employees, CFTC had no 

security de~tranct~ on !lie at all for the duration of the employee's car~er al CFTC. Employees 

with lapsed or absent security dearances indudcd e-mployees with access to lnfonnation 

protect~d under Section 8 and other sensitive information. 

The process for dealing \Vith the di:•covery of inadequate security clearances, we were 

told, \:va-: to leave the employee in place and to process the security clearance. Only if the 

security clearance could not be completed due to problems with the employee's bm:kground 

wmdd action be taken to remove the- employee. Moreover, even if the employee could not be 

retained, prjor work completed by the employee would remain valid unlc-s:-; there \vas extrinsic 

evidence that the work was not adt.-~-quatcly perfonncd. This approach finds suppon ·in the law, 

Comptroller Gener~ll opinions could not be more dear that "laltJoffker 'de .facto' is one 

who performs the duties of an office with apparent right and under color of an appointment and 

claim of title to such ofttce. Tha1 is, \Vhere- there i-.; an office to be filled, and one acting under 

color of authority fills said offlce and dischar2es its duties, his actions are those of an officer 'de 

facto.'"'H This ,:ule is not ironclad, but the t't'~o exception:-. to this rule are not present here: 

(_ 1) The appointment was made in violation of an ab~olutc statutory prohibitimi, or 

(2) The employee was guilty of fraud in regard to the appointment or deliberately 

. lfl"'j '} 94 m1srepre....ent~~l or a sJ1Je{ a matena matter. 

"·' A1.1i<-ta11/ Cmnptrofh:r Gnu:ml Yate.1 roth!' Secretarr uj the Treasurv. B·98693. 30 Comp.Gcn. 228, 1950 U.S. 

Cornp. Gen. LEXIS 93 '*5 (Dec. 5, 1950) (ched ir1, In lili" .'1-f,uwr <'f'Compr:n.>ation for Sm·iccs Rendered 1\•J·idil'g 

At'fJOifllmcm, B 18 l9.\.:1-, 55 Cow.r. Gen. 109, 1975 C.S. Comp. Gen. LEXfS l\H -~6 (Jaly 23 .. 1975)). 

lM Mauer ol' Sidney P. Ameff and ,11ary A.nn lhtrron Erronn-'1',\ Appoimmenll D:! Focro Employmenr. 

B02207:20, B0220791, J%6 Cmnp. Gen. LEXlS 516lScpt 8, 19lfb) (example~ of ~1atutory han; would induJe anti~ 

nepotism statutes, etc.). 

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The Cotnptroller General recognizes as a general rule··· regardless of whether a de facto 

employee may be paid for hi~ or h(·r efforts or may eominuc jn his posjtion "

5 ~that "acts 

performed while a person is serving in a de facto status are as valid and effectual insofar a~ they 

conn.'IT! the public and 1he rights of third persons a::-. though hewer..~ an offi..:-l"'r de jure.'' 96 It is 

also clearly the law that the guvl:.'rnmcnt ha~ t:vcry authority to ratify the acts of agent~ at."ling 

\:vith apparent aut~ority: "a sovereign may waive its right to be hound only by actually 

authorized <tCh."9 

· [n fact, in the Comptroller Genera! opinions we re\'iewed, we enGountered no 

cases where a de ;acto employe~:';-; work was invaliJaled due to administrative error in hiri.ng 

documentation. 

In ).hort, it appears that there is no basi:.; to c.quatc improper on-boarding papcrv.·ork wHh 

improper access to CFl'C confidential data in a situation (such as this) v,cherc a heightened 

security dearance is not required. 9 s Similarly, there appears to be no ba'iis to invalidate or 

indefinitely delay work product by OCE economists who suffer administrative irregularities in 

their on-boarding papenvork. 

We note with approval that it appears the OGC\ proposed policy has not been officially 

adopted by the Ch~tirman or the Commission. Nevertheless, Wi.~ would be remiss if we did not 

note the potential u11fairness inherent in the proposed policy. It appears that no one in OCE or 

'""'In (:(,mptroJlcr Gcncml t•plnloas uddre'>'>ing udmini~trative errors affet:ting tl:dcrul employee ;;tatu~. the ultimate 

issue b alway;; whether the empl(lYI~t" may be paid. whirh j, nil! what we ure ](Inking at today. We dte these 

upininno,: fur tfwlr .:t;~1f'rtlt·m.: nn the suh~equent treatment of employee W1;1·).; whe1; the empk•y~'t" i~ 1101 properly 

broughl' o.n hoard. 

96 Afdlter of the A ding Fedcrallmmmnce Adminislro/or·:, Statu:, and Authority, 13-183012, 56 C(lmp. Gen. 761; 

!t)77 U.S. Cmnp GetL L.EXIS !00 {June 29, I'J77). See al~o, Matter (~j' Earle W. Coflk- Compunation for Service:. 

Prior 1;1 Appomtment, B·198575, I 9R I U.S. Comp. Gen. LEXIS lB {Aug. l!. 198 IJ (When au Acting lu~Un.tJKe 

Administrator appointed by the din:ch!r of the Department of Housing and Crhan Dcvdopment Jacked autllority to 

H~rve for a pexiotl of ahout uim~t~:,:n day-., Juring which time he ~igned dcthkm lettetlt. il;<.,uetl regolati<:mil, aud 

testified before Congress in hi~ unauthorized official capacity. the Comptroller Geueral ~tated: ·'[.WJe c:mnot 

nm~ider !the A~.~ting Admiai,trator] Ll U\Urp<:::r, devoid of uny ('(.\lor of authority" At all time' rdevaat he pel formed 

the dU!ies of the nftke (lf lnsma!K't< AJmiahtralo! 1',-itl! !ht: kllovdellge aud apparent ;>cquie;;ceuce of the S•:eretary 

and !he Pte;,ide!'!L lu our dew, he meets the definition of a de facto officer M emph>yee .. "'j, 

07 Restatement {Third) Of Agency § 2.03, Gllnmwnt g. t2006). Ratification, or course, doe~ not apply soldy to 

contract action>. "Any act which, lf done under proper authority, would be lawfully charged to a prinnpul may he 

ratiHcd when done without authority by an agent or ~uhagent." 2A CJS Age!'!\:y ~ 55 (201.~_). ln Matter of the 

A clint: Fedcmi lnsurfliN'I! AdmiHistrator's ,\,'lr/tuY and Authority. B~ 183012, 56 Comp. Gen. 761; 1977 U.S. Comp. 

Gen. LbXIS l 00 (June 29, 1977 )., tltc- Comptwlkr General 'uggc~tcd tlmt a .,ucce~~nr cnniiidcr rntifieation of th0s.e 

;_l(•tion~ by a di,facm _,.\.Cling Insurance Administrator~ which included dechion ktwr~, new regulations, and 

Cmgw.,\imt;li !<:'Nfimou) ... \1 ith which .:;he ngn:ed. to unrid any confusion a~ 10 til<:'ir hindiug d'f.ort 

\H Certainly the lack of a security ckunmc-c is relevant In thc~c con~idcrationB. Jn In the matter ofCompoaatirm.fN 

Scn·icn Rcndnni Pending i\ppointment, 55 Comp Gen. [09, B-1 t\1934 Oaly :!-3, 1!)75), a retirt'd Army officer 

ll\\igncd as Execu!'ive k;<;i~tm:Jt tn au Amba~~m.lor-at-Large ~ervcd in that po'>ition for llcvcn momhs hcfon: the 

Dcp:trtment or State determined he ctJu!d 110t he appoimed dtk~ w hh failure to pass a requm:d security clearance. 

De~pite tbe failure of apptJintment, thts individual \crved in good faith, perfonnl:.'d s.e.rvic.e~ under color of authority, 

and \1 ith nu im.hc~~lwn uf fi'('\Hd, :J.rld with the 0Jmptroller General noting: thai the: ~·mplo:c.:~· JiJ m,t luadle da;;;;ified 

malcri:.tl a ad !bat "the bck of secu dty ck:~rance 11ppar~nt!y had little imp:1d oa bb Job performance.'' In this 

cif\:umstanee, the Cnmptmller Geneml deh:rmiaed that !hi'< individual was a dej(u:to employee during the· pcrit'd of 

service. 

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OGC wa:-. aware of the ~tdministrativc errors in OCE econolni~ts· on-hoarding paperwork until 

December 2012. Moreover, it appears that, at least umH December 2012, irregularities in on~ 

boarding processes and paperwork were simply addressed by fixing the irregularity at ~taff levet 

For 'in~t.;mct:. the di:>C~)very of dual hiring processes for new OCE economi:·>t:-> were not 

documented or brought to the attentiun (Jf tnanag_.:menl that we can see, Similarly it appears that. 

at the time, nobody documented or brought lo the attention of management the fact that~ 

~s initial request for netw.. ·ork. acces.·s was made by the Chief Economist and in process with

~or more than two weeks before his contract was signed. 

Given the impunance OOC now gives to on~boarding pape1wnrk at least fur some OCE 

staft'99 we arc at a loss to understand why accuracy wa:.; never emphasized before December 

2012. Further, we do not understand why this policy, if necessary at present, is not being 

implemented Agency~wide. 

ln any event, we simply fail to see any connection whatsoever between a public 


employee's on~boarding paperwork and that smne employee's right to publish on matters of 


public concern as a private citizen, even jf the public employee's efforts arc sponsored by the 


g:overnmt~nt. 

The Decision to Prohibil Publication of Completed Research and Institute Mandatory 

Prior Review Raises First Amendment Issues 

As previously discussed. without regard to the content of research papers prepared by 


OCE economists, the Deputy General Counsel for (b)(6),(b)(7) detern1ined that any employee, 


consultanL or contractor vvith administrative onbo 1 e ~: Kie6 m«y not vie\v information 


protected under section 8, and to apply the prohibition retroactively. As prcviuu~ly 'tatcd. we 


have found no legal support for this course of action. 


Separately, CFTC management determined to form a committee which is reviewing the 

content of all papers writhm hy OCE economi:-:ts (regardless of onwboarding documentation and 

regardless of whether the all thor included or had access to information protected under Section 8) 

and which will pem1it publication only of research papers approved by the committee and by the 

Office of General CounsoL We believe this course of action may potentially violate the law. 

The First Amendment and Fedefal Emplovee Publications 

Federal ,~mployees clearly do not enjoy the same First Arnt:ndmentwo rights as _private 


citizens. The Supreme Court has rccognif'_ed that "even many of the most fundamental tnaxirtls 


of our Pir<;t Amendment jurisprudence cannot reasonably be arplie-d to speech by government 


'

19 ltuieeJ. ir <.tppt:ufc, rl!<lt OCE ot!hounJing errors were not all treated Illc ,._a!t!e o:vd1 ;;fter Der:cHthtr 20 I2. Earlier 

this year. one of !he OCE ..:ontra.:tors wa\ simply trunsfern:d lO the OHke of Datu Teeb!wlogy evea though Agt:ney 

staff recognited that his contract pn;vinw.:ly h:1d heen ir11plemented while Jacking the contractor's "ignatllft'. 

I•A: See ln.li. 

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U.S. Comm•)dity Puturcs Trading Commission REDACTED 

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employccs:'w1 and that the federal government has "far bro~l-der powers" to rc.tulatc the speech 

of federal employees than 1t has to regulate the spe(~Ch of the public at large. teL Bul that docs not 

mean that federal employees lose ali Fir:.,t Amendment protection~ merely by virtue of their 

:'>hltU!" as empl~)ye\~!". 

ln order to be protected by the First Amendment, speech by a public employee must 

speak on a maHer of puhlk concern, and the employee's intereti1 in expretising hirnself, as a 

private citizen, in commenting upon maHer;-; of public ~.:oncern must outweigh the interest of the 

State, a::. an employer. in promoting the efficiency of lhe public service it pcrfnrrn::. through its 

empluy~:es. w:. It is clear that thl~ Fjrst A1nendment docs not shidd from Jisciplittc the 

expressions public employees make pursuant to their professional duties; however, the Supreml· 

Coun has specifically declined to determine whether the fact of public employment simihrrly 

alters the Firsl Amendment rights of public employees engaged in speech related to scholarship 

or teaching. 104 Context is key in determining whether an individual who works for the 

government is speaking as a private citizen or as a public employee performing official duties. 

We believe the employment situation for OCE economists is clear-cut in thh regard: in 

addition to their assign<;d tasks relating to ongoing Agency operations, OCE enmomists arc hired 

by C:t<JC to perform independent acadernic resem·ch.. '11m position description for a level CT~ 12 

research economist states. that, in addition to supporting the Commission in its work: 

ITlhe incumbent also participates in the planning and execution of ~pecial 

pr,~jccts, primarily long-term studies with little precedent The incumbent is 

expected to be prepared to present and review papers at profc~;sional meeting~l •md 

conferences and to contribute to the literature in the field and identify the effects 

a~sociate-d whh implcmcntjng proposed standards. regulations. ;.md policies- 105 

Similarly, the position description for a level CTM 15 supervisory economist states that, in 

addition to supporting the Commission in its work: 

As a recognized expert in the- economic and staJi'<tical analysis of futures and 

swaps ma1'kets, rhe incumbent is expected to be sought oul to serve on panels and 

~<JJ Warersl' Churchill,511C.S 6tiL67J,fl72(l994). 

\(,; Id. 

l•lO Pickl!riay v. lJoard oj J::ducafiflft. 39 J C.S. 51)_;, 56}; (196X). 

w1 ln Garcelfi !'. Ct:4wl!()S, 547 U.S. 4!0, 426 (2006). tht Supre1nc Cnur\ rejec\0d '"\he notion th<tl!he f.(N 

Ame.ndment shields from Ji~dplit~e the expression\ employet''> make pur;mmt tn their profes<>ional duties"" but 

spedficully declined \o addre~s the upplicatioa of Fint .Amemhntnl rights til <>pcedt by public employee.\ n::.\~11"-d to 

acudemk scholarship. /d. at 425 (''There i<> sume urgU!l'!(~l'!t tlwJ expression related w academic <>cholurship or 

~.=b~~I'Pom i11;;u·ucliot1 illlpli~.=utt'S udditional wn'>ti\u\ional interests tbut ure l!tJt fully iiCt.:ountt:d for hy this Court's 

cm;\ornmy employee·-:,peedl jumprudt:nce. We need not, and for that rea\on du not, decitle whether the analysis we 

conduct today would apply in the same manner to ;1 c:Js\: involving ~peech related to scholarship or teaching,"). 

1 1 

''- Position de·,cription fml\e!~~)/(b) 

21 

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to pre scot and rcvic\v papers at profcs~ional meetings and conferCllCCS, to 

contribute to the literature in the Held .... 111" 

Tht' position descriptions in our view indicate that OCE economi:-;t-> ~II\'- required to create 

and publish economic rescan.:h nol tn!;:;l'ely HJ thl:'- e;;;te-nt that such resean:h supports the 

Commission in its work. They are required to create economic articles that comport with 

academic ~t;m~..brds :md expand knowledge in the field; and we hello:vc: the requirem.:nts of 

academic integrity would requin.~ su~.:h research to be developed independently of Commission 

policy. 107 

Independence from Cornmis::;ion polky ls uJ:.;o evidenced by the fact that the Commission 

requires OCE economists to publish their research papers and pre~entations with a disclaimer 

that lheir views do not represent those of the Chaim1an, the Commission or its employees. 103 

Even if the Commission has hired an employee-, consultant, or contractor for the purpose of 

requiring re<;earch on a specific economic topic selected by the Chief Economist. the disclaimer 

is required when the research is ('Ompktc and ready for publication. Assurance of academic . . ld . I . . 100 mtcgnty wou rcqmrc no css. m our vtcw. 

Of cour;..e, the Commi.ssion may publish econtm1ic research through Commission· 

approved publications prepared by staff economists, and has done so in the past. 110 The fact that 

lh<:: C..).mrnis~ion h~!S publisJu:J OCE staff economic resec:m:h .in lhc past, as an official CFTC 

report and without any disclaimer, indicates to us that the Commission is fully aware- as it has 

performed thi-: function since 1976- that economic research papers published under a disclaimer 

arc dono so because the author is publishing not as a Commi~lsion employee voicing official 

~c t· . . b . . . '" 1· 1 - po 1cy or opmwn, ut as a pnvatc cttJzcn. 

Consideration of CFTC OCE ccouomi~-:t po:-:ili(ln descriptions, CFTC's rcqujrcd 

disclaimers for OCE economist research paper:-:. the fact that the papers undergo a jw·ied rc:vie\v, 

and the contri.l:..t1ng staff economic research repo11s published wtthout disclaimer, !e~d to the 

Hb Position do.cription fori (b )(6). (b) I 

tr'l Some ..:ontracr 0mployecs in UCE arc tnrcd solely tu perform inJepen(!i:nt rescardt on topk.~ approvcd by the 

Chief Economist. Othe-r<> are hm:d w pcdorm other scrvK'CS. ~nch as lT services. 

1 

''~ Di~dalmer~ that arc "rca:-;l!nahly prominent'· and that convey that ''the YJC'-V$ expressed in the <1rticlc do not 

ne;.::essarily teprt:$C!lt the view,; ol' ;he ;~gen<::y :· are reguin;:d !->y n;~ml:uion at 5 CFR 2635.807(h). 

l</J We would tontra\t disclaimers u~ed in 'ituatinlt' \\-ht'l'e C.\i;lff ic. spc!tkintt m the direction of nr with rlw approv;ti 

of Commi~~ion m:.magement as pan of their otlidal duties in \ituatiom that do not involv~ scholarship, .;w:h as: 

staff no-action letter~, Comnliss1otH->ponsored ot Commi::.::.ion-attended meetings and conf~crences. and Agency weh­

~ite postings. In such ~ituation~ the Cornrnbsicm reprl!~entativ~ does not ~pcilk as a private citiwn, but th~; 

di"-ClainKI' H1<1ke~ .:h:\lf th<1t the rcprc~cntativc's ~tatcmcms may not nccc:>:>J.ri!y represent the Commissi•-.n'~ views. 

1111 For instance, in 2008 the Office or Chid Economist pllbl.i::-,hed in cooperation with representative~ of olber 

regulut()rs u paper titled, ''Interim Repon on Crud~· Oil.'' \-Vhk:h \VU~~ not puhlisbed with a disclaimer. Av.~iluble hen:: 

l!Up :1/v,- h' \'.- .1: fl~:. t:<J.V iuu1ilgrout ;~/pub! id @' uew\roomtdocumentstfile/h:li 11t <'I i1 111'el Jut t 1 Jl !U';tcit::-1 •i 10/0S_pdL 

111 As late as 2012, OGC \!:tff attonwys ~1ppliud till'· CFTC regulations pertaining to writing completed in :m 

Clnployce's persouul capacity to OCh Ci.'Onottlie H''<clln:h papers, <tllcaq on o\Xasion Sec Appendix 6, page 41 

n.1Y0. 'fhis practice has ~topped. 

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conclusion that CFTC knows and acknowledges that OCE economists publish their scholarly 

research as private citizens. 112 The fact of lhc!r cmployn1cnt, pay (for some economists), 

required topic approval, and access to con11dentla1 information, all authorized by the 

Commi:"~ion. in our vh::\v should not change this conclusion. 

Prior Restraints and th~..f!.nH..Am~.o.Q.m~m 

Introduction 

A prior n.:Mraint has been described as any governmental order "that prohJbil[ s] the 

publication or broadca~t of particuhrr information or commentary .... orders that impose a 

'previous' or 'prior' restraint on speech:.! J? The repugnance of prior restraints has been 

recognized from the earliest expressions of the Anglo~ American legal tradition. Blackstone 

wrote: 

Every freeman has an undoubted light to lay what sentiments he pleases before 

the public: to forbid thjs, is to destroy the freedom or the press; but if ht'; publishes 

what is improper, mischievous or illegal. he mu:-.t take the conseque11ce of his O\'v'll 

temerity. 114 

The Supreme Court has recognized that prior restraints are abhorrent 

!Plrior n.:stn1ints on speech and publication are the most serious and the 

least tolerable infringement on First Amendment rights. A criminal penalty or a 

judgment in a dd'nmation case is subject to the whole panoply of protections 

afforded by deferring the impact of the judgment until all avenues of appellate 

review have been exhausted. Only after judgment has become final, correct or 

otherwise, doe:> the law's sanction become fully operative. 

A priorrestraint, by conlra<;! and by definition, has an immediate and 

irreversible sanction. If it can be said that a threat of criminal or civil sanctions 

after publication 'chills' speech, prior re:->tralnt 'freezes' it at least for the time. 115 

The Supreme Court has cautioned that the government'\ requirL'.d prior review of 

protected speech, even when permi~sibk musr afford affected citizens due process prior 

!ll T1w t;Kt th;~t OCE ecom1mk research papers often concern the artkub1tion of new or eontrovcrst;d 1deas, and 

could reasonably be de~>criberl as an eAerci~e nf ~'!"called ·'ac.;u.iemic freedom'' also weighs in favor of tre11.ting OCE 

economic research papers as priute: .~peeeh. Sec nreilllla FIIumg ~·. [l Va., 896 F.Supp.2d 524, 543 n.l2. 

!u Nebraska !'ress Ass'nv..Sfll(irt, 427 U.S. 539,556 (1976). 

111 4 BL Com. !51, !52 (quott·d in New v, MinnP.,\'0!(1, 2fU U'.$. 6Yi, 7 !4 (1'130). 

1 u ,\icbm<ka }'rcss Jhs'n v. Stunrt. supm, 427 U.S. at 554. 

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to ~tny final restraint, and must assure a prompt final judicial dcdsion. 110 The Supreme 

Court has cautioned that any government syslem of prior restraint must take place 

··within a specitled brief period:' and ha\ criticized a prior review and judidaJ appeal 

proce!"t> running 10 10 months. 117 The Supreme Comt has. stated that "any systl"'m .::Jf prior 

restraint!' of expression come:s to this Cvun bearing a hcuvy presumption against its 

. . I l"d' "llil const1tutmna va 1 ny. 

Prior Restraints and Mandatu(V Prior Review o(.Public Employee Publication5.' 

The government clearly may require prior S-ubmission of a public employee's spe,;.ch as a 

private citizen if the govcmmcnt can demonstrate ~uffidcnt interest in staying informed of public 

employ~.~e< public sm!cmcnts about matters of concern to the workplace, 11 " We believe the 

Commis.sion has a clear interest in being apprised of OCE economic scholarship before it is 

prest~nted or publir.;hed. However, we have found no precedent to sn.pport the length of time 

cmTcnlly .involved \.Vilh tho Agency's review process. 

In order to impose a prior restnrint on speech by a public employee, hpeaking nr 

publi:-,hing as a private .:itir~::n, the government must demor~stratc that 

_.the interes!s of both potcnlial audiences and a v;;1st group of present and future 

employees in a broad range of present and future cxpre;-,siun are outweighed by 

that expression's 'necessary impact on the actual operation' of the 

Goverllrnent. 120 

fn addition, the standards used to evaluate employee sreech "must possess ·narrow, objective, 

and dcfjnitc standards' w guide the dccision-makcr." 1 1 

Even when a prior reslraint is warranted, th.; Government may bo limited in the action it 

may take. inte-rnally, to prevent violative speech from pubhcatiOIL E:: Even a penniss.ible prior 

111 ; Freedman v. Md., 3HO L.S. 51.55-59 f!%4). 

117 M St!t' al.w, Dl!jlll'U o_(Nusflrillt. !nt~., cl a!. t'. N(Hhrillc. ct (!/., 2006 U.S_ App_ LEXlS !6323, *13 and n.4; 

2006 FEn ,.\ pp. 04-nn (6t11 Cir. 2006) (recopnizinr: the ''stnngent stand;ud" '-<:'t n1,tr in F rferlnwn for prompt Judicial 

review fnr governnwnt~imposed prior re-;tr:dnh on Fir'>t Am1~fldnwm activities). 

11 ~ R•n/am Bouks. in<.- 1-', Stdliwm. 372 CS 58.70 ( l%3). See also. Shebon P<Aict: Unhm, Inc. 1'. \io,:cola. !25 F. 

Snpp. 2d @4, 623 (D. Cnnn. 2fl0 l) ('"The governmem's burden of denvlwo.\mLing lh:tt it.>' lllkl\~'lb oufl.ve igh the 

mtcrcsts of the speakers is greater in casc~ ifn,olving a pdor t>.:~tJ aim ,as oppo5ed to cases mvolving lsolat~Cd 

dhdplinary action,'') 

!:·, Lalino qt)in·n; AJJociu!ion, et ar v. S'afir, eta!., 170 F3d 167, 172 (! 999); Wt'aH:r· v. U11ited StaieJ h~f'ormation 

A!{em-y (Weaver). 87 F.3d 1429, 1442 (D.C. Ctr. !lJ%_l. cert. denied, 1997 L'S. LEXIS 3405 (1997). 

1 0 US 1', NmifJna! Tn:u.\uf".'}·;m:doyecs Union (NJEUj, 5 B U.S, 454, 46g (P)95J (<:.-ilin;.; l'i<:ku"inx, 391 ES. at 

571 ). 

121 Harmrm v. City ofNew York t,Hannun), 14U F.3d 1 I 1 120 (2d Cir. I'J'>R) (quoting Shuttlesworth v. City of 

Birmingham, 3Y4 U.S. 147, 151, ~9 S. Ct. 035, <J38, 22L Ed. 2d 162 (!WJY)) 

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review process could he invalidated if it involves lengthy delays hcc:ausc. "[ ilf the prior review 

were extensive, of course, it might delay constitutionally protected speech to a time when ils 

only relevance wa!'> to historians:d::3 ln addition, the govemoy~nt's determination to $L!ppress 

;<>pe-ech must ;lfford tht: ;lffected party prompt judicial revie\.V. t--t 

ln contrast the Supreme Court has recognized that the Central Jntelligence Agency may 

enforce <tg<tinsr it:i employees reasonable publication restrictiun~o; o~:er da.-.:sified infonnation. 12 " 

This authority stems from the ''compel!.ing interest" that the government has "in protecting both 

the -;ccrrcy of Information important to our national security and the appearance- of 

cunfi~kntiahty t•O Ci>St:ntial w th1..~ efTcctivc operation of our fnrdgn intdlig(:fl(:c service." 126 Tt 

include~ the author1ty to bar publication by current and former CJA employees without prior 

authorizJ.tion. I·Zf Nothing in the Commodity Exchange Act indicates that information protected 

under Section 8 may receive the same protections as cla.ssitied information. and it appears very 

dear that similar restrictions do not apply to non-classified information generally, 

The Office of Government Ethics has 1'C('ognizcd that required prior review and 

approval of federal employee publications risb violating the First Amendment In 1991, 

the Office of Govcmm<;nt Ethks proposed the following regulation of kxk~ral employee 

publicatiom (proposed§ 2635.807(c)): 

Appn.>val tif contt:nt. An employee shaH comply with any reqllir;.:rnl)nt for advance 

agency review, clearance. or approval of the content of any speech, hook, article 

or similar product. 128 

This proposed regulation dld not survive the mlcmaking proces11. OGE explained: 

n: ln Weaver. the Court suggested that ''laln ag;,;ncy confromed 'With a n:calcitran! employee who refused to 

diminatc d;L\si/1cd information might ~\·ish !<.1 sed an !fl.jll!K1ion ugainst publkati<m of the offt:oding SC(.'tlun of th~: 

el~tpiPYt'<'\ :ttliiterhd." 1-1-'t·tJto-..\t/;)ra, 87 F. 3d at 1442 n.5. 

ll:• Weorer. >upra, 87 F.3d at 144! (the quoted lMguagt: L<, dicta; !he com1 noted that "Weaver has not alleged !hill 

the review under§ 628.2 is lengthy'-'): Jfarman. xupra, 140 E3d at 120 t·By delaying the review proce~s. the 

employer has the po\Jv·er to destroy the immediacy of the comment on ag<:ncy affair~. and thu~. in lhany cases, its 

newsworthin~~~. In such c..tM::s, 'Ji~~emin:11ion delayed may JlTOVe tuntammmt tn dtssemination deni~d.., (citations 

omitted)); Freedman, supra. 380 U.S. at 5~~ (1wting the dcterrent rft'cct of delay in a review proce~~ running to 10 

m~.onth~,), W>.: nok the Agency has delayed publication of economic r•~"~'arch p;tp{·r~o. for !4 months tmd counting. 

1

:<Freedman v. Maryland. supra, 380 U.S. at 55, and 51!~60. 

125 Snepp v. Unired Stot&s, 444 lJ.S. 507,510 (1980) C'IE]ven in the absence of an express agreement the CIA 

could h;1vc Hi,:t~d !o prot~(.:t :-ubstantial government interests by imposing rc:;~sonahk f(:~tri~,:ti1.)1h on employee 

activitic~ that in other context~> might he pn)tcctcd hy thf: Fin! Arwnrlment''j. 

!~C fd. 

1 ~ 0 IJ. at 5!! n.8 (file Cum\ no\~d that the t:rnploym~n! contract ut issue "'require, nu mur~ than a de11rance 

procedure <>ubject to judicial revie;v''), 

1 ·~,, )6hd. Reg. 3377H (July 23, 1')9!). 

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In response to comments made by four agencies and one organization. OGE has 

deleted proposed §2635.807(c) which :-~tatcd thal employees must comply with 

agency requirements for advance appmval of the content of any speech, writing or 

s'imihlr product. E;Kh of the commenters argued thm the p!-.::Jvi:;.ion is nverbro~1d 

tmd would violate the First Amendtne-nt. Cun~istent with our original intent. tl1e 

final rule simply notes that some agencies may have policies requiring advance 

appnwul, revie\v, or clearance of certain speeches or writing~ to determine 

whether they contain an appmpriat~;; disclaimer, disclose nonpublk information or 

othcn.visc comply \Vilh this parL 129 

The OGE' s finalntlc today contain:.; thit> neutral statement: 

Note; Some agencies may have policies reqmring advance agency revtew, 

clearance. or approval of certain 'pccchcs, books, article\ or similar products to 

determine whether the product contains an appropriate disclaimer. discloses 

nonpublic infonnation, or otherwise complies \:Vith this section. uo 

More rece.ntly. in 2008 the OGE issued advisory material \)TI fcder~tl t~mployc~:~ 

book publications and took a simi!.arly neutral approach on required prior approval, 

merely stating: 

Many agencies have supplemental regulations that require employees to obtain 

prior approval to engage in certain outside activitie-s, including \Vriling. Some of 

these agencies· supplemental regulations may contain other provisions related to . . !31 

wntmg. 

CFTC';-; ;-;upplcmcntal standards of ethical conduct ;;,tate that ''Commission 

members and other employees are encouraged to engage in teaching, speaking, and 

writing adtvities.''u1 CFTC's supplemental standards do not requ1re prinr submiss1on 

and approval of employee publications. CFTC' s supplemental standards do require 

advance approval for outside empiO"yrnent regardles;,; of payment, but advance approval 

fo1' outside employment only "includes wriLing when done under an tm·:mgcrnent with 

another person for production or publication of the written product.'\ Moreover. the 

advance approval requirement "docs not include participation in the acti.vitics \)(a 

lWnprofit _.. educational ... organjzation, unless such acti_vitJes involve the provision of 

professional services or advice or are for compen~ation other than reimbursement of 

expemes," CFTC's regulations also provide: "iaJ Commisl'ion employee or former 

employee shall not divulge, or cause or allow to he divulged, confident.ir.tl. or non~pnblic 

u-, 57 fed. Reg. 3500h {,A(lg, 7, 1992_). 

1 

"' 5 CFR § 2635.807(bJ(3) (note). 

L' 1 U.S. Oi!'t~.;e ut Govtmlwtut Ethics. D0~08~006, Bonk Deal DAEOe;r~m. Pal't 1: kegtdur E!HplP}'t::~:-, and SGEs, 


Paragrapll Vl. H. (MmdJ6. 200~). avuilable at 


http :1!www.nge.:;ov/displ u ytemp !nt;,;;;.Lclt.~~-h-:b.\tlf.,;g..,r;-;.!.i4:::kJ±7.:1B.3B.J.l. 

!1;' .'1 CFK Q510LI03(ai. 

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cotnmerciaL ecnnon:tlc or otllcial information to any unauthorized persoR or release ,<;uch 


information in advance of antbodzarion for it!! n:lease." 113 The cfTC's regulations do 


not specifically address the current processes tOr pubhcations by OCE economists. 


Regulations adopted by lli~:: Secm·itfes aud Exdmuge Commission (SEC) require 


prior review ofpltblic.atious and speeches by employees. hnt include1l a sdf¥imposed 


deadline to alliiwer the employee "as promptly as possible, wirh due regard w publication 


deadlines, but in any event within 30 days ofreceipt of the written document,"n4 


Information Security Concerns are Agency-\Vide 

During our field work OGC clilployccs cxpn:s&cd concern that auyone with OCEuct 

ru::cc.ss could dovmload- tu a privately owned thumh drive, disk. or cxtcmal hard drive- any 

infOrnMtion. from any netwcrk accessible on OCEnet, and retu-ove it from the budding. Data 

technology staff told us that lt l5 possible that downloading infomuttlon from OCEnet couid be 

accomplished ;.t,:ithout Cf(Jlltiug any re<:ord of the download dependijlg: on tbe- relevant computer 

and m·twmk :.etting:u. Bi Tiris ofcom·se would include setwitivc infun:natiou and iufortluttion 

protected under Se<:tlon 8. CFTC staff cbarg~-d with responsibility fur physical socuri1y in the 

CFfC workplace told us that. without thoroughly searching all employe-es as they leave the 

building, such removal of iufonuation would he impos&ible to prevent Moreover. there was no 

way to tell what data the OCE econmnists hnd 4Ccess.N through OCEnet because no logs w~re 

kept of data transfers from the CFTC network to OCEnet. \Ve agree that these are seiious 

concems. 

Our interview"'~ indicate that OCE economists believe it to be tmlikely th:tt dat::1 left the 

building:> while information techtl<>lop;y and se-cur1ty em~)loyees believe it possible that ::.uch 

miS<:.(mduct occurred, dne to the lack of contxols, but are in dlsag:ree1nent reg.arding. whether it is 

likely miscondm-.·t mTurred. Foren}-ic analy:.is appears at this time to he lncondusiYe due to the 

lack of controls. The absence of c-ontrols i~ key: th-e bottom Jlne appears to be that it is moilt 

likely that CFTC will never know whe!het or not data protected tmder Section 8 left th~ building. 

"""',.-L\1(b)(6) (b)(7)(c) 

(b)(.6), I 

l

(b)(7) 

(C) 

tB l? C:FR § 14il73:1--5. No e:nfor.:emcnt m:.::cbani&;:n i& prov:iti..;tl. Separa!ely. the Conu))od:ity A!::llnttkcs 

it a :fulony to misns~ any nonpublu: C\:uruni££iml i11forumtion '.dn::h uuy affect or tend to affect th~ pnce of any 

cmmuodity futures J)f <:unm1odity· in connection witlt certain nmrket trrul;;actiDili, ; t'SC § B(d)_ 

u+ l: 7 CFR § 200.735-4(d)(2)(i). We lt[fer ttl) t"l}.•imou on the SEC's rule. Tire Court of Appeals fur the Dj;,tri<::l of 

Columbia Circun in WeatYr recognized the req:cirernent for a t-'1J}tupt decb>lon and judicial revtew in penrJs~4b!~ 

p'1'ior te<>tntint schen1e.; (~--tw;:er. s.-Hpra. 87 F. 3-d at 1436), but also oote-d the 1ack of any '-'cax: holding that a re\'tew 

pru(;e~'>"rw inrleed <ltlY tinro of1nior restruiut, even one incln:Jin;< s\!bl!iautive pmltibitict~ of ··'lx:,;c])~~in 11m coniext 

of an employment relatwmhlp is CUJ\iltitHtiDit't!ly ittvi:IHd fot wm::U ¢La r.pediic deadline on action."' Iii. at l-44.3-. 

n~ lu atltliiiun. ,f<lffJetu;uketl thai infurmation eould also be prime-d ont autl!\:nluh~t! fium lht: builtli:lig:. 

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I )IG) 

CFTC management was aho di::;tre~std tbat tb~ badgmg proce~s for outgmng QCE 

e-conmnl:;;ts W[<lf> nN properly perfotmed. We learned that tbe fom1er Chief Ecoiwmi;~t had 

'\::xrm'' badges in his dt\'ik that had belou!'fed to fom1er OCE economisL':l: and had not been 

retumed, CFTC managemeut in OGC and Logistics and Operations smmif>e tbat these ba(l@.es 

m::1y have still Wl>fk~t and may have been used to pennlt LlUHide individual~ to obtain access to 

CFTC headqttaTiers offices. 137 CFTC management feared that lliliHJthorilcd ccouolllists could 

use old badges to enter CFTC headquarters, and then h,·we an existing OCE economist Jrive them 

~u:.:ce.o:;s to OCEnet (using their own usen:tames and ne"hvork passwords), without detection. 

Cf'TC rmmagement also sunuised that,. prior to the iustaHatlou of the welcome desk and badge 

readers in tbe lobby at CFTC h~tadquartcrs. OCE ecouumists could bring gue:.ts into thtJ huildiug: 

without detection. wlth or without any badge for the guest Cl:TC n1anagemem seemed fairly 

convinced that improper access had oc-curred, although it appeared e<(ltally dear that no improper 

access had been documented. 

For their part the OCE econmnis:t& \Ve interviewed either stated that they had no way of 

knowiufi what other OCE economists were doing: at headqmmers with regard to possible 

it11permi~sible gut:~t n<.:c6:s, or stated they did not believe that any(,ne. bad Ini&utied expired 

badges. None stated that they witnessed any Improper access to information pmtec1ed mtder 

Section 8 N:cnr.ring within <X:E. OCE economists told us that whe-n they 'l.ver~ working With 

C<COuomlBts who wen: not CFTC employees. contractors, or cunmtln:mts, they met off·-site to • 11g discuss economic research p1·oJects.·-

CFTC's Remediation Efforu 

SllK·e December 2012, some progress has b-een made addressing the issues cunfrouting 

OCE OCE prepared n draft memorandum giving ba<:kgrouud on the wot:k ofOCE which was 

pr-e"erH<:-·,j t\'1 1he fh-v1s.ion Directors and furnished to the Ch11inn~lL B$1 The piipel explains OCE's 

~>~> Rc:UXJVUJ~ .;;cnfid-.mtial inforuution from federal buikllngs: can be -a flef!0\15 probt11m In 1987, a 5tX:teiaty to Lt. 

Colot~e] Olivet• N(ll'lh tV!H1ftl!d befure Conj<J·ess !hat she :~;mu~t;ded !)i~lrly da~:;;itied documems <Jill of f]\e Old 

Executive Office Building in 1lef bootK Dan -h1org:m & Walter Pincus, Hali Te;,iifies: of Necessity """foGO AboY\1 

WritletJ Law:· \V>t.'>k P<)i>L Ju;n'O t0. l987. at Al (nvatlnble nt: http:/f\>.''.1.'·(!.·.•,~-·a-;JriJ_;gtou.pr;;;Lf'tlrA·\"p· 

'<IY·-Jyrplt!-mJlJ!i;;IJJ}1WJtrWm:m!d11Hgwnhall html In auy event. the leYd of mlJl~iou !h»t would t•e- n~.<:»»MJ to detect 

aU instances of rem.:waJ of Ci:lnfidemifll ~utbHuRrkm frvm tlli.i federal '\V{)ti:ptace is extreme 

tr We k<mo:d 1h.1t be,;;:m.oH! CFTC retains badge acceo;o; data for only 90 <ll}t., it >A-ill no< be !Xhill:il-e to detemtine 

vd1dher dethm;t bnclF-c;:,: were rued: improperly after the departure date fur the relenu;t ~mployee, c.mu;tili:ant or 

contractor. CFTC retains gues1 log<. fur nniy 60 days. 

Bt lt iS l10L UflC-Q!Xl1Xl01l i\:n: CfTC t:Ci:ltWmiStli to work With 11QU-CFTC ;;:;;;.;;•uonlh-tt; to -pt\Xluc.: e-.:onomic research 

fillJ:#.'r'>. Aeconhug ro OCE e~cmo::nists, the con1ributwn of the lKltt..CFTC eC>~-'rtlOtr!iit doer. JX>t ittvd•:e access 1o 

infonnntwn protected under SectiOfl S. 

n~ oc-r: \\'hit<: !'ap..:dduffL lla!<:tl May 1. 20 LL 

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practice of hiring academic economist~ to research and publish academic ortidcs on '-Ubjccts of 

jntcrcst to the Commission. Efforts. !iJ n>establish OCEnct arc ongoing; the relevant per:-~onnd 

jn the Office of Dala Technology drafted a pian during 2013 that would perrnlt the OCE 

t:.c·0nnmjsts to return to tht: practice of conducting research 0n a standalnnr.- server. While this 

sounds hopeful, we nndcrstanJ lhat a rcstan for OCEnet has not yet moved forward. \V.ith regard 

to information security concems, to our knowledge the Agency ha.s not yet addressed the hsue of 

information 'ecurity for de~ktop computers Agency~wide, but is ln the proc.:ss. 

As di;;;cu:.:sed above, improvements to badging and security clearance processes had been 

underway since 2011, CFTC employees working in Logistic:-> and Opcratiun~ wid u:-; that the 

recent improvements have rc:.;ultcd i11 greater controb over CFTC badges that will prevent the 

potential for miw:;,e of defunct badges in the future. The new badges may be terminated 

remotely, and can be progrummed to expire on an employee's, con!"ultant's. or contractor's last 

day at CFTC. Moreover, the recent installation of card readers in the lobby at CFTC 

headquarters along: with a manned front desk decrease the likelihood of unauthorized visitors, 

including visitors improperly using somt:-{JOC else's badge. 

Human Resources, the Office of Data and TcchnohJgy, and the O!Tk:c of Security and 

Emergency Management have coordinated w.ith OCE to analyze the existing proce~ses for hiring 

and retainjng academics and to plan improvements. OCE has lost staff 311d has not been 

pt'rmittt"d to bri.ng on U!!.pai.J inti:rns and consultants, but on Dec..:.mber 5. 2013, CFfC posted 

four economists positions in OCE. \Ve view this as a positive development. 

As: previously stated, in February 2013, the Chairman's Office and Office of General 

Counsel formed a committee~ con<;isting primarily of subject-matter experts from OCE and 

DMO- to rcvie\V for po,;:;ible violations of Section 8 and other nnndbclnsun: pro\'i:-;ions all24 

research papers that were pending publication ~ls of December of 2012. ¥ic understand that the 

Chief Economist furnished the. committee with the text of Section 8 and other relevant 

provisions, The Committee has not been given written guidance by OGC (ltl the standards to be 

applied with regard to the identification of information protected under Section 8 (including 

at:ceptable aggregation policies) and regarding the identlf1cation of trade secrets. 

The Committee is drawing on substantial expertise within the Agency to review the 

papers. In consultation with the authors, the Commitlcc is performing the f()IJowing tash: l-w 

l. 	 Please identify the CFfC data and infonnadon used to produce the paper. Please pmvide 

detailed information about the source of the data (ISS. TSS, Special Calls. other sources 

including DOE, DSJO, DMO, and other CFTC record~\ the market sector(s), a.ny d~Jte 

restrictions, and which specific data fields were reviewed (account numbers. specific 

trade- information, etc.) 

~l'tll t!w;;c qun;liom to OCE and the Chief Operating Officer 011 

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2. 	 Plea<>e describe hmv the data used was aggregated, m;;t;;kcd and/or anonymit:cd so that it 

docs not separately dii'dos(· the business transactions or market positions or any per~ons 

and trade secret.' or names of cu:..tomer:... 

3. 	 Please describe any busc-line vf aggrcgati.vn numbcr(s} identified a.s .sufficient for 


anonymization and the justification for the baseline of aggregation. 


4. 	 Please identify if any of th~: CFfC data and information used to produce the pap~:r was 

shared \Nith non-CFTC affiliated individual(s) or organi:?ation(s)? If so. please describe 

the t•tep:~ that were taken to ensure that it was appnJpriutcly aggregated, masked and/or 

unonymizcd. [f the CPTC data and information used to produce the paper was shared and 

was not aggregated, masked and/or anonymized. then please describe the steps taken to 

protect the CFTC duta and information from further dissemination or use. 

5. 	 Please describe the intemal OCE review process for the paper. Please discuss whether the 

review considered if charts, graphs. algorithms. fOTmulas, and other analysis in lhe paper 

could be rever~c engineered to separately dbclosc the business transactions or market 

positions of any persons and trade secrets or names of customers. Plc~tsc dcs;.;ribc the 

basis for clearance. 

6. 	 Plea:;e ide-ntify tht" C.FfC staff, contractors and consultants involved .in any wviews of the 

paper or the CFTC data and information used to produce the paper. 

In addition, the Committee, in consultation with the authors, ansv,:ers the following · quest1ons: Hl 

l. 	 For each aulhor. identify the affiliation with the CFTC during the production of this paper 

and during any period of contact with CFfC data. 

2. 	 ldentify any division of Jahor (1r specialization among authors utilized to prevent 

unauthorized acc0ss to CFTC data by comau!hors or assistants not affiliated with !he 

CFTC 

3. 	 Identify any aggregation, masking, or other anonymix,atjon techniques utilized to prevent 

unauthoriLCd acce.ss to CFTC data. 

4, 	 Jdcntify any other steps taken during the production of the paper to prevent ac!;ess to 

CFTC data by unauthorized persons. For example~ de~\...'rib{~ how d;;1ta W~ts protected if a 

co-author became un-affiliated. \Vith the CFTC alter previously being affiliated \Vith the 

CFTC. 

lf a paper is approved by the. CommitWe, tht~ nex;t step is review by the Office of Ge.neml 

CounseL Slaff in the Office of General Coumcl state that their revic'w i~ not intended to second 

14 ! 	 l'hi~ checklist ·,va~, crcaktl by tltc Acting Chid' Econ01nist in Juuc 20JJ. 

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gues'- the determination of the Committee regarding adequacy of aggregation or disclosure of 

trade data. Instead. the Office of General Counsel reviews the work of the Committee to assure 

that it ha~ con~idered the trade data nnd presented its analysi;., dearly. 

TI1c Committee has sent svmt: paper;-, ba-:k to authors with questions. In our fieldw~n'k. 

OCE cconomi-lits described these inquiries as requests for clarification as opposed lO requests to 

dumge the substanee of u discussion, OCE economists affeeted by these suggestion:.: who spoke 

with us voiced no complaint:-; or misgivings regarding tht: level of inquiry. 

All witnesses with an opinion told os that the Committee has not idcmified any violations 

of Section 8 among the paper:.; reviewed thus far. A~ of December 9, 2013, the committee had 

approved len papers: three were approved in June 2013, the others \VCH~ approved thereafter. On 

October .B, 2013, the a'isigned Deputy General Cmmsel permitted three pupers to be published. 

These three papers discussed economic theory without reference to information protected under 

Su:tion B:, not even in aggregated fonn. We are puzzled why such seemingly ~;imple papers 

required 10 months of revie.,.v, OGC cleared four addltlonal papers for publication in Fcbruarv 

2014. 142 ~ 

Conclusions and Recommendations 

After the receipt of one complaint regarding OCE economic research papers and a two·· 

day internal review, the Office of the General Counsel in consultation with the Office of the 

Chairman indcfimtcly suspended OCE publicat.ion and presentation activities. The Agency 

thereafter shut down OCE's ded1cateJ server, anJ issue-d stop work orders for all contractors and 

terminated most OCE consultants. The motivations for the decision w prohibit publication and 

presentation of completed economic re-search \vcrc; 1) adminil'trutive flaws in on~hoarding 

paperwork for OCE economlst.\; 2) conc~~m;; r~~garding the existing review and clearance process 

for OCE papers; and 3) phy"ical and information technology security concerns. 

We agree that the physical and information technology concerns cxi»t; however, they <H"e 

Ag..:·ncy-\vidc, and arc currc·ntly being address-ed at least in part in connection with an OlG audit 

of CFTC's Fiscal Year 2013 implementation of the Federal Information Security Management 

Act HJ Tht: absence of controls is significant: lacking a re-liable \vay to determine \'>'hether 

confidential information wal£ improperly taken from lhc CFTC, we v.--ill not jump to the 

conclusion that misconduct did or did not occur based on contradictory opinions of Agency 

employees. We can make no finding. 

While continuing the indctinite >;uspcmion of OCE publication and pre~;;cntation 

activities, the Agen~y formed a Committee to review propos.::d academic resca_rch pap.::rs. By 

June 2013 the committee had approved three papers for publication. and by December 2013 had 

approved seven additional papers. Throughout this process, the Committee found no violatiou;., 

l-C See Appendix 5. 

14.1 Fuh. L. No. 107-347. I--itle HJ, 116 Stat 2899 mec. 17. 2002) 

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of Section );: among any research article it reviewed, though it did rccomn1cod alterations that it 

described as clarifying. During our field work, we rcpemcdly advised Agency management to 

restart lhe OCE research program, and encouraged them to $peed up the prol'ess for permitting 

the puhlicati~)n of OCE n:s.;:mch articles. In October 2013, the assigned Deputy Gen~:ral Counsel 

gave final approval for three papers tube publhhed. OGC approved four adtlitional papers for 

publication in February 2014 (as of February 20). 144 

We appreciate the gravity of the COili,;CnlS that motivated the OCE shutdown, induUing 

the Cornmb;.:it)n':;, :;.uh-;tantial lnlerest in protecling confidential informatimt li!)rt1 illegal 

dbcint,ure: however. we nev,;rthcless bdieve that in shutting tluwn all scrvcr--a:-;si~t(;cl t'1.'-search 

and all publicatjon by OCE t:'.(.'Onomists for the length of time that it has, Agency managl·rncnt 

has risked violating Section 18 of the Commodity Exchange Act, especially given the long 

tradition of describing the research program as fulfilling a mandate. 145 We recommend that the 

Ay:ency remain mindful of the requirements of Section 18. 

We do not agree lhat isstK~s with adminislrativc on-boarding documentation ;md security 

clearances present a bar to the perfonmmcc of duties for any CFI'C employee who is othcn.,visc 

prope.rly appointe.d. \Ve be.lieve the Agency did not act in ar.:cord~m;.;c with Comptrolkw General 

opinions addref..sing analogous situations in the federaJ \Vorkplace, and apparently treated OCE 

economjsts differently than other Agency employees with similnr adminisumive deficiencies 

(anti tr-:.ated at least om~ OCE employi:e with an administ:rativ-.~ on~boarding error di.ffc~rently than 

the others). 146 We recommend that the Agency remain mindful of the general rule that acts 

performed while a person is serving in a de facto status are generallj1 a'\ valid :md eft'ectual as 

those of an officer de jure, and that the Agency has every authority to ratify the acts of 

employees who are working in good faith albeit with administrative deficiencies in their 

personnel records. We recommend that the Agency take action to remedy administrative errors 

in on-boarding documentation Agency-wide without disturbing employee work activiticf.. 

whenever possible. 

We agree that the Agency may assign research topics to OCE economists, and we 

find support for the Agency's mtthority to re-quire OCE economists to submit their written 

research papers and presentations to the Agency prior to publication. We agree with 

Commission management and ~taff that any cvalu<ttion of economic research papers for 

possible impermissible dis.dosures of infonnation protected under Section 8 in many 

in~tances may not be easy. \Ve understand Agency management's desire to determine 

whether aggregated trade data in an economic research paper may be combined with 

other publicly available data and reverse engineered to permit the reader to ascertain the 

identity of the trader. The proces:-. to determine whether a trr.tde .~ecn:t .ha~ b{~en disclosed 

may be similarly complex in many instances. Given the:.:e complexities. and the gravit)' 

of being acct1scd of violativ(.~ conduct, we are nol surprised that for more than h:venty 

yl!ars, OCE economists have voluntarily submitted their research paper:~ to the Chief 

-----······················ 

!M Sec Appendix 5. 

HO See fn.47 and accompanying te-;x1, 

14 '' S<ec fn.'>'-J 

32 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

Economist for review prior to publication, and have acquiesced to further review hy OGC 

and DMO staff as recommended by the Chid Economist. 

\Vhile \'>Care sen:>itive to these important concems. and understand the Ag~:n..:-y' s 

desire lo avoid illegal disclo;.,urcs in Agency~spvm:urcJ research, we c<mnol find support 

in the law for the Agency's new system, which bars all publication and presentation of 

economic research p;tpers published with a disclaimer until approved hy a Committee and 

by OGC over a period that can last more lhan .14 months. 147 Il appears that the OCE 

c.conomi~ts have not been furnished narrow. objective, and de-finite standards for the 

evaluation of their independent research paper~. and tl1is h Jisturbing, as it seems 

unworkable to expect !)Cholar:o; to confonn their Jndcpcndcnt research paper:.. and 

presentations to disclosure standards that are not clearly defined at the out:::~et lt doe::; 11ot 

appear that the currenr system provides for prompt judicial revtew. We cunnot emphasize 

enough that the current process is taking, in our view, far too long. 

We recommend that the Agency a."isure the- legality of any mandatory prior reviC\\' 

process for employee publications, keeping in mind both that "any system of prior 

ITstraints of e_xprcssion comes to(] Court bearing a heavy presumption againsl its 

constitutional validity,'' 146 and that ''a free society prefers to punish the few who abuse 

rights of speech after they break the law than to throttle them and all others 

bdon.'hand.. , . ," 14 ~ \V.;;. C~\ution the Agen;;y lo remain mindful th~lt '\lhSI)nlin~lti•)ll 

delayed may prove tantamount to dissemination denied." 150 

Our inability to find legal precedent to support the Agem:y's (.'Unent review 

process is unfortunate given the Agcnc~/s legitimate concerns; however, we do not seck 

to re-duce thh matter to a mere legal issue. Even if the Agency idcntil1e:-; prec~.:-dc-nt tn 

support the current review process, we recommend the Agency remain aware of the 

adage, ;'just because it's legaL doesn't make it right.~' lt is the length of time involved 

that ts the greatest concerrt 

We therefore recommend that the Agency re<:taft the OCE research program, 

including OCEnet (_or comparable research capacity), as soon as feasible. We of course 

agree that improvement to all related processe~ and controls should continue; however, Jn 

the absence of any findings. (by the Agency or its 01G) of violative disclosures by OCE 

economists~ \Ve believe. there is no rea!)on lo halt economic rese~U'ch mid publication. We 

recommend that any review J)fOCe~s for OCE re~earc-h papers and presentations 

undertaKen by the Agency be prompt. Any delay in publication ri;.;ks diminishment of the 

research's relevance ;-md of its usefulness to Congress and tht: public. MmT:over. it 

1 ~ ·At the end of the fC\'iew pnlecs.s, CXi-C staff issues a. memo with langqa:zc such ;1~; ·'OCG ~;onc!1rs with the 

condn~>ion of the P:tper Review Committee and dears !hi~ paper for publication subject to the lbC of the dhdaimer 

provided below.'" Sec Appendix 5 (OGC review mcOJ()I\ for four OCE economic research papcn.} 

1 ~' Bantam Books, lt1c. v. S1dli'-iilll. supra. 372 CS ilt 70. 

l-h Southeastern Promotions. Lid. v, Co11rod, 420 U.$. 546, 559 ( J 97;1). 

1 ~r: Lmrcnce H. l'ribc. ;1merican Comtitutional Law I042 (2d ct.!. l9Htn (quokt.l i11 llnrman, l4D F.3d at 120). 

33 

U_s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector Geuerai byCFrc 

provlrles a Y.trong rli:dncentire tbr economic research scholatl' to Bpply tn CFTC for 

re&earch opportunities. 

Fim-tlly. we so:ess the impm1ance ofeconomic researd-; at the CFTC, an tcouo1.nic 

regulatory agency. For over 35 ,years OCE has attnt\·ied s:ome of the highest qualified 

e-conmnl:;;ts in the country among both its full~time staff and its limited term 

appoiuttnents. 'fltc quality of reseaxch economists attracted to the CFTC has resultod 

from the quality ofinforn:mtton available at the Conunissmn coupled with the high level 

of aMlydcal support f\.)1' research publications and presentations tfmt pern:muent OCE 

staffhavi: historically oflerOO visiting scholars. 

\\'e belieYe the ClJITent prohibltion against publishing conp!erl with the l~ugthy 

dela:y"S ln the new pre-puhhcation review pmcet-s bas hampered flu: ()('E resea~cb 

program, at least temporarily, aud ha::; potcnlially dal:uaged academic careers, 

1 

: 

1 It has 

halted the tUssemmatiml of economic research to Congress and to the pubhc. 11" lt has 

endangered the Agency's ability to attract the high quaWy of economic research 

lustoricaUy achleved at this Agency. In order to continue to attract outstandin~ scholars, 

tbe Commi-ssmn must support the goals ofeconomic research coupled with academk 

integrity. and nm&t 111ake any pre··dearance pmces& (\vhether vohmtary or nmudatory) a 

}lfiority in terms ofboth legality and speed. 

151 We uru::lermmd that eCDnoocic rc;;;;:;m:h papeTs currently under reYiew tn CDtmec1ion witlt academic june;; and 

1-'i:tD plogJillll'> were recalled jJeJJding tlle outco~ oftbe required Committee and OOC revie·,y process. In addition. 

Agency trlilllagement sought the removi'lof one ec.onomi<.:: HNJarx:h j)nper tfom l1:lm lntetnet prim fQ receipt {If the 

<.::ornplaint {bJU) C\1E" See fn" l:Z. 

Hl Hov.-ever :it s;:,;;:ms thai some OCE ecoliOmists are tlisregarding 1hc A.tH!t~ey ·-- prolcibition in ·mv e;--ent I! appears ~ ~ c ' 

Hlu ''" ' 'W ;H tbe ''" ''"' l(b)(6), (b)(7)(C) lwitl'; t\1-i;! mme-r 

,_·r.-;H , ' c <'m 1uno:e, ·,nt t l<: i.V{II : 10 0 am (b)(6 ), (b)(7)(C) ' b)(6), b 7)(C) I 

(b)(6), , mn ar ~ Jt ll )eats t mt b (6), b 1'£'l.(.']l.i!.:< u;; a 'Til b)(6),(b)(7)(C) o~m..-J uu-'t_}lti\11( b )(6 bll7liC I "'011 mtt wtt 1 t 1e wor ·" ) )1'02T3J.l}; ·eve-r 1! maY oo I<' n<titQ_." '3111ffr y omt e 


program adnmustrntor 


H1.;, P.."'P"'" "'not HVAHH 

(b)(6 b 7 c II bll6 b)( 

published a i>¢ JatT!l:e rxi~ b)(6),(b)(7)(C) 

11 b)(6 ), 1 b )(7)1c) I 

34 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


AP.PENDICES 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix I - The CME Letter 
--

U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


SKAOOEN, ARPS, St.ATE, MEAGHER & FLCM LLP 

! 440 Nit'>'. YO~K AVE'il)£, ki,W, 

WA$t1lel"V7CIN, f> C;, ;!C¢0\:Hr J I I "'-""'~""'~ _, 

<:l>«AOO nu,: <JI'OJh ;)71 ::'!:>:'Xi 

FA"<:· ;a.ozt :J&J·If>J'ffO kl$ 

""­ ""1UJ4 ~tl<i~ """'''W.MI<i\IC\ll;!J'!Wll .~A!-1\1 

~~?<·?~ "''"'"~ ""'-"'lila'!!lN

.......-... -Q,rt)O~I(OOI<I 

-"V"'·i.l'l<>·{•~; 

fl\',I.N{!\"'1

!Fiffi$0.$ 

- -- ---

_, 


,_ 

"""""" i'MN<~mA 

~I!IIYP<Jllt 

m­ ­

~~

Oat\ M. atd: . .ovitt, Esq. "'"" Genct'al Coutl~l 

US. Commodity Futures Trading Commission 


H552l" Street, :t-'W 


Washingvm, DC: 20:58 t 


Thlmln- fur YIJUf atterttk<n to our ron~mS- regardirt~ the use ofSecti6n &data by etrtain 

CITC empk.lyee> .xnd third panics. We becaln<;; concemtd when v.'C reviewed an artl<:!e t.hlu w11s 

c~;HI.Utboted by Andrei Kirlienko and tha1 specifically disJaimzd status as a Coonmissioo 

pt~blloatiott Th.mk you rbr pointing out that Dt. Kiriltmkq had a!oo co-alltbotai anarticlein 

20! 0, regardi-ng "(he tlasll ~' Ih(i~ alS(> CM:t;: Section 8data and that also dl$claim«!- !X'Ing 

a: Z'.un1missivu publi44ti(I(L We belkve tha!Um ti:W' t,1($ectWn 8~a~ irwht1,U1<1g l.t1:!lk ~«> ~· 

for the p~on ofnon..Commi$skm spom<>red publNlations viola!¢S S¢¢li01J, 8, 

App.l 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Dan !\t B2rkovitz, Esq. 

December l4,20ll 

Pni!ft 2 

It appears th&t the Ctmur:issiQn's Cbief Econoroist has OO!h use& Section 8 data liUliJ 

provided acce.~~ to Section 8 data to mn-CfTC ;:cooom!sts and thcir assistants for pUl'pO:lles of 

p~.<b!l.:$.'u:d academic research in viclatioo cfSectiml 8. W<¢ llppre<:iate that ')-'<lut Office: i$ looking 

into lbis :sittmtioa 

rn order to av-oi<J a."ly dvu.~. we have· Hat{:J,l. bclow the issues 1hal: we believe are raised ~Y 

thia.:;..:mduct. 

I. Has !he Comm!iia!oti illtllboritM .ill> Ch.ilif Ectmornist to use Sectlnn 8 data for purpostls (Jf 

I'Jla &~A<:l?m~c r~t91mrd,? lt. iOO dwi1~ r.1f ~~f!;~~h wpic reviewed in ru.fva:ncc by any officer ,!f1l;1e 

Conunission'"' lfs;;;, which officer? Are the Commi;SS~mu;::rn given any mh.-nncc r><Jtkt that the 

tC$Cl\I'Ch l~ being oonducJc<f1 /ut.: lhc Commisskmext n;quited 10 give 10rmW. <iflprovnl before the 

research is pub!ishecl':< 

2. lf the- Cumrnissiml ha,, !lufhoriz.ed i!s Chief EcilliiJ.-nhl lu ·~ Soc! ion 8 datil fm purposes 

of his acadernk re~e.arch, what ii> the !>tal:\;il'~tY .;tr other !ega! b!lsls for that authorization? 

.), Wha< system of supervision i& In place to !$View liilJ sueh f?'i¢.'lfci1 before p1lliiiootion, 

a."'d v..fta! v.u done In the cases referenced above? WOO l!f•pt"J\'t-'{.1 the pib!kation ofOt. 

K,irilenko'a researeh'! \\'ho Uf'f-t\"l-V<;d !.he :>-¥k.>;:;tkin ot'lndlvldua!s to whom !he data WIL'l 

provided? In .,.,+wt !Omi Wii!i !.he J..u truvi·Jed'"f What sp¢elfic data elements \\WC provit.Jt::cl? 

\\'ba; Eaf¢guar4s were empi<tyt:d to protec'l !he datntbat wu ¢;qx)Std 10 non-Commission 

l)mp!oy¢cs? !}id De Kinlenku or an~ne else at the CFTC c.~r!i:t:e dll'l:i a! lasing !ru;ehanl\WUS !o 

protect identifym.g data e!emerus'? What datu is a!inwcd to !e!lve Ci'1'C premises? If so, what 

was done to protcC! !ha1 data after it leaves the p:remiu:s? Is the data provided ttl third parties 

reviewing the research !lS part of!l peer review pro~<;? \Vh11t yr.n;;e~!l(:j) are in place to provide 

assurance !hat all da!a provided tol!lird pa.'1ie.<J is :return¢d to !.he CF1'C and is oot used by third 

partie& for any ~n r.ot m.:.lht<ri<:ed by 11w CFTC'! 

4. Ab;;~nt specific Commission authorization, &.ll:t The Chief8¢t,_n.;;nh;t htw~ t~ulh<lrity to 

use Seclion S Jallt JOt tnttpos.;:s vfhi:$ a.:t!d.;:rnk tto~? 

). fial! the Commission or the ChlefEcooomis\ au\hvri.v;:4 rAID·Comrni.o:!ilvn ¢Inployees. 

lndudlrrg ''!1G.lldemicsH or their assistants. tn have t«:C.::£'1: 111 S:tx{il)ll g :;i«lil !61 fttr)' fJUrpu4C'! 

6. If so1 for what ~urpose, subject to 'Wha1 lirnitltl:Ulns an.d pm1tctkm.s and under what legal 

authority? 

7. lf the C<::·rnmissi.on or Hs Chi;:.f£ron.oJXist provides Sroion 8 data 1o non·Commissioo 

e.rnploye.~ ''academics,!' how does the Commission :~e!re!. ·;vhich n;;m~CommiM:!iun: employee 

·•academics~ to favor with Section 8 data for their private mean:h? 

As you mig.bt expa:.t, a nu:mber vf (;uswmers vf our ~:lient CME Group, Iuc. have 

expressed their concern that Section 8 data has been llh!L"'td wi:!h no;m·Comrnission employees 

engaged in academic research. CME provides !hal d&la to the Cumm!m;!an l.ll'.d its !ltaff 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Dan M. Berkovitz, Esq. 

Thxemba 14,2012 

Page 3 

routinely l>tt.ause the Commission ~illres lbe CME to do ro for the Commissioo's re_gularory 

prniXJSClL Market participants world-wide expect the integrity and confidentiality ofall_ Section 

8 data tv be rnaintuinc.d. Any m.isu..v:: ofSecii1.-m fl. <Jam, we know, wooid be 00llili.dele..1 a St:tioos 

violation of law by the CME and im cu.W.u;nm IIJ:Id, vve believe, the Commission itself: 

We J.::rok furward to discussing these matters fhrther ~ith you upon the oompletion of 

)'VUl' inquiry. 

Sincerely, 

~ 

3 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix 2 - The Chairman's Letter 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


IJ,S, (;OI>!MODITY rroTIJRI1S1'IWIING COM!IIIS$JON 


Throo !.~Centre 

11titi 2:1&tSttl!ei. NW, ~~!\.DC 2Dii!ti 


T~{2{12) 41t:a.woo 


FacWmlle: (20i) 4'1U521 


V>'WW,@t!.g4V 

ReyA.Lavik 

tnsr~.Oetwtal 

U,S. C~i.ty Futures Trading CotllJ:ltiasion 

1Mee tmityette Centre 

l1S52bt-,NW 

Wllrltir~, OC 2{)!181 

k OCE R"""""' 1'rot;rnm 

O...Rey, 

1run writing to filiWwwup en .my l!tdrs ooll!fnutt.icatlon with Y9Uf oft1¢e 00. Oeeembet 1i, 2012, 

1{!~. ltW'tm rclaili'!g t<::> ~<:h ~dor supported by the Otr~Ct: o!Chicf ~lnist 

(~) within the Comm.<tdity Futures Trading ConitnluiM {''O"rC'). The OCE JOOo!'memk 

1~·J71~ foeW!eS em the q.Ufitltitattve ~Ia vi' durnges in tml,ilng ~ll)f£Y, trading. 

rum~ <i»f pmtlti~ aml makes the results of its J"tlsei.Udt avallablfl :u; 

tbe pu• Rt!view of'lile OCE pmgmm t~e ~~~ ~m. ~.m i.wM:!<.~'IU'diq 

the use of nort-pubfic data by the OCE and visiting ~los. Addltiool!.!ty, l'l1ere a.prear 00: be 

isstte5 reptdlng the mattm~r in whlcit r..Ai!.~Wmlc cortSUltail.t$ and coo:mom were·~·mro 1he 

agency, timir status .'tl.i.tb .r• .et. t<.~ .fkw, ~~ thclr access 1o CFTC systems and. informatiow, 

w!.d tlw adeq~~acy ofrelated doclll!lOOI.a1ion. I believ4!:~h.\nk.I¢W·~OO!>·w.&rwt~)'QW'1'<1Vitw, 

Sc~ly, 11$ furl1wr deseri~:f belcrw, 1 herve dira:ted the CFTC staff ro suspend the el£~ 

JA~bll~ of ~n· ~~d 'JJt niP~ ey oce. .oo ao ~to ~poblie 

ilats. by OCE personnel other than CFTC ful!4irne mnploye-e<o wiiliin OC£t r ha~ als-o directed 

tbn CFTC. staff ro ;:eoomtrttl11td or implet.ntnt. illl ~M«, ~w ~ru:'¢S or 

progmmmatio improvemen;s tt-a n.my bt: w~. Ourmlewofth.is 1Mtt« is~, 

On DecemberS, 2012, cotlfU!e1 fm an outsfde peY$01'1 ilie CFTC's Gett.eml CooiweJ and 

I~: q~;ms l'tlStlatCh based upor, ct-"'rc •»n-~~> 4a~. ln \hi$ a in 

~oont ~icati<ms, the r&laOO quel$1icm ~lq the u.se of norrpuhUc CFTC 

di!An In rnibJW.ly av.atlabie researeh p:apm. the autbotity afOCE cmplaym:n ~d. I!Wh&I'S to ormduct S~.Wh ~it, and the types ofeootrols the CFTC bas np'ding .a<:Ce$$ to, u$tl 0( licleR$6 ofdata 

t1utt is JW.)t~ li'om t~ ll!':ldet Section S of tOO Comnwdtty Act 

I 

App. 2 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


At my direttion. the otnoe of~ Counsel ("()\£'} lt:mnelfiatel.y beg.tm m look into these 

m~ Oil .tkoembe;. 11.:WlZ•. ~. ()!](;~!! lnfttal ·Witew·or··tm: :Pt>WiX:t"Ut·~wp~ 

~m.~ml.dd'~ns in.docurnmtatWo, OOC, inoonaultation with my dffioo, 

>Jireetwd ihtt Chief Beottcmlst to bumte that all 008: ~'¢U. ~. md co~ 

.$b!irlti& ptlbilablng, dlstnOutln,g.. or ot1terwise m~ ~nbkl Hey or other 

JW>SlaOOd \\ith C<\mmb;skm mtll. '" l!ltlY non.C~ U:tdlv«luats or partietL 'I1le 

Chief ~:rt: imrnedi'atcly ia:?m thh ~!tsiw. Also at my on ~Y. 

!Jm<I<U<t n, 2012, - J""""" the CIIW Opemllng om"', w<ll'lll«l yo111 off""' ot the CltiJ:flttli> .tlrurt had bceo mi.sed QCE.,guppm:tOO ro~b !lind 1trnt tkw.w Wl.".R' p;assibte 

isAtes that tbrl. ~.~ n:-1~.. On. ~1:« 12, the CFTC acooss t¢ the 

f!IPW1 lUl.d databases, inCklliing a ~~tm.e aystem Galled OCEnet, ofdt irtdi'rir.hiiih 

wlilrin· ·tlm OCR prosmm <1tlter tbsn fu{j.tinte <!!~ cmplo)"OO!l wimin OCR 

FollO'\\Ilog acdoos. the CFTC lrttlff'bas: been rwui&w\:l't_g·thu i!ll.W.I.~ru\ ·.~~~·lll~ 

logistics, data,. arul legal hl!n.~m~ ralood by the OCB ~h aocl will take any tV:rt:her ~~XpS!ltatwe-~te. 

CF'fC llrtd'and I are available at j't'llr oo~ttt brief you « yom ltltiJ'e oo 

:these issues J!l!trl Out rnv!ew f{} date. lfJ<¢lt b.b>lli:t (my ~~please do not hesitate" to oontac1 

MY. !nmM..<t. 

2 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix 3- December 7~ 2012 email 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

From:l(b )(6).(b )(7) lroeputy General Counsel] 

Sent: Frfday, December 07, 2012 06:22 PM 

To: Kirilenko, Andrei 

Cc: Juzenas, Eric; Berkovitz, Dan M; Thompson, Anthony C.;l(b)(6),(b)(7)(C) 

Subject: Follow Up on OCE Review Discussion 

Andrei Thank you for meeting wtth us today. As you know, the Commission was notified abo~:t thE: 

potential discloture of protected, confidential or non-public, economic or official Commi$5ton 

<nformation in a paper produced by an unpaid consultant in the Office of the Chief Economist. We Jre 

currently rE>vte\Mtllg thE' Comrnisston information referenced Dnd used for cornpli;mce vvith s:ect<on 8(a) 

of the Commodity Excho.mge Act, Commtssion regulations on the disclosure of information, and the 

terms of any applicable Non-Disclosure Agreements 

As we discussed, throughout thf' ddt8tion of thf' r.::vif'VJ, pl0ase d<rect all of your staff (including 

employees, consultants (both paid and ur1paid), and contractors) in tlv: Office of the Chief Economist 

to imrned1ately cease sharing, pl:blishtng, distributing, or otherwise making available any papers or 

other products generated with Comm1:>slon data to any non~Commission individuals or parties. 

1\dditional!v, please remind your staff that they are prohibited from discussing or otherwise disclosing 

any Cornrntsslon information that that they have rece:ved tn the course of thetr wotk foro; 

engagement with the Comm<ssion tv non-Cumrn:~:siun individuals or parties. See 17 CFR § 

140.735-5. 

We ask that you please document these instructions to vour statf in writing and prov1de 

confirrnat:on to us once you have completed notifying all of your staff. 


If you have questions about the t·e,;ie;v or this e~mail, please do not hesitate to contact me. Thank vou. 


·j(b)(6),( lfDeputy General Counsell 


App, 3 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix 4- A Partial List of Economic Research Papers 
1985 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

1976 : American Jow-ru:ll of I Pood policy: implications !tJr the ttmd industry 

. Agricultural Economics 

1977 	 · American JmH'nal of I C<>mmoJity futures exchanges and the north-south 

· Agricultural Economics l

dialogue 

1977 Western Joumal \)f ······ ··a~;·\:en1·rn~nt··R~g~~ia·ti·o~·~··ru~·d··the··p~~t~~e~··M·~·rk~.t~···· 1 

' Agricultural Economics 

1978 Intemational 

· OrganiLaliun 

I Fond Marke" and their Regulation 

1979 American Journn.l of 

· Agricultural Economics 

I A regulator's perspective on regulatory research 

19HO . American Jow,rutl of 

Agricultural r;..conomics 

futures Markets: The Interaction of Economic 

Analys.cs and Regulation: Discussion 

19H1 · Financial Analysts A Comparison of Optionfi and F-Utures in the 

Journal Management of Portfolio Risk I 

1982 · Financial Analysts 

·Journal 

A Comparison of Margin Requirements for Options 

I and Futures 

19H4 · Review of Futures 

Markets 

Regulation of Futures Iv1arkets: Theory and Practice 

l9l-i5 · American Journal of Market regulation and intemational use of futures 

Agricultural Economics 1 markets 

' 

Journal of P'utures Futures trading ,md the- prkf.' vnhtlility of GNMA 

Markets 1 ~e11ifkates - further evidence 

19H6 . AtnJ:ril:an Jow·nal of Cross-compliatice for t:rosion control: utttidpating 

Agricultural Economics I efficiency and distributive impacts; comment 

19H6 · Journal of Futures I Insider trading in futures markers: a discussion 

Markets I : 

························································-----------------1------------------.................................... ·--------------· 
 Amcri~an Journal of : Expectations and commodit v price dynamics: the 

. Agricultural Economics ji overshooting model: comrn;nt 

·-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-~~~~~~~~~~~~~~~~~ ~~~~~~~~~-~~~~~~~~-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-~~~~~~~~~~~~~~" 

I 


App.4 


1987 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

19WI : Economic Affairs 	 I Re!!ulatitHr financial services· how severe are the 

I J~gers?, 

1987 · Financial Analy:-;t.~ I Stock Index futures: does the dog wag the tail'' 

1987 

· Journal 

Joumal of Futures 

Li Factors affer.::tmg agricultural futures pnce variMCe 

, M;:trkcts ' 

1987 Joumal of Futures I Transactions data tests of the black model for 

· Mal'kd:-. I soybean fotures options 

1987 Joumal of Future:s 1 

1 An a11alysis of cash and futures prices in the deliver

· Markets period of maturing contracts in the coffee "c" market, 

y 

l97H981 

Financial Analysts Stock index futures and stock market activity in 

Joumal I Octob~r 1987 

1988 Joum:1l of Futures A note: do futures prkes ah:~.--ays refl~~t the cheapest 

Markets I deliverable grade of the commodity 

· Joumal of Futures I Optimal exercise of the switching option in treasury 

. Markets bond arbitrages 

Review of PUtl1res 

. Markets 

The lntradaily Variability of Soybean Futures Price~: 

Information and Trading Effects 

19H9 Book: Research in 

· Financial Services: 

Private and Public Policy 

Market 

· Bubbles, Volatility anJ 

· Futures and Options 

Rcsca.t"ch 

Thrift - ln;-.;litution Failures: Estimating the 

Regulator's C1osurc Rule 

Statistical Analysis 

October 12"26, 1987 S&P 5lXJ Futures and Ca>h 

Index Futures l\·1m·ket During the October 19rn 

Market Break 

App"4 
1991 

1991 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the Inspector General by cvrc 


Publication Journal I Title 


year I 


........... . ...,.............j..,................ ' ' . ' ............... 
 1990 	 · Jotrrnal o1 Applwd 1 he new rogulatton ot hybnd debt mstrumcnls 


. Corporate Finance 1
 

1990 Journal of Fiuattcc 1 liiitial publtc offerings and underwriter reputation .

....................:...................................1······································································ 


1991 Financial Management Share repurchase mechanisms: i1 compari:ltive 


I analysis of efficacy, shareholder wealth, and 


I cmporate control effects 


' 


1991 . Journal of Real E5tal8 

Fin;mce= ;1nd Economics 

1991 . Reviev:.·· of Futures 

. Mark(:ts 

· Review of Futures 

Markets 

Temporal Rdationships Among Adjustable Rate 


Mortgage lndext;>s
 I 

I

I 

On the Existence of an Optimal Tick Size 

Do Circuit Breakers Moderate Volatility? Evidence 

, from October 1989 

i 

Review of Futures Who Owns the Quotes? A Case Study into the 

Markets i DefinitiOn and Enforcement of Property Rtghts at the 

I Chicago Board of Trade 

1991 Western Jourmll of llmpa(.:t of Ca:-;h Settlement on Feeder Cattk Bosi:-; 

1992 

· Agricultural Economics 

Journal of Banking & 

' FiflatH;t; 

I 

I Test:;; of the nominal contracting hypothesi:;; using 

I stocks and bond:- of the ~arne firms 

' 

1992 Journal of Futures • The effects of amendments to rule 80a on H'1uidity, 

Markets I volatility. and price efficiency in lhc S&P 500 

1 futures 

' 

lt>92 . .lournal of Real Estate Determinants of the AR!\·1 Shan.~ ;>f National and 

: Finance and f<.:.C.onomic<> I Regional Lending · 

.................. ..................................! ...................,.................,..............................~ 

.................. ..................................1....................................................................~ 

' Real Estate Economics t Seasonal varianon in cost of funds at thrift 

I intititutions ; 

~-l99~f----------. Journal of Applied tIntra-day futures price volatility: information effects 

. Exonom¢rrk·s 1and variance pe.r;o;istem:e 

3 

App.4 

1992 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

1993 : Joumal o:t Business I Tellts of Unbiasednes' in the foreign Exchange 

!I Future:, Markeb: an E.'xamination of Price Limits and 

Conditional Hctcroscedasticity 

~:;---~~~CC'.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1994 · Businesll Lawyer I U')ing Finance Theory to Measure Damage-s in Cases 

Involving Fraudulent Trude Alloc<ttion S\.~homcs 

! 

1994 ' Jounwl of Derivatives I Market Maker Competition on Futures Exchanges 

. 1994 	 ~Journal of Derivatives ]!~~P:~~~~;~}::Eq~iiy6pti~J;;'[i,~;,;:y~,;d 

1994 .Journal of Futures ~A~l~tr~d~yAnalysis of Rid·Ask Spre;llh ;md Price 

Markets jVolatiUty in the S&P 500 Index Fulures M~rk~,::t · 

'~''''''''''''''''''''''''''''''''''''~'''' '''''''''''''''''''' ,,,,,,,,,,,,,,,,,,,,,,,:,,,,,,,,,,,,,""""""""""""""""""""""""""""""""""""~'''''''''''''''''''''''''''' 1994 	 Journu! of Futures , A Time Series Approach to Testing Market Linkage; 

Markcth i Unit Root and Cointcgration Tests 

····································-~ 1994 Journal ol Law and I! Residual Claims mllankruptcy 


. Economics 


~'~'~'~'~'~'~'~'~'~'~'~'~'~'~'~'~'''~'~ 

1994 	 Management Sdenc(: 1 An analy:;is of the risk in discretely rebalanced 

option hedges and delta~based technique!' 

1995 Journal of Futurt::s 

· Markets 

The Faih1re of the Mortgage-Backed Futures 

Contract 

1995 I of ''" Standard & poor's 500 index futures volatility and 

price changes around the New -~{ork Stock Exchange 

close . 

1996 Journal of and market impact of dual trading: 

1996 , Journal of Futures 

Market:-. ! 

Market making with ptice limits 

!996 	 Review of Financial l11dex arbitraf!c and ttonli11ear d)'l1mnics betw(~en the ' ~ 

Studie:- i S&P500 futures and cash 

4 

App.4 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

1997 : Joumal o:t Futures I Crop year int1 uences and variability of the 

. Markets I agricultural future> >preads 

1997 · Joumal of Future~ I Futures market transactton costs 

1998 

·Markets 

Joumal of Futures 

L . i Tradi11g volume and transaction costs m futures 

' M;:trkcts ' markets 

1999 Joumal of Banking & I MD.turity stmcture of puh!ic deht and expected bond 

· Finan~~: returns 

1999 Joumal of Finrmcial ami 1 M<lrket liquidity and trader welfare i.n multiple 

· Quamirative Analysis markets: evidence from dual tradmg restrictions 

dealer 

1999 . Joumal of Futures 

Markets 

1999 · Journal of Statistical 

Computation and 

Simulation 

· Review of Futmes 

1 

Iv1odeling nonlinear dynamics of daily futures price 

changes 

[ A Monte Carl~~fJ;~~~~tTgati;n~z~fThC~Bi1S~Statistic 

! 

I Do ProfeS>ional Traders Exhibrt Loss Realization 

. Markets Aversion? 

2tXlll Joumal of Financial 

. Services Research 

A Te~t of Integration and Coinlegration of 

Commercial f\-1ortgage Rates 

2tXlll Joumal of Futures I Examiuing futures price changes and volatility (Hi the 

20011 Joumal of Futures I Trading volume, bid-ask spread, and price volatility 

· Markets I in future.\ markets 

.....! . 

2003 Review of Qwmtit.ative The Split of the S&P 500 Fu.tures Contract: Eff<ets 

Finance and Accounting on Liquidity and IVJarket Dynamks ' ' I 

' · Market~ trading day after a limit-lock day 

21Xl4 . Futures lndustry I Do Block trades Harm Markets·; 

'2004 Journal of Busine-'S i Causality anJ Pnce Dbcovcry: An Application of Directed 

. I A"yclk Graph:­

.............................................................................................................1........:............................. 

5 

App.4 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

2004 	 : Journal o:t Futures I Contract modifications and the has is behavior of live 

. Markets I cattle futures 

2004 	 · RAND Journal of I Pattem~ of reta1l pnce vanat10n 

· Economics L 	 . 2004 Southern Ecor'totnk i Integration and causahty in internatmnal frt;:ight 

, Journal I' mark. ets modehng wlth enc1r <'OIT<~ction and directed 

, acyclic graphs 

I 

2004 · Journal of Consumer How Retailers Select Product;... to Go on Sale: 

Policy I Evidcnct~ from Store-Level Data . 

21XJ5 Journal of Finance Do professional trader:. exhihit myopic IO'-'S 

aversion? An experimental analysis 

21XJ5 Journuluf Financial Estimating the value of delivery options in futures 

Research 	 I contracts 

21XJ5 Joum:1l of Forecasting Conditional V(JlJtility foJ"ecasting iH a dynamic 

I hedging model 

2005 	 · Journal of Futures I Asymmetric volatility of basis and the theory of 

. Markets storage 

21XJ5 Journal of Funtl'es 

. Markets 

l.nfomwtit.>JI tl'ltnMnission in electronic VCNIS open·\•Utcry 

trading t>-y~tcm~: an amtlysis of US equity index futures 

markets 

21KJ5 . Journal of Futures 

Markets 

Derivative pricing model and time~series approaches 

to hedging: a compari~on 

•··220IXiJiss····················· );;ti!Iiiitioori'.jpf'iuiib)iliic(.···················· j ic';,:eeddiilb;llec' aass·;siiiggnments can improve efficien~.:y in 

. Economics laborat()ry public goods games 

2005 of the I A Simple Test or . Utility Theory Using 

· National Academy of Professional Traders 

. Sciences of the United 

States of America 

6 

App.4 
2005 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

Rcvic" of l"uturc~~~~~~~~~~~+\Vh~cn~Cun!;l\ct Stze Matters" The Case ofEq~u;ty~~~~~~~ Markets llndex Fulutc~ 

20115 Rev1ew of Future:-~ 1 Liqukhty rutd Pnce D1scovery on Floor ver~ux 

· l\'larket:.: I Screen-Based Trading Systems: An Analysis of 

, ~mcign Exchange Futures Markets 

2005 ' Review of Economics ...........!:..G~~~ri·~..d;·~·g...industry dynamics 

' and Statistics ! 

2006 Journal of Futures Causality in futures markets 

Markets 

2006 . .lourna! of Futures 

Markets 

Transaction ta.x and market quality of the Taiwan 

stock index futures 

2007 J<JUrnal uf Altt~rnative , Hl~dge Fund,, Volatility, and Liquidity Provision in 

Inve:-.tments i Energy Futures Markets 

• 2007 Journal oi fina.nct.~ I Infonnatjon c~~~C~~d~~~:EVidCilC~~~ffO~U~~~f~~':~JC"d___

I Experiment wrt~~~:::ct~l~l:r~ct~r:f:S>'_o!'Cla~ls_·-­ .,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,.,,,.,. 

2007 Journal of InduMrial 1 The effcr.:t of group size and asymmetries on tho 

·Economics incentive to reveal group~specific information 

. 2007 Managerial and Dec.ision "Branded Generics" a~ a strategy to limit 

·Economics I cannibalization of pbarmaceutk<tl markets 

2lXl7 . Berkeley Elcctnmk IPricing bt:havior of Multi~Product Retailers 

Journal of Theoretical 

Economil:s ! 

2007 . Book: European I Competition in Generic Drugs: The American 

Pharmaceutical. Po!ky I Experi~nce and Le!'sons for Europe 

· and the Global Market I 

ZOOJ--~BB:;;o:;;okk.~·p;;;,;;;;~eee·tt!VV uull~el!tllrc-s;~ "l··'he·c'":h.·ll·ll··g·:iH·g-S;;t~r-uc_t_u~re_o_f:cE-::.n-e-·r-g~y-;Pccu-tt~,r-e~s·Markets 

' 

7 

App.4 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

2009 	 : Book: Financial I Clearing and Settlement 

. Derivatives: Pdclng and 

, Risk Management I ~~-~~~,-.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~"CC

2009 · Book: Flnancial IThe development and current state of derivatives 

Deriv;.ltivc-t< Pricing and markets 

Risk Management I 

2009 ' Book: Financial I Speculation and hedging 

. Derivatives: Pricing and 

Risk Management I ~;;c-~~~~;;c--··································+····

2009 . Book: Financial I Equity derivatives 

. Dcriv;H·ivct'J: Pricing and 

Risk Management I 

2lXJ9 Book; Financial j The rcgulatiot1··c;r··c:s·. commodity futures and ' ~ 

. Derivatives: Pricing and I options 

Risk Management 

+ 	 ........................... . 
 2009 	 . Journal of Futures I Reversing the lead or a series of unfortunate events'! 


, MaJkm NYMEX, ICE, and Amaranth 


! 

20!0 · Journal of Alternative 

Investments 

Commodities and Equities: Ever a "Marke-t of One'"! 

2010 

' Markets 

Acstimatio 

Why do futtJJ'0~ and cash prices diverge 

grain markets'? 

Privately Impo:.cd Price Limits: 

Jmpo,;ed by Financial Exchanges 

· Markt:t:-. 	 regulatory finundal t:X\,:hange:-. 

Alternative The Rok of Speculators During Times ofFimuH:ial 

fnve~tment<; Distress 

8 

App.4 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Publication Journal I Title 

year ! 

2012 : Joumal o:t Policy I New regulatory authority over significant price 

. Modeling 	 !I discovery contracts: An.examp.le of natural gas 

swaps with ecow.:'lmetric application~ 

~~-~~~;;:'.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

2013 · Book: Handbook on I Strategic [nteructionl' of Financial Networks for the 

Sy~temh: Risk Analysis of Systtmh: Rjsk 

I 

9 

App.4 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix 5- OGC Review Memos for Four OCR Economic Research Papers 
U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector Geuerai byCFrc 

,...~~~113;f\fll1(b~)(6~);, (b.;_;)(,;.7)~(c,:,)-..------_j~YI(b)(6 ), (b)(7)(c) 1~j[!l,(b )and Audl<l Klllll'nko 

The Office of the General Cotm'id hss completed tts revle•.v of Paper P:3, Our review indm:kd an 

cvalmrtion ofthe findingSo of OCE Paper Review Comnunee, tC".:iew fbr compliance vrith the Standards of 

Hhi;;';al (Qi:idm:r t()f Etnploye-es of the Executive Branch, review fOt wn~p!i.'inc:e witll tontracting 

requirements tmder the Federal Acqui$ition Rtgt!lations, and an anal ·sis of whether the paper flis within 

the permitted research activities set forth in 1 USC. § 22_ b 6 , b 7 c ,coumtlii>t m the 

O.fficc ofClJiefE.::onomlst ful.::. confinned for us that the Wll mg, o t <ts paper wn.::. mh <!rt.;fk.:n as one of 

the pem1itted research activitie:s ~t fouh in SecTion 18 of the Commodity Exchange Act(CEA), codified 

at? U.S.C. § 22. to assist CFTC' in the d~.!vdopmenl tlf cdtt<:ational and other inforrrunional materials 

n:gardiug futm·cs trading ru:nou,!!. producers. market m;ers and !he gent:ral public am:! to cmy out the 

general purpose:H>f the O:m:unudity Exchang.:t: Au, a~ ruuended, In particular (b )(6 ), (b) has 1Ioi:t;d that 

the re~arrh fosters the: publlc inte"rest by pnmding: insight in!o tbe price disco btlts of 

markets and mvestigating the impacts of tee the interaction ofdtfferent trader t}lXoS on the 

dynamics of the price process. Additlouatl) (b)(6),(b) other explained that re;;earch on p1ice 

discovery is relevant to the C omrrnssmn ·-s m eres m os.ering transparency in the futu:rcs and swaps 

markets and the paper lndudes specific re'lnhs that have a direct bearing on price discove1y role of rhe 

centralized market of DCMs. 

A-;:.:-ording to illt1)ttnahon vrovlded by rhe Office of the Executive Director n11d the Prottu'e111enr Otl'k:e. 

two of the tiU'ee authors were contra\.'to-r;;; and from The CFTC for the resca1cb 

d roduction ofthe a cr CFTC umkr contract lli(bl'i)tr(6m)1T,(rb).;.(7..:.)_, 

and (b)(6),(b)(7)(C) the CFTC torthc rehl 

p lClion o 1.:: er, · wmk under rwo t'Olltratl.s.. one 

in (b)(6),(b )(7)(C) ln both ense>,l(b )(6),(b )(7) ~<·cdV<'d 

~a]J<:L 

The third authot. fom1er CFTC employee i\mln::i Kitiienko wrote this paper as part of his official 

dutie~. A~ a federal employee, lvk Ktl'ilenko was srtbJect tD the federal etbk:s regulations and {)ther 

<~gen-::y~::.pe~::tf'ic anol gtwe.rmuent wide laws and !'egulations for fedt:ral cmplb'J'e:e'S. och has eonfinned 

that 1v1r. Kirilenko produced this puper jn h,;;, offkla1 capadty within the scope ofhur duties. In ad:ditton. 

he received no addirionai co-mpensation for tills paper from source:-. u-ut:<.ide tfi-e govem:::iu:ut 

This paper was deared by the Paper.Review.Comminre.for.p-ubli<:ation based on a review of the paper 

it'ielC a revie\v of information provided by the authors and the <:\)tnnllttee:·s wndtbion tlmt '·'release of the 

papcr did not present a signifii,'Mt disclosure risk" of information proti.."i:tcd by Section 8 vfthe CEA 

codified at 7 U.:iC, § 12. !vfore spe("ifically. the P'<~yer Review Committee has infonned OGC that "the 

JHlper ntili?es ;;onfidentifU LfTC' data hm aggregates the data to Jln::'SI:.'nt re'Ullt~ that do not pres;t'llt an 

Ufiih:-ct>pn:;bk rb};: (•f flisd.::->Sllrt> _., Dtuinf( the Paper Review Co1nmirtee''> ex,•tmlnnti:on ofrhhi paper in the 

summer of 2013, the Conmrittee conducted a derailed review of1he paper including aU tables. Tlle Paper 

Review CmnmJttee noted ··Reading the entirety of the paper. the Committee condt~ded tlw.t tl!e number of 

HFn [High Fr<:qu-ency Tro'ltkrs] exarnined does nor faU to a level Uwl. prc:senl.ed ';Ubitrmti:tl disdosure 

risk" The Paper Revie'>v Com.tmttec Jlso noted that "tl)C infonuation about the participants in th<:: market 

dld not n:prese:nt::~n inappropriate disclosure. but ralber prm..'Jded useful iuforrmnion tluit did no! reveal 

C<mfidetttial mfmullltknt uu~ 15 especially true. given that the >:onchGtOit$ relate to the HFT indt!Stly 

rnther than to any particular HFT firm.·~ Asid~ fhuu their annlysis of the condusiom: in the pap~'t, the 

Paper Review Committee also i:miSidi.."'ed ·,vhetheJ urtQrmatiDn protected by Section 8 of the: CEA is 

disclosed witl_ri_n the tables c.om.ai:ned in the paper. Fm exru:nple wl1h tcg~u·d to I'able 3 in the paper, the 

1 


App. 5 - OGC Review Memos 

U_s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector Geuerai byCFrc 

Paper Review Coumllltcc noted·-... !hi\\ infmnwtion wa~ agP.Ic~ated over a par!icul:u (one month) lim~~ 

interval. ailll tlt."'t the- -:db we-re c:oostmcted usiJJg data from tnany firms and pair 'Ni!ie gr011pings. A:;, 

noted t~for.::. et1ch fll111 (ypt (aggressive HFTs. passive HFTs and ulixcd HFTsj ;y m1 aggregate of many 

firn1s." The Paper Re\':iew Com:mtttee went 011 to condndc tbar the data in Table 3 provided "no 

:.:.ig:nifi<:ant di;;clo~mre risk., Consequently. OGC eoncurs wirh tl1c condu;;ion>i of the- Paper Rcvtew 

Conuninee that then: is no sig.tificant risk of disclosure of Sectlou 8 data relating to the relea~e of thi5 

paper. 

A;;idc from tlw dercm1ination relating to Section 8. the vaper is. cou-:.idcr-:-d a g:ovemm.em \\'Ork product 

and may not be individually co:p)~~i~~!~~--~y__t~~-~u-~~1~~ :.. 00<} co~urs with the ~:o1ielus:ion oft~.Pll~ 

Rcvlcw.Conu:rdttet.::..aud.~kian~·Jhi::. paper furpublicaHon :Subje<:tto the me ofthe disclairner provided 

below_ 

The tbHowmg disclaimer n:msr be used: 

Tile research presemed in this pa er \-Vas co-authored by b 7 a former · " o 

perfonru:d work under contracts (b)(6),(b)(7)(C) and b 6 and (b)(6),(b)(7)(C) a 

' rCFTCconnactorwhope onne wor <m ercontracts (b)(6),(b)(7)(C) au b) 6, b 7) C 

Andrei Kirilenko, formcr CFTC ClriefE.::onminst. wa<;, $0 a co-au 10r w {l wro e s vaper m us 

al capacity with the CFTC. The Offk:e- of the ClriefEconomist and CFTC econonrist!. produce 

mi,gfnal re-sewn:h ou a bt(l0d range of topics relevant to the CFfC's mandate to relZUhte .:ommodity future 

markets, commodity options markets, and the expanded mantktte to regul:ne the swaps markets pm:suant 

to the Dodd-Fnml Wall S!Iect R\':fonn ;;md Cm:.;;umer Pwrct~ion Act These papers are often pres<..'llkd at 

conferences and nmny ofthese- papers arc later published by peer ~review and other ;;;dw-huty QUtJets. The 

anal)"Se'l and \:Qndusions expres~ed in this JlaJlCl' are those or!he authors and do not rei1ec:1 11le views of 

other members ofthe Office of CbiefE-touomiH, olh~T Comn:Usslon staff, or the ColJ.llillsslt.m its.eif 

2 

App. 5 - OGC Review Memos 
i iS paper was 

U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector Geuerai byCFrc 

Paner #lQ 

'-l(b-)(-6)-.(b-)(7-)(_c_)______,lb~(b)(6),(b)(7)(C) 

The Office of the General Cotm'id hss completed tts revle•.v of Paper P: IO. Our review included an 

cvalmrtion ofthe findingSo of tl1e OCE Paper Review Couu:uittee_ revie•.v for comphmtcc ~:vith the 

Staudflld:s of Erhkai Conduc.r for Employees of the Executive Btanclt revie-w for conrpliauce with 

contracting requirement!) tmder the Ftderill Acqni<>ltion Regulations. · 1t papet 

fits witltin the pemtitt,,d research activ!!ies set forth in 7 U.S.C § 22 (b)(6),(b)(7)(C) 

[couomist in the Offic.-: oftll~ <1ti.ef F..conomist, haS< confinued f\1r lb t ,,at t e wntmg t1 

undertaken as one of the pemlined research uttiviries s.er forth in Section lS of the Comm{)dity Exchange 

A<:t ("TEA"). <:odified at 7 U.SL. § 22. in the: devd{}ptlteill tlf educational and other infomrn.tiou.ai 

materials rcgardin.g. futures trading among producers, market users :md lhe geneml )tihlic md to cany ou1 

the general purposes vftbe Cotnlnudity Exdla.ugc Ad•.as arnrnded, In particular, (b )(6),(b) ha~ noted 

tlmt the re~e-nrrh fosters the pubbc irrterest hy provkling_ ilts1ght into tl)e behavior o po ennn y large, 

potentially correlated acmn, in futures markers: central banks. Specifically, the growth of central bank 

teserve assets and tlle active use of centml banks in liste-J and over-the-<:ounter detivarives markets 

represents a significant occum.::ncc m futures markets lrru:ting~ and tlle impact Js not well rnJdcrsrooli This 

resem:ch examlnes the magnitude of trading by central . - . 'hethet· activity acro-;s central banks 

appears to be coordinated among attors_ Additionally (. b)(6 ), (.b) furtht:r observed that under::.taudiug the 

efttcts of potentially large Jimtlripalih. iu futtu~;::; mmkets i:, ~ y relevant to the Cmlillrission·~ interest 

111 rep;nlatinp; 11ctiviries in the;;e markets. 

One ofthe co-authors (b )(6), (b )(?)(C) was a CFTC couuactc'lf Illldcr cnntlnct (b )(6 ), (b )(7)(C) , nnd 

be recclvcd <:otnpcusanon ftom t e CFTC for the research and prorluctiou ofth <..: o 

~tmenr dot·urnetitatton pw;,idcd. by !he Office ofHml:taii Rewurces, the se-cund atuhur (b (6), 

~was appoint«i as a limited rerm ~o.'tnployee \Vltb the p!Hi · 'tie of consultant (b )(6), taY- 1('\.!n 

setV11l_g uH a ;,.eries of one year .appointments with CFTC sine (b) ( A:. a liuuted It11H cup vyeef(5')l

li'iiili; oonnd by the federal erlric sregulations. Tile finn I autlior b 6)' (b) (7) (c Wn> appointed a!nr-' 

Lftttrrt:!d term employee wlth the pos· .· ~ 'tle ofcom;uitant (b )(6),(b) 1as een setving on a series nf one 

year appuinunents w!llt CFTC '""' (b) As a hunted tcrm emp oyeej(b )(6),(b lis bomtd by the federal 

ellnesregnlattOits. Bnll~ attd (b )16), pmdtu:ed tltis pa~n!lldal en >ac!ltes and the 

paperwasWJittenwitJ:riJ~oft.leRo.Kraiduties :SdtheJ (b)(6), no (b)(6),(b) eceivedany 

cmnpensation from an omside source for rhls paper. All three autl:iors o. aper #10 s1gne t e December 

20 l 2 UOlHHsdo'inre agreemenc 

'I1ri;, paJ11!1 was -Ch::an::d by me 'Paper Review Cofllluittee for publk;:.tiJJ-11 ba'i<ed 011 a n:vkw of the paper 

ir:;elf. a review (,f infl:lrmarivn provided by the author", .anrl the roulilliuee·s conclusion tllar no 

:infot1lilltion protect«i by Section 8 of the CEA. codified at 7 U.S.C § 12. is revealed by the paper. More 

spe-cifically, the Paper Rc-vie•,y Comm:ittee has iuforrued OGC thnt '''it is lm.hkely that the paper could be 

use.d to idemify nny· plll'ric.ular central bank in a Ulllnner that all-ows idenTifit:nion of that banl:;:'s positiOJlS. 

transactions, or strategies." In xegard to specifi~.: I abie~ in the paper, •the Cotrun:ittee concluded that no 

spetific demils abom a pru:tknlar institution were 1eveaJed from the infbnnation pRwided'' and that 

inforn:union ·\;Vll:il too qlliilinmve and :incomplet~ to reveal confidential informanou.'' Based upon these 

representations. OGC concurs with :he cundu!..iNI Dfilte Papcl' Review C onumrtee relatmg to Scr·tion 8 

data_ 

Aside from the determination rdatin11 to Secttou 8, the papet ls considered a f!:OvenWlen.t work product 

and mRy not be individut~ily copyTighted by the authors. OCG cOIKUrs witb the conclmioll of the Pnper 

3 


App. 5 - OGC Review Memos 

U_s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the luspector Geuerai byCFrc 

Review <'<>liDllirlee ami: dears thls paper fu.rpnblkatlon sub_i<x-1 lo !lie uM: ofthe disclaimer provided 


b.;:kPN, 


The following d:isdaimer must be used; 

The research p!tiit:tlted iu thiii paper was co-amhorcd b ' (b)(6),(b )(7)(C) a fortuer CFTC c:oru:ractor who 

performed workunderCrTC OC£ wmruct (comracr (b)(6),(b 7 C n CFTC 

limited term en1ploy,.::e who was appointed as a coust taut. an (b)(6).(b)(7) mlited term 

Vlllflloye.e who- was appo-inted as a consultant l11e Office ofrh\C , .: .-. t, \. r;;,t and CFTC cctmomists 

produce ori?::inal research on a broad range of topk~ relevant to the CFIC's mandate to regulate 

commodity fiitures markets, conunodiry option-. trutrkei s, and tJl~e expmikd rmmdate to regulate tl:le swaps 

market>, pursuant to tile Dodd~Frank Wall Street Refonn and Collittlller P:ro1ediou Act. These papt:rs are 

often presented at tonfercm:c5- and mauy oftht:sc pa_~Xr.s are later publi:>hed by peer-review and uibcr 

sch1.1larly outleffi. Tire a:nnlyses.. and couclu'lions expr~~ed in ttus prtper are th{)&e ofrbe anthnrn aud d<~ 

not reflect tbe vie\v:. ofother metnbers of the Office of the ChiefEconomht e>tber Commis<:ion staff. or 

the Conunission Jrself 

l(b)(6),(b)(7)(C) L, 

Asstsfant General unsel 

lLS, \.mnmodity Futures Trading Commission 

4 

App. 5 - OGC Review Memos 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the luspector Geuerai byCFrc 


m~~~l~~~;:~riff~lZfr7l~rc~)IT];;;7m;:;==========::;======]lby Andr•t ~rll<nio,j (b)(6). (b)(7)(C) 

The Office of the Gene.rni ComBe! has completed its review ofPRpcr #12 Our revict.v indmkd au 

cvaluaiiun of the fmdiug:; of the Paper Review C omminee. revlew f('f c-t.'lupli<llKt with rhe- Standards of 

Ethicat ({)Hdltct for Employees of the Ex.temiw Brauch. review fOr cm:uphance \t.ith contracting 

n~quire:me:nts tmder the FedcrnJ Acqmsittmi Regulations, tllid an analvsis of whether the paper fits wnhin 

th__-: pcnl'J:ttcd re~arch acthd.rics set fo11ll Jn 7 U$C § 22. (b )(6),(b )(7)(C) ,:,cmwrni~t in the 

Office of the Chief Economist. h;lf; conr1nned for lli that th1:.1 · , tmdertakeu as one 

of the pennirted research activtr.i~ scr fbnlt ill Section 18 of the Commodity Exchange Act (''C£!\.'\ 

codifit'd at"'~ LLS.C § 22, :in the dev~:lopment of ~:ducational anti othtr intbnnatimta! matt:rials regarding 

futures trading among prodttcers. Illilrket users and tht' general public and to c 'out the g.eucral 

flU!JXl'<' of1he Commoru!y Exchange Act as amended. lt1 prut~cular (b )(6 ). (b)( "'' noted tlln! tl1e 

research fosters the pubhc intere~t by providing insight into the ''Ha<:h ras 1 o ~ .ay 6. 2010, (This 

event was previously discussed in ajolm SEC-CFTC report o-n the '"Flash Crash'".} The research poses 

three questions: l) How did Higll Frequency Traders (HFTs) trade on May 6? 2) \\-'hat IIJaY have 

tngttered the Fiasb Crash? 3) What role did HFT<i play in the Hash Crash? The analysi'i provldes specific 

jnsight itrro the behavior and jntonr.ti.om of diff,":rent trH::kr t}1,)eS during this extreme event tddtitated by 

te<:lmological uumvatiom'" 

ThJs paperv.'tlS deared hy tbe Paper Review Committee for pubJkati-(m ba:ied on a revtew of the paper 

itself. n r.evinv of intbnnation provided by the author:;, and the conuuitt.x ·s cvudu-sion tllm no 

information protected by Secrion 15 ofthe CEA. codified at 7U.S.C § 12. is revealed by the paper. More 

:;~'<C--<:ifically. the Paper Rcvkw C omrnittee llib infOrmed OGC !hnt !he s:n:mllt.'S:t grouping \.)f aggregated 

<ht~l Wi(hifl the paper was. fo:r 15 market participanK and that '""15 ll.'a:s n ;:;tt.'l:1dent levd of aggregation for 

this sample" and,., grouping of 15 wa;;- likdy to be sufficient to eusm·e that individual entity infommtion 

'N1H nor rev.;-nkd:' The P!1rer Review Committee also discussed anoth~r taNe in the paper v<here "some 

ccll:ii might hav__-: a ::.mall population/' but concluded that "tbis WJ~>rnllih:ly to b-e JJJ ii>:mc:· TI1e table 

presented ~rnnmary statistics of the aggregate market over a ahort time fiarne. ·•Jimitillg the Couumnee 's 

concern over iw.pmper revelatton of confidential data." Based upon the-~e reprr~entatiflns_ OOC concurs 

with lh<;; .:.ondu::.iuu of the Paper Review Committee relating to S.;cl ioh 8 d::t\1-L 

Aside froru the determination relating to ~ection lt the papet is- c-om.-ideu:d a j::OVerument work product 

and umy .ao-t b: i.ndividua!Jy cop)Tighted by the authors_ OCG CCIUQ.IfS with th-e mndlli-ion of the Paper 

5 


App. 5 - OGC Review Memos 

U_s_ Commodity futur.;;s Trading Commlss1on REDACTED 

Office of the luspector Geuerai byCFrc 

Review <'<>liDllirlee ami: dears thls paper fu.rpnblkatlon sub_i<'icl lo !lie U\e ofthe disclaimer provided 

b.;:kPN, 

The following d:isdaimer must be used; 

The reseru , - - •- iu thiii paper was co-amhored by A11drei Kirilt:nko. a fotliltl' full~iime CFTC 

em lo ·ee. (b )(6),(b) a former CFrC cummemr \Vho performed work under CFTC OCE eomrnc! 

(b)(6),(b)(7)(C) (b)(6),(b)(7)(C) a form - · •• · '!nvee.andfonner CFCTcomractor 

w o 'f•"'"""' won. , ontract (b)(6),(b)(7)(C) am! b 6, b 7 C 

7 afonnerCFICcmittfl>:tmwhop<: om r "HJ 1m er FTC , contract (b)(6),(b) 

(b)(S),(b) 1e Office of the Cluef Econonn~t and C'FlC economists produce origmal rese~iffiila_.J 

!f.l)il. m.uge ~Jft~Jpk7, .H'kva.m 1:0 the CFTCc, mandate to reg:nlate t(IUJ.nl\Jdity fmurc\ mrt.rlws. tmmnodity 

options markets_ and the expanrlc{1l:nruidatc m regulate ihc swaps markets pursuant to the Dodd·Frank 

Wall Street Ref-onn aud Cousumer P:rotection Act 'I1Je\e papers are often pr~ented at ct.mfcrences and 

many of i:hese papers are later pnblislK:d by peer-review and other sdmbrl;r- outlets_ "l11e ana~yses and 

conclusions expressed in tills paper ru:-e those of the authors and do not reflect the vfew;;. ofother ruembeb 

oftbe Office ofrhe Chief Economist other Couunission ~taf:f, \!t the Commission itsel[ 

(b)(6).(b)(7) 

uts am l&neral O::n.msel 

U.S. Commodity Futures Trad~ng Commission 

6 

App. 5 - OGC Review Memos 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the luspector Geuerai byCFrc 


Pa!Jfr #24 I(b)(6), (b)(7)(C) 

The Office of the General Cotm'id hss completed tts revle•.v of Paper P:24. Ourreview included an 

cvalmrtion of the findingSo oftl1e Paper Review Couunittee. review for cmnplillilce \Yith the Standrm:ls <lf 

Hhi;;';al (Qi:idm:r t()f Etnploye-es of the Executive Branch. review fOt wn~p!i.'inc:e witll tontracting 

requirements tmder the Federal Acqui$ition Regt!lations, and an anal ·sis of whether the paper flis within 

the permitted re'ilearch activities set forth in 1 USC. § 22_ (b )(6),(b)(7)(C) E.ronmuist in rhe 

O.fficc ofthe CbicfEconoml3t, b.as confm11ed for ll"> that tll 1 e> t ; 1 -,,,, 1mdcnaken as one 

of the pennitted reveardt activitie:i set fortll in Settion 18 uftbe Commodity Exchange Act (''CEil."), 

codifkd at 7 U S.C. § 22, in the dcvel()pment ofeJut:ational and other infommtional mattlials .regarding 

futures trading among producers. m<nket users and the gem::ral puU-lt~.:: anti to carry out the gencml 

pm]XJ~s oftl1e Commodity Exdlaugc Act as tullelldcd. In particular l(..b )(6):(b)( h1asnoted th,'li the 

resean:h fosters; the pnbh<:: inrexest by provlding methodologkal re-;;earch mto the classtfiranon of trader 

types hy alg:oritlnn u\ing: market dam rather than by sdf-identifieauon or r_hroug:h cla'isification by simple 

--.tmunary statistics. This methodological research provides a building block for a better understanding of 

price discovery mechanisms of markets and for mveshgnting the impacts of technology,r,'~!:if";-.,.., 

iJlteraction of djffl;;rent trader types OJl the dynamic:<. of the p1ice proces'i. Additionally (b )(6),(b) 

explained that research ou price disc,n:ery is relevant !fJ tllc- C'onmris;;iou'<J iutercst in£ 

t:rnusparency in the futures and swap:; :mruteb aud the pa}l(t~ i11dudes specific proposals that have a direct 

hemin?; (>11 price di'icovery mle of the centralized market of DCM:t 

v tlon provlded by~ illc Oft1(C of the Chief Economist and the P:tucuremeut Offi.;;:c. 

(b )(6),(b )(7)(C) . was a CFTC cou!ractonmder contractr(b )(6),(b)(7)(C) tmd receiVed 

cmupema mn ·om he CFTC fi1r the rt'>carrh JlfC:\tn1erl in tlus- die paper. 

Tills papet was cle:artd hy IDe Paper Rcvie\\>" Connnittee for publkation_ based ou a n:vie-w of the papet 

itsdf a review of infonnation provided by the- antlK>rs. aud tl1e comrulttee·s com::lusion that no 

information protected by Section -8 uflhe- CEA,. cC>tlified at 7 U.S.C § l2, is revealed by the papeL M0re 

specifically, the Paper Review Committet has informed OGC that ·very httle .of the paper is based on 

internal CFTC data" and furn "'the autl!or llas :;nft:kiently aggregated or masked infQmlatiou to avoid 

reveafutg position or other informatk'~llj)fotected under Sections.·· Based upon these represent'ttiOfl'). 

tXiC ;;;uucur'i with the concln;;;~on ufthe Paper Review Committee n:latiug to Se.:tion 8 data. 

Aside from the determination relating to S-e~;tion S. tbe paper h considered a government work product 

ttnd may not be 1mbvtdually topyrighted by the authors. OCG t.:<:>!\CliHi with the c-<~Jldusio-1; of the Paper 

Review Colillni!tee and dears rh1s. paper f{}r public-ation subje-ct to the use ofthi:: di!!daime:r provided 

below. 

The research presc!l!cd in this paper was authored by (b )(6),(b)(7)(C) former CFTC comrnctor who 

performed work under CFfC OCE contract {contract I'he- Offke ot the Chief 

Econon:ti.st and CFTC ecunom.ists prodtJA:e oJiginai re~ar<:n 011 a oroau range of topics televaut to the 

CFTC''J mand.1te to regulate co:mmodity futures markets. conmKKllry option;; markets. and rhe expanded 

m:a.udau:: to n:::g:ulat.:: the :;wap::. matkets pursuant to the Dodd·Frank Wall Stn::~t Rc-f-otm anti C!)ll'ittme:r 

Protection Att TI1ese papers are Dftell presented tn conferences i:Uld many of these papers are later 

published by peer.r-eview and other scholarly outlets. The analyses and <:ondusinru: expressed in thl!) 

7 


App. 5 - OGC Review Memos 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

paper ill\! thos~ of the authors and dn not n:!kct t.he views of other members of the Offit:e of the Chief 

Econum.ht, other Con:1rnh~iun staff, or the Commission itself. 

1(~)(6).(b)(7) 1 

Assistant General Counsel 

U.S. Commodity Futures Trading Commission 

8 

App. 5 OGC Review Memos 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Appendix 6- Management Response 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


fr!vilr:w:t! &; <)mihlrrntirri~ 

A.atlwYhed Fwhrfltm:gl Ct"TC !Jfttt!hBfhlff q)J(l &l'iyw Otd!' 

Commodity Futurtl$ Tt'1td'lng Comtnissi<tnl\'lan4lgeun~nt Respni¥J~ 

to tile Oftk;; afthe lns:pect<>J' General's 

Review of tbe Cm:nmi~:¥l"imf'?;J Rol"f.HH~tic to Allega.titms Pertabtiog to the Offie{' 

<Jf che Chief [cmmmist 

Dated: Pd"u'vyl2. 2014 

Jo'illr;?J lt Ci1CiN!Iki, O·J.('hiBH'f:::·wi: & 

<'>·U>wi Of""'''"" flftit:c~ 

An-tJ>_)r;y C. Thon<ps-_;;,t E:-.;•.,>.;t,ll-,·,.: Di:ccc;oulk. 

J.c\fiZih~o~) L :,;,h\.Cl\(;, U«l',~tnl '""'"'"'.7" 

App. 6- Management Response Cover Page 
--, 

CE economists. 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


In Janu.ary 20 13, ;.hnn-i)gnmili;lity FutUtQs Trading Commission (''CPTC" or "Comrolssioo '') 

Chaim!P.Jl Uney Oensler ("Chairman") requeS'!ed a furma!. -iwe>illgMti11"Idmo h~s·n:::garrl:ing the 

llile of m.ln-J.>libli,;; data by· the Office of the Chief ECf!r!OfKrist ('~CE") and 1±-ti.IT'Alllll!lT.~n. which 

academic rol.t$Ultmit\l' an•J ¢{))\~ wet~ ·bri)li$bt into ibe agency, their status with l'<${X:~;t to 

L'lw Dg~Ofly, lhelt access to CFTC systems and infumwtil:ln. #M 1lWl 000:J.®r:Y l:l:f relat¢':1 

<l0¢~tm~n:t,~)~Qn. 1 In the Chairman n.ottxi ihilt CTTC :;mff v.-~re revl<:N!lflt;, I 

'!lJlmUJ\ll!le\'C'!w:impori~L'l!; f:undion~ «t the ag;tll>.}y; human. reoouroes, p 

d!Ma•. wu:l. h::gmL1 He a!.sa !W{nd 1hat allofthMe iSSUMI Wllth'lnt;:.U the [nwpooltor r 

tn ~~to this letter, the lnspcctor General opt%1ed an invrwti galion to t;;:vjc~ ilk....(llds 

relevant to the Isaue£ :mi_sed)n the. (;'hai:rtn;!hi).lc:tt.:r. "l:: ' 

On Oecembet' lB. 2013, the Offtce of the Impector General 

D~slon ~11-0f itS Review ofthe Com.mili$lnn's 

Offke of the Chlei'l::conomi~l (hereir~>fiet ''the D:raft 

MMag,ement appreciates the opportunity tc n:view J).JI_d 

appreciaies the {}me illld afWufXon fhatt.\;e 0f0 hM 

ChairJ:l'lilil" Wh!h: tlw. Dtaft !teJ'hlttt.etl fm-th 

""''tl.nt to brl..;g to your atteruion several lsSL'ts 

n:vt\'iuos i:n Ute Otttft Report r-W:., 

%'i 1> 

AJ: explained below, CFIC ManaJ<:menf~~ comctirm.s 10 Cll'S\IX¢ the complete accur!I.Cy of 

theo l!ottfije!jt and to address certaii}lns~ln which lll:*'t«;merttil in the D11tft Report :may be 

us coof1lctinE <mG ;:;:vnksdh..~;~"W"' al:ro req~test attribution of.s-.._'lffie 

of the in the D.rm'fi~~im,;;:~ 'i'!i:ll as 

doclll'!"'erltaticn, sw:::k as in.ismtive pa~, reviewed and relied Uf'C'l1 by the 

oro to reach specific make :re-commetv:lntions. :thrll:ter cxplainnd bel<J\4', 

C!YfC 1\'ith~el'IRil! ·J~al, con~;lusions. S¢1 ftnth ip 1t¢tiQri 

ofthe First Amendment to wm-k ~ncled in OCE and the review 

1m :tp,ency, the nppointrr:n;hi 'U:titltoiJty· ortne Chld'Eoon<•l11isr, 

Jlar"'Cl'Wt<rk; m<cl tfurapplk:abillty ofoutside e:mptoyn1ent et.hins 

, l.i!.«i!.i' fl:(ji'il.:GM)' Gemlw,.C!Itti:rnen, Ct>lnttu!.lity FUI\lt!M T.tlclh1g J;.)Jllt!lli~~~.., 11J !l..;:ty L\lvf!r., ~ll!l ~raJ. 

Ccl':\Vl:'i{hjil)< Funw:::; Tr..dlag C<X"<IDl'-f'·~.r,{i<~ll. lt ;N-D,itfii«:llwftet"<l<:«iler Ltutu t~OlG oo OCR").
 1 ld. 


;, !d, 


1 ~Jfl'lC!l 01' Tll<: INSI'E"I6R 0UL, <XIMMOOITY FiJT1,R£S TRAllli-Kc 0.JMM'M, (:;c)'l\'l!)l:.Otl~"'l, l:m:ctJ~$1{);, f)f0'J'7, 

fti!YtEW 01' THE C«-AMf!{.~ Y!( f'!tHtl',~:~ TRA\"!i:\(' CCMM'N i! !:!JPONSR ro ALLCGATION:S PERTAINING ro TH2 QVS<l(.'ii' 

01' Tilli Clt1fW' ~.111:1 (?.ill j j {Mroi4.lf\t:' "D~.AVT }l.lfi>!)Wr''), 

' 


I 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


ln this respo:nse, we lnd ude spedf:l:! suggestio;>,;; ID ~some cftlle identi fled issues. 

ltuJludir.J rtlt~siom to sume portions of1be Dmft Ri'pvrl .-:w- rcqtl~ :lbr m.\1-:r'¢ fuc<:; ~·J cr«<ble 

CfiC Mnr1us.emmt oo muke uppropriate decish:ms on htiw to re!!pund to rhm OfG1ll flvdi:tt&S and 

etlhCiu$11)1'*' We wf::!CQrne ;:1-t: ~ttt.mil.-y 1;0 di':leUI% !he llllltJC$ identified a:nd our 

J'w;r;:Jl1Clc~fi:Ol'l$ whh the 010: further. 

Part l offhillt;;J~,tllnd.J;(1;J pt"vld.:.; ~kW'Aln~ JJ-ttd s summary ~fiCF!t! M;~'"'"'"""t:""' 

taken in respan&e· 00 !~· i~C\1 Jd~i'itUi~ l'it'!M C\'!ain:nan's refen:al to the 010. Pan 

to me OlG's CD;H::!usion that the tenli)Ortlrj' $1J$p¢!1Ritm of publirehons prOOtu:ed -~~ ­

eCOO<:!mlstk pcte~tlnllyvi.>!;Jtt'-ll S..etJ:t,r;_ I!1: {",fthe Act('iC~11:}~ 

atsndl$C:U$$CS tht Lk"C of CFTC data in t-,;onmnfc rcS¢arc.,\ papers arultesporut.z fflliths OlO'e ~";ffi,[,": ~.ii 

JIDdlilgs and coodesiJJns !hat the OCE nconOJt'litds ~rup<!rly :u«;&stwd C1'i1rltn~1Df\9a1A undit:r the 

~lC~en propm, and !iioch ¥-~X.ess t<l' dtlta lnf{)tfhl;'lt1-tt'! dM;;~y~i~Jai;, ~!loti- !t: of 

the ot tl~ 'Pl·i·,:~:}."..\Ct' Part msw_~~ Mruwg''"""'"' 

v!;;w· ofllie tor:reet Flm Amon.;:bnent review standard fur p~.~w;Q: r~~d5~\,h;:·ocE eoonomists 

et'ld ~niltt oo the Draft !h:at 100 CJ:.;TC -~rc~vrw\t- pro:oo3s wmy 

potenha:lly lltT"e .us a prior xst:rcin! :m f\rst Anendment :p;;c~~~h. U-1 al$V 

.e:>pv~ '""~:am fuctuil stateJnents in. the Omit R~rt"'ifhcl te;{~Ui <hiit 'llie OIG cU!'Jtl:l:liW:: the 

;Kittib«<km !ltcn:tn ofthe tt:tnpmary wJspci\Vlon j",r,:u~i!~}ropt:RI Wfil\t:n · ·en:~[ m-:~Jnvmiins 

duril!lllfie penri!i!KY "hhmvifw 1Mhe ~GllllelJ:I•iilblm!lCI fo (b) ( 6), (b) art lV 

dl~cus;;mJ·tiJ>J: scope- md oferrors ill adml~~~~i{\t pap"''"'<11'1 n1' ,J .- ,,~,_.,,1\~'<ll\-i:!ts. 

FirJ9;l1y) f'i:td V identifies additional fnqli'fflti~ at\.7 ,-'JJN-.:>~"l:<~tJH\ fnrwhich dvttw dt,JM <rfft nppeas 

1Q be udeqoate su.ppon. '';""J"<ci-'-' 

I. 

il·~t·;;nM\iJ- Mr. 

•. \flat. indiv.idualt v;,'}u) may ave n g::ven oon ~ thtl 

to :t!:J;:rt Jnkll'TIIll:1~un- and !ixmwle&_g..;; ofdw:·Cl'&E ·Order 

ves and this koowledge 1o t~OOm.,.,rr.l.r.:.;l:;:p;;it->Jr.->.'lfC'-Mf:-.. 

11 .In & 

- raf:x:.U .~ S!'J!il!:> :uff'i;J.le:s{iQnJ; about what \Vtts del~li6d tl:l u,ol) 

ooniJublic 1-nfom;.at::ioh, N>rtloalariy Se::tion E 

{Wtp(l#t$fli'filt {;fit\)~ 

~ l:t{a) {th? Commlwioo ~,;?mQJ Jlw!ew ttrAln w»put!W irtfuffflhlit>ll, in:h.J<llilg 'bmlftti!W !mtlt!'U:tiom, 

llm!:!!:lll: ~~;~, tr.Ei4i: recreM, cr CW~!trmer JE!l!H), 

: J1j}),(> *$5:?«­

.!~! fun M fa-kFyt~ •htfH'"trm' t"mm#J., 1\l f.ric J~J (b)(§) ( b )(7)(C) 

i(~l(6ptjj!)(C) +1¢, p;;;. ,, """"""''""''"'""'" ~"''"'"' 

l 

2 

App. 6- fvlarm~<lll<'tlt Response 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


inforrt\atlon, $)#1 \Nita! :C.":iitilii:W\U f)ttli:edlit¢5- met::m:l:truisskm.esmbllshed fotnpj;trovmg 

re.<reafc:dh, parlieuinrty fu: Uulhridrrals ~0!~ ~eft10 fcl!rrwh1€; tbr< i<'!iticl 

;;:pn,~l<ioll with the Skndden attorneys at1cl al the diu;d:ion oftbe(Jmiw:zr tho;; ihrn~CfTC 

Oo<Urod Ctnmscl, Dcpuly Guwral Cour""' ftd (b) ( 6), (b) (7) (C) _jruloJ!JH OOC 

l.'ltiorneyll tnlt~ 11 rt:'1icwof iliff: resutrcl! 'WOO: ilr!rl.f,WipFI~-ptor.loM.d bf OCJ:t .OO.C.readM.:d 

.:muo OCE, the Office of!he Executive ~'ld th~,; O:f.-'te t·fD<-11!3 ;§ttd 

1echnology {'\():OT'"') ti3 ·ooorclwv;; t!X';· t<:Yiew .and· J!$3$$ <:orrective measures and pro~c 

lro~tn, ~ 

/Ji, Rule ttf' ihe Off'Jtt: nf CIOOf E:coMtliUt 

J\.s ;;n~hfl~· i:ln tint C:ITC >VtA:mite, tltc mlszioo ofOC!$);; OOoort~ IJ$ ro~~'lfji!>,. 

1M Office ofihe Chief E'~ist f.'!Uvidex ~lc sup 


Corrurii$:ril)fl~ ci;>!idi:ln'fil 'MS?timh oo the 


~,il.l''.lltes a:ruJ 1ralns C4rurniMkm t~b~ 

i·mp!ementutioo of new fil\htl(;ial metk-ct reg;;:lalior,s 


GXJml""nnd t-~·-b5:nefij ¢-w.st.;k:rntio~;;. un&~'lyln" 

Om l:'Jttcti<m eiOCE is to -cebduct eceMn:tic :rest<IP 

obtlg;ill.Gllil rn:t out in &ctron 111 cfthe CEA, ~m 

~ ~ 

''ffilililW. and maintain . ""e!fC,t truf:iJ.matlon programs !tl: '''""' ' 

, and tbe exparufed \lS1! of 

itt prntttlfiJng, and rn(ldern 

1 ex¢1:-ltl.!l.~~ lYJ:t!.Yli! (,f i:t;O.de, ;:md by t.b 

~iiiililf imprn,.1ng. stren~e:rring, fucili!.O:ting, ;;r 

" ati<;~P,'!'; 

ofJAiqrational _4f,.\l .-..1rnr ia.fm~q.t~!Jf'.lll. rr.at.ecilll$ <l!~-nhw.tk>tt :and use nmoog: J:Mttet 

l!!i:I<J 

2!110~ 0.CE:·l:-wnrl<l>ists 1-mv<:: focused on trading and i;o; 

";:':'::~:;::~~~;';!iastrunWlntz ad rr•\!Nel f'l'itdd:fl&l':i!l, and ti<her M:W ;'t'$t1:!t!j !P are deve!oped and deployed. TlUs ~I furd)CN the cvrc"s ubility '10 

1nee1 mls:sion~ritieal aha~knges. 'ill1d O:CE maklhl dWJ results oflts resenrcl! available to the 

pubii<Ott~.,,~g.n irtf'mma!:ion on the CP'r<:''< .,.,.,~lt-<' e~d by prt%1tlt<lng it% rJ?<~e~rob at ;~;cc.___,_ 

"l:JUI;r lh;lit:! Ntark 0, You;l_£ end IttmW E. full~u, ~Jd.:n, Aljl!i, SoW, :M¢:1gh~!<T:4mLU', to!lwl r.1; 


fitrkcvitx, llmem! CPUilwtJ, <:emflhhii;y fulmY& nwlift$: Ccmmim«m 14, 


1' CrtC Or-",ymL4111;m, OffiC!:J', Chir:f&crwm::n {fXE), 1J S, ~>JliD!rY Ft; !tffili!> 


t.rtvJtwww§<llil.govlAJxwVCFTC();:pnlmbrtilnd£x.htm, 

3 

App, 6- fvlarm~<lll<'tlt Respouse 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


CITC <n¢¢d:<gs or academic onrrferem:~ 1n Mti<in 10 its f~!l-"*mt-., }lefi)1ill1<::Dt ¥ID-'f, 0Cl:1 has 

maffv:d r!'ie cffice with contmc~ COI15ru!Um~s U1JIP!':>tat>:d tilirni~rutm 

entpl~yee,s,anG mmlllftjrunteteri wnsultantsnp.Pfr.intal tl$ 11:mfted~term ,; 1'1le wwk 

wnduc:!W by 

OnD"""'b" 1, OOC d~d liw ~rrflhe (b )(6),(b )(7)(C) '>"",nil~ 

~;:WrJ))J:JJJi:- nmMUZch with i\ndtci ;bervCFfC nc:t E;;;or:omvrt \""-'- !!tf ~ ' 

ooier to asse311 the N;n1tctM tn:l!Wxl hy CM P.. 't~ Chief Economist infurmed: Ot;JC'~i: -. 

HJ ~tt~ru.t, the fA:n:nrn:i!!Sion enttced the ¢¢41XNn\~$ v,•i.!b. 1\re· cnc~un!ly ia'$(qrk i\t 

IA'i.R-ki-;;;;fhW !heir and goals ru:Hi il11"' ffi:;y;;fiu·:d ~bc.P"~!~G~P He 

@<p!ahted the prWe$s· -whereby-OCE mx>:ntmtiJJIS ·de1c:rmia00 their tasks ~d-~\;ut!-4 lniti~!h·, :OCE.. ~onmnbts fur data seis that tM:y went in~\Jccl L11 ;?W,;i,~,l~-6i~,.Vib1..M- ;;ptl»d six 

l;;>:fr.h:t;'ti~ks, '. arml)ll!C$.&d "~ -~~li.t1(~~. 11 .A.tfu':.asihe, Cfucf Bc:cnon;rn;J ~~w, wsr<: ;Jo r<:~>G"'ii.1i~:w-q_n ~t!t# OCf ocooomlSW -,'Wla 

rnvi0'A\ Hi Fot!oWJng the initial revum the ~ Jld _1X11:st:n1 Jtls (If h¢r 

rlr:niMfj-" rci>UJts to other OCE ¢¢4ROtnists. t.,' {~!';:l:rl :>Vf,¢¥;;tc .tk-~ PCB 

~fum to twclv# werb V..'riZl:ng a~. 

while tile paper was not " the 

fl'l~r>:0111d be ~llbrnlu~d fur f..."el" 

Ltxmomist de:tem.be-;1. or. a 

_?'<lpllf$ p(lnr to 1ft 

" 

OCE e;:;onorniat vtY.+uli-1 t,tv.,rn 

lmctm1!1y. 1 g At this 1J<tint, 

t!w OC:B oc;:m.;;lrni:st that 1he 

and )s The Chief 

OCwC should be cnnmtltnd 10 review tt-.e 

4 

App. 6- fvlarm~<lll<'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


Two OCE ecorifnfil5i!i ~>ui.e& &#:;' N~~ihilit)' 'ti'i trmsfut frre d&lh from 1he CFTC 

~wah1 '!tel'<'~~<,\~}: 10 a separate wrnptrter I:'ICt\'IQrk furQ{::H ~J>;l•'1mi;<-t~ (0Qq'N~tH; 21 Orta1mally, 

unly tlieDivil!:ion ofEnf0n::ement and the t)!vi~!oo n'f M;t,tka frJ~lliiW'il {"'DMO") were 

<lti<wll~Xl auihOrlly 1o !ibm (h;: &4ta; rtlif.t4f6tt1 all data tn go DOE .;;t 

DMO. However. aJl.er the ebief Dconomist ~~> J'tttlV<mf, M vta_"- :j13:!.;ftlllol)clll!!llt~,J.~qwJtority 

~f-, .~;t.t;lu~-t: 01mfidential inf~on tv a <:oolt$Ct ~Y,.~t,. ;f\'i!!H ~;.;~\<~t;.t~ .f;*':mt.'l', .$,Vf~"P ?~ 

mJ~ill.t«y, re.gist~OO ·fut&W asoociotirm or 'Wlf...;eglllruocy organimtionv uclio disJ.:iJ:.;. 

(:t)l!fld<.\ntJAl Jttfurnliit!otl to 44)' 01 depar!ment 11r agency, at foreign 

~~tle:;:.a.,_'1li .foreign futtrres J.l11tlxr.itles wlthb the :;r:npe nft'l;eir }u;hdkd 

1\WooprWe 

drive. Jt>·l~b )(I 

dMi he tr?.f"::k t e 

-'. itKimd].jld·itmChi:ne 

arul(b)(6).(bJ( I 

i! -<W-O.>!lit "~ r.:xternall:wd drive to d'*""nloorl !lw datil- . lJ!:hl):;!_y lefl ill<'- hHtd drive 

¢{;J'~~ tv W tui!clline and"returni!d to his <>ffwe·'A~~~-~me""'rutt;·\'<~ cio>A-rtloadffog,;r+ ·When 1he 

OOwn!oorl was ~XWf!im, iw dld oot: immo4icld~A<rem~"~ external-drive and !lw drive- could 

retllllitl ~to1he maclriue for up to a w<:~;: .1'fw ex:1erna:t btttd'iiriYes 't¥F.!t tlot 

~r~ryptt\l anti 100 data incl®ed D«::~ts ~'d 'j.'OS!ti<:tl'l$.JJ (b) ( 6), (b) _ . !icn•,.i, tm.1 

Mttld not eon:firm. 'ihit'i theJui'.F! a!;~o ro~~~rhcr iden d&t.!l wfr£ 

OOWK~I~~. ~<~any iocation the Oi}~:X,;:n!Onrl$1:$t;hose, 1-v®f 

lmrJ drive_J'~ b (6 , b :asun~1} ?.'he11rer OCI!. cmoomi>rt1 !md ir::.Gh-i.daa) ~o~where 

be ;;:t<)l-<; .W; " :tf:!) oefi ~rtc;noii'st~s~"'~~ukl:•:m:!"''<l:irn::'': ::~~:!~:,:!::' rnque!Md. ibere .,,-as no :re}iThlrement t: >i:J m:}~ C 

k '"0 "4¥' 

'4__ (?"0~-s~·';;. 

:1\'f"!'i~'!\"!"'-,_~~~lf~o:~;nJ. l>l)ir;. U;. t!\Wmi\lw. gmtz_cf a1 iale~lttw bjjJbl(5L 8(b) (6) (b) (7 I 

)(6), (b) OCL-t~.:tit!rtllltst, ltt WWI~. D.C_ <!?!,.•t\ f L 2::1!1l~dii!:f ~m\\.lf','!em -wNh 

1'\ll'lt'll;ilnlmioo, lhA t"*'#'PY wa' 8!ri0 JQ~wme Oli,.V,ffffi' 67: 8\Ytij\1 ito/l!lli1lftth'd\aty " 

•u 

• ld 

'M 

'j)' iii. 'h· lii 

ld 

il/d, 

}) ifi 

"' tri. 

5 

App. 6- fvlarm~<lll<'tlt Respouse 
4

furm1i\<} \Villi :>1Ihmitt1)ri m {Jn!. TOO 

which 

" 

U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


thumb drives liM h9£d' 2fiV,!;~ 'lliicl'di:!Vi~kiif.l'tb~ dit'l.tL>t As fnt (b)(6) (b)( !new> theJ#·'Wat f:K) 

~ftbtt ~1:.< r.;mvve the data sets from OCENet upon -c<:!mp~edoo ofA<> o-:E \OCtm<h-n~;;;!';;. prqject.36 

H::..C'.md'(}flT feV-1i;>;i,-·.:d 

1nfur;Y:lltkm Z'!I'Xru!ity issues tclawd tv OCENeL ~l>'lm Rt~, t '!-"H,1 Chtef 


lnforrnatioo dffJ\'-cr{"d®,j'JCEN'~(w;lS.c$iabESMcl based on crltexla provtdild t~~pief 

Ectmc"'illh;t The ClO oo:ted that it was OM's ptac1!.;;;-e to r-rttt·id~ CPiC rt1tll'l r.ct•k; 


W·l)'·&firlfcr v.mm form 


thatintemet~onty -nc<!<:%~ \Vit'f a\':11\li:lb!e in: lhe !:'t%<'Z,':"Ch 


W<J« «<:~S.tt:~Mt\d frnm !he CfTC main t1i':lv.Xll'k~ and OChN"-~ <~1'4 ;J.!d ~>!: ;>: 


r.et\-;.:ut; ID...Ailhough soum OCE eoonomlstz~ l[iv,,r, (::f.~'C <t:ta~n n~ 

Slaff had t!:w abilicy- w ·pFGYi0;-;l -if:clivilfoois- with·f!ffX:!kl: to ' 


lf\qi"'iJit?Ji!. fiiicl ftnC(;1$lQ the ern: n:ain network. Ori-girm!ly Qle Q.•,.~.'ihi~1.o1"'''' were not 


give-n CfTC main octwurk nzcess or ncoes;s to the int~mur,. -·~~&d.'tl~VW: lW'l.'>WI¢1\. tl<lme OCE 


COOfJO!DistS Wi:X¢ gi-•'el! Cf"f{: :mfiin nclwtak ll«)ti<£ !ltld flt1~l+(p_riMetiot:S !hat 'A'#te t«:{jfll.)tfl! 


t¢ 1M OCB'Ne:t !R:rv<±c 'i'he serve;, v.l!!lte ¥fa},~~ hl rm. ope:o and wf.<t«ly 


aecesElble aret~ next 14 the v.ilich ~~~i(~~t~~i)lX~. !;¢:~ 1-v-. ;p;;:;:f;;~_"<f~~Vri«L 

when Gt'~llit!ali"' cre:M*<i, ODl' ~t~1ith&i'ooi<;nn~u;$er ldendfk:aticn n-n<i !I£tt "' ;; ~". J;Y4(Y

w{ls ~~ OC£ «conulniJ>Il>. ,, At ·-- polAJt (lxilieveO wt<: tn 20t I ODT 

bEg.m giving OCE eoo:oomisls fimffmtt't\voroa 

t'lihC•·OCF.Net indrnl~ ~ttt:.':'>tm:~lit!tl to'-.f:tjved, t:teattti. 

t;,'id. :m&l:mamOO by !he C · · was :oov~$J by S:ect\v$1 :8 r}f ~h$ mfvtuiatiou 

subj¢Cl to !he Pnvrur; At:t, t~~hl-mlvcd vursunnt tn Memo111I!clc 0f Unden!nndin~ 

("MOU'')\ iUtd 0fhet N::m..i¥1'\t;Jf't"4n:J&matkm. t~,, 

D. Oniwo.~';;f ~~'"'"'' •fOCILE<an•mirt> "'·'' ,o>,. :%-1:.' ' >~ 

?~l~~':~t.r.; -~v~W~~;;;, ra~sed by CME, ooc H;·o~r,' "~""-d~v"~!~-~~~t :~li ·v-~re a 

"'un:;;;;,, r.<, q~~inU'fO!tW:hng the an« ·<1fl!ii'hlH,.,w"t vfO'<.t-, v,.VMb·Jlm~ ·Due to 

~. n\l~~iry.g, >,{~fAttitlN9ft, 9Jm l!fa';! r\t)! able tv quickly the st!.l1Us of 

Mrl been provided or were l).ffilifl&:.d vliih OC:J.. Bl!S~d 0':1 t.'m ;t\"aliabk 

'fi;l<tl<<Y tll$0 WU11vt able 10 quickly dct-t-tmint wt,r,;:btrGWI.'.in (M.'f: f.''I'•>Pomists 

or ttml:r;tt:'l¢1:$ $11d wMtlwT rhe i'lj;:¥Jrop-riat? und hmi l:7tc:!! 

the start uf :hcirVi(!J;'k in (ICE 

nu 

'It fd_ 
 ~~ !:oorv1ew wlnl\ 1<1\dm KbletJ«:. ¥IfF<! lm!>r 1:), Dltl\VT :RV¥01\:T, m: 10.} L 


6 

App. 6- fvlarm~<lll<'tlt Respouse 
Jn~L tim &x:umen:J:nJlon available to OED revttn!M that other inilividmh menti;;med in the 

FCi b ·6 

publi\'Jlgxi 1'1 P'JX'f Q u ~ 

tttmc tn O(f(''s oumttfnrr on f.G:J.:mnlwr 7, ::W12, when OGC '14-'a:U 

(b)(6), (b) 

~I :WIN!' fM~t> !ew;l &nm:n Although the ngoocy cn11W •J:4 ;r•tl""'''l H'fkNtl U:,«; 

> 

-

U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the lusp~tor Geuerai byCFIC 

frfd!M & t;,;.,fid~tJ;JfW 

A#lh~_i_fJL_Lttma/Jd!IC pist.rflmli;m ami Jlg!:liffw iW 

,.,fl~~1J!l!!;k<~ ·mm: Oftb~ ffivt{/A\' *ii febi®:i)i M!, 2013, OED the statuS of~ (b )(6 ), (b) (7 ~ OCE economist pw liil"' w CMEj<;~ ~~.(.'f!r:o<liT;S, \'<Yc'< 11M!C1 ptQperly 

=~~~-~j:~,~~~~~6,~~}r~rsr QC-F C(<jU(lffil)tN R'"*l ~~p;bft6)~(~·tr 

l.lnlli :R,rort dro h!td e,\'tt'l.'11. in Llw-lr .mi't'lir.istmtl•,-e 

discwzed oo ~c· l7· of'liu:: Drat·R.::wort rn.d thi::· 010 oo-ms t1mt it 

no rtf)VJWi !viHb)(6) (b loot he n.-ui I(b )(6). 

paper I!JfC!ily pi!Micalb· !l"ai!<iN~ (:It- Ill¢ ilt.¢~ that stn 

iQmtJi100 al C.'FTC Outkx,j; -t:uhlll.l accmml ful (b) (61J1 Accor 

(b )(6),(b) '~ Mt.h#t<t iiM\i Uf)Pf'\~lihcliii ~tk, but 

F"h'*'¥111 "'l!rl to aocess tile CFTC {f,;:Jdin~}x~ 

Porn~ )ll9le~icatcd tlwt he dld oot inilrm1it-!r.m: k 

he had a CttC Otu:JijQk ~{~ tm OCENI'ft acoo 

Addltio~Uily. on Mareh 5, 200, OED ~41 ~fi~~V~n$ additional fu12:!inL'itm:tive 

P1!Jl~Twtll '"''" \\ldl te~l to t4heJ OCE &i..n{, io~Je, 11!>001ding 

'!'~ Q1Jlf"< LV, 1141\f L~4 ··-,; ,> , .• -, ffi,<• ,,._,r,, l .,._..,,,..,.,._ 

~~'''"' .,,., "'"''• ,,, " "'""' _,_.,,._,.,_,., •-t ,"L,""' W\:0;" cy. W ···.- r/"'' L~A- WKiw--• 'L<T t 'w <m<i>fu. 

<~~• "'-'"""'!. ~WV£k ""' 4£··~· ""'"h 

or OOih."" SGmc lttdhiduals had a crit:-r'orm 7[9 v:t:rich affi:lrded aoocs& ro :t1w 

CHC b!.l)B.tlng sm.d CflC m~~il; ~t· <Jil:u¢t':t fllid tv;t/(j Arnlth¢r 4¢\'?ltl«:t'l 

individmls W!tr~lrleuJfid by OEll:l ao, serlomemm <If tJO 

;ij;!;{:ii:rttffiii:;t 'paperwott, CFTC ~ithctwork aoct5t> 'i':i!hl;:.-41 <ipj;:>Iv:p,'iii-lho paperv:£•Ik. ll<J- vhiid -:, 

7 

U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


contract, badg.&' at<:b~~ ·~1tOOWI: 'l±mripmt<:i jm,Jii#Url;:, t~r Tete!l:tinn 

:tftt:r a~.rAmb.,,_,n of the OOltitiWt,n 

NJC"!l' inHial micw ofOCE was oond~¥:ted in «tUi'diMtit~fl ·wrili OC~~ 'OEO,.J:\fJd. Ol:l1' ·uoo 

idel:(>:~f1ed ~~;]cim:clcs ln the docmrsmtatio:n rclated ·1\.i ~h¢·$pp<tll':\m::~~H$D!;. ·Md·t:\Ji'MN\1<~ fur 

OCt! :Jb~d oo ihl!$ int'Qiw~fkm.. 00. 1, 2012, tiw Chaimmrr dixeJOd.OL<e 

1>J >M.'fk wiih The Chief Economist to em:!l'P; tb11t ,all t1C.E «~Jl10lni£t1l ctll';W-:f sliJOrlns, ~-ub~~JS' 

.Riu!Jibv;;ii"J&·~'t <:>then¥l5* makin$1 availab-le: any pap;;.n m- o;biir p>:td.»c!!l £;ctX:>4lcJ'_.,lii~t~~~.!f trading data tn any rrt;~n..(;p·rc tndivldua!s or parties whlit tbe stview ofOCt ~~~~'03 

·Th~·Clri.;;-f~k>.'ff:;;xttJt&i j'JttJOOptly il>"$l:Jl1\J l.bei:n:J\f*J{:tl::,m t!) OCF sfaff.#l -3-~>"'ir.:._ '·~'";' 

< '", ' 

·o,, b.:c'omi><UC l\}c 2012, !!ll C<tt!!tnh~J:m:et::;: were informed ofthe qw;mrif~Knd 'by CM:E about 

OCf ~npubii.;atkm:;;.ift O!i- ~w~ i \, :?0 12, !tit: JUl;!~Wfih~ C:h!efO¢i~t!~ 

0ffi¢<if ("ChiEf Opemt!.ng Officer}, infv!T!lCii the CHC':;; l:g,$pi;q;~;it4Je~i thzt CME had 

tai!#lli eonC1::mS ;d:tJut OCR and nnu OOG 1/.rrw lnokb1g· D:itfj i,~·K~ tla,v,•n" '~"'" 

could JJ4l1 cnntim> the sWJ"<l~ c-t~nGiv~&U>;b ¥tltk kr,_vwn ~~~ta through f'..C:S:Net, rm 

~"'C{!lnbt:f t1, 20\Z, the Oflicer fm.>r-•JJW;'it:l-'lb~ ~-ro- Gt tcrmiM~ ;t~;C~lili )O tklla to 

;my~Jne ~n OCE tither than full-time CFTC emp;~~ ~-Dec.ctn!Xir· 12~ '2Utz;1b<i ClO 

t:onf~ Olaf "li!]l:! oct:· mm+TE n~ io t~.::_,Ori·~«;t;.>Ol<>gy b&& bt:cn d1mtb1t:d,"~~ 

'fbe ~h.'\imtl'.P:s~~~r~!ons t:, mion ~Jug Pt\t{ew Md t(l limit w;~ \-\! oo:npubhc data to ru-lH!tt!J: CITe rr~k!y.;..~i!'~">>ll!r®:fir¥et«l aw:1 til<Monabt;=m;;-;:::::=~=1 to 

4ddtm of OOth ~k~~-~!ruttk:s'Witlt ~1 to ant! ._A, 

stt<Ltity ffllt£m£ with respect tc_, QCE~t 

F. DeeidQ!11 tu Ret(!l~'-~\~:-db¢1 Clillill~rtnan Refer Maittt to tbtt: OlG 

§'" ~'t;,.:!t 

Vlhi;n th,r f~ues lt~ 

Marut~cmot~~~,k 

as~ isstres ~n:,;dtte' 

CHC 

"t>mi\w UwAw 01Gu!! QC:£; E>uwJJ ih:;ml (b )(6 ), (b) lo Andtei kitiltnko (!><.(\ 1, JDtlH!W; fOI!GW tl!:! 

oe ocr: Revltw u~~km), . M E"mail ittm A:mtml Kiti!on!ru (b )(6 ), (bH ,1, Ztll"Z)Ot~: R£; foUt•w Uptm<Xfi Re·'it?J.' moi:\Jillioo), 

:':i$-:llini:;<,,?m: f::nw hktwit;; to Ji ornmtt,, Clllkoe, 'Snmt O'M'l2<o, \hrk W,>~1m, and C!wyOtlm?ef {Dec. 

}<!.,:tOl~}(Rwt¥;tC:P\~~iitftritr~f.rtntr}, ~ (b (e (b) ,\£-<mad from Er>~·.h:rm;-=M.Ar.il'£n;• ~-. Th::l1ll¢-ili'l ) _ ), _ cfm L. i<.ogtt't, Den M, hi«Ytltz, 

Clllherhw t.&Ccy, aed Ant!rui Kiri!en!ru H, 201 l o <WY-'l£ ~!1 D:tlat 


'

1 :t;.mai! f;ett, Jol)n ~,, w ± 1L1~, Den M_ I:crrMwltr. 


Uldt<ri!W M¢C.:r•. 111\l Ant!rui : W1t m tlillli+ 
basis. 

y, -­

· 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


format invesiighciriri: '11iri Chitiirriari exp,:m,~oo hiS' concern about these problems und ifHTOfa:. and 

he "Hwiftiy re-ported the .;;rrors 1Q the OfG"53 

Afi:e~ fue iswes tvete referred to the Ol:G by the Ch,.ll"!'l'ffi:1111l:id ""'hll.; ~he· oto·:tevtew \'i.~ 

pend!n& CFTC Management wniinued to address i®nt!!l!Pd·jssr:w on a· fotw£a0·f£YJ>};jn 


We iimtted ouit: d~t:i1i'l:~i thO%#: ~O~iri %WP~: :iilil: it~nt.i that wuld be taken "Withow · 


the r-evi<;l'.v being cr:mdw::ted oonfelil:JlOranoouniy by t}~ 010, At the time .;:.!the J~!Mllj' 

:.'1;:(&.:."1'<.l! C<f ;his matter to the OlG, CFTC Managen:u:nt wu:> u.mnv.r~ of ilie i':ntir 


stuTOtll'¥fing the rum:mer ill whiCh OCE economists were l:wough:t into the 


x¥ith ·11!\l!lt'i:'t·iu tlw:il access to crrc aysf011)£ ;md infnrmaticm, ~ 

docu.'lleclatkm related to their status. CFTC Manag.emerrt: hnE 3! .aH tlro~<i;-. 

protecting contkbmiial <md rAJ:rt-<-purrli.;; intbrn:~&~l.::m und to the propC fits empl(l)'etiS 


and .<-ont~t<>ts-; M have taken sv.-ift and a_wrcpriafe ar:tion t~ in!ema! control 


is5t~, CFTC Management's review included an e~it.tl}ittli-~ 1.-.~:t"!:d. by, OC~, ODT, 


and OEJ.> m. Sf.$ff:mJ.} :md ~Rwic..ing St~ptX<ft Wthe _ 54 

Sir.-.oe January 2013, CVfC Managcmem has tiken ti•EJQ!.$~;1:~-sfe:t-'-" to addrw the i~rt~ues r~II>Cd by L1.u review ofOCE stuffing: and N!~: ~""-- '] -­

"' .'<!4 

w 	 <>Bf> U$~s$'el.l. the availo.ble :;lQCumerl~'l;~,:J\;r ffltQJY OC.f.. v.r.oo.oml'V: incit«iirtg 

ru;yone wtfu abadge, ' >'i-i'l <>tl. SF~52, ·::m <'xtt~!l from 

i'lt\Other fud.eml ag:e!m}~ or ID reviewed the seeutit}' cl~ for 

;every uctlvc OCE oootiaqor £15'mu~tan:t .,, ,,, 

• 	 ln CO<If"dlruttion witf:uQh£.__ §En (Logintrn & Operntinns CLO")) deactivated and 

cn!1~;i the b;d£:~:bf ~y·n(;~: :.l!'$1ff member wlKi- was tiOt appropriately app.~i~ted 

re<i_!)it'l'!Z rtnr.l retains ct.miez ofSF~S:Zs t-o ensu«: a complete and auditable clearnnc-e 

me. 

tJ C'*l!n!et lr.ffl:ri>H)I<J on OCE. 


'"" ftor acnmplrle rlitew;tloo of lhrl CFTC Management rtvicw, j'lle&;;e $\ti: me lln!tt l'<ffhe CFT(' B'i.'lifttl%.~ 

MA!l!lgcme!!l Repel'! llegnrelng Qffioo ofChiefEc.'>oomitt R~!>rog,rnm, 


' 


Vf whose '' :~:,x conttat:t was tcirl.'tliiti'it>W: 

l!iJ'e:> (o eruam: 1bat boildlng and sysrem access are established 

appoilltnier!l anti conuaet t<<:.:cc1tt!r.m ;nul :mrm!n&ted .on.the d$\tt:: of 

Qf eontran! expiration and develope~ f:Jipjtt'ii£_for t'!lSUrir~ ar.c;ess is 

'£d f,;r a;,y ;;mp!oyee- depsrring <h¢ ag<:nc;y. 

(10) .sirenglhenedand enfurred pnJicfe;> to \'ll~ tOOt flu; on~bt,"rrliug process 

<Ai !t Mt bci,tln willv:11lt reteiving a copy of M Sf;-~::\l ot cnn1t.UC\ n\lfriber. 01:0 (lO) 

9 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


* 	lf;it\ #pp¢lri1~ .Ot'¢tjrt_Ui_d b .f:~t.1!ti.li<-J, OED rttp;lm: anew ferro 7l'f :md -the 

a';;xmrpanying 00CU1'flt::ntatkm }M'ior to an ,;Kttn!ion vr ttt'le-1-";~! c,C l:k1 i!Wivk'iUJ:I 's 

!roxl8<<xl'imtim date, OED for tlew OOdgvl! (F'lV to 

C!'l&Jte thai only in4.lv!.til.lU[s with :a valid or contract at¢ ae~ 

w <.;~tc pttrp#tiy, :PtV cartls c4ntabt m m::p-irRti>:ln dB.w:, cutw:spr;ndL"'g·m rlw·end of 

' 

« OED (H;;;m:an Re:M>an:el:} davclop:tcl u Sittr11714t'd Oper-ttd:ttg, .Proc¢l,i\.:if1t &Jt 

pro.xttin~ -lmd ~m::kb~ mllli\:S!~ fo: staff to ensure ~ 

(>\:Ughl ofthe use !ffiif~ in tfi.{; fu11Jfi:', " " 1 ''1 ' 

« 	 (J-l)T ~ndiwitiaterl. &pproprlut-e~ a. review ofbow;ro~~""'~'~"::a:·: b~tod on e:l\ytio;Jtty ~tiS~~~;;.:~~~~~ $lJ that hardw-l\N,

;;cfivrJte, and $¢;;\lrlty «mitGl 1~ tt:q-.ip;n;e-ms, 'the 

:nr<iew 'WiU o:msider: 

0 V;ggi:ng t:J.f ~rval 

©.•ti.'"Otn1II!Jrt; 

k'-Cte!i$l?-~ 

~' 

0 

0 

0 (b)(7)(E) 

., "' 

f.lt¢1'\hz. *l'fllirZht~tHt 1 F., dh~trtlhrn<:n! rom 1 e 

software use, 

OGC ha;; t-t.mpit.erl" ptt!~hn!n<rt)' da<ahvse t>f O'«'Gt l® MOUn enteretllnio !hit 

CITC tv shnre l:rtOnnetloo with f ed;;riii, stat-e and intcmutiulllli cniltict~ anclls 

.~TI,knJg w ronke tit¢ datuhas(; availabie a1 an Pl(;en;::y rt!Xmt;;;t. Afterrhe ronfi&::ntia! 

di?d! tcview is .complete, OGC '*in w&dl <A1th the divisknts mti !1root! 

10 

lO 

App. 6- fvlarm~<lll<'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


• 	 OC£-~ft*l a· ~pij~d WO!kfi~W tbt'JOng~term ~h Nt eonurrunkMes: 

'" staff OCE"s research mandate and the geuerl'!l p~1,y which ~ll ',ttlJl be 

ctmduotut 

• 	 OGC rcvicVr"ed the l:opl guiOOrity fur ~~t;~_~w;~m) ~:y 'Q!f.. C~rvni~mit.­

iool:ud:ing authority for publlcalirm ofCcmmission or individllill paprrn ruv.i proper 

use v:fS~io>;~.$ ,;hl#-1 by CFTC.~>:rrploye't$, 1;)._

,,,, CfTC Maengemem thflt 1ht 010 revise~ Draft R<:jNrt tQ- refl>;;'l;t 'lhat v~ 

M\o:m~T:OJ\::1~1-\\'im mii!ie aware of l!illOO$ surround[~ 1lw rm\.ctl~tf in which \Jw OfV 

were brout!U imtr ttle ~m:y, their t1ntt.>s wi1h re.~t 1¢ the ~cy. the' 

~tJ!t!t$'J1.''1<hllfiJt'l1hllt'ion, !l.t'!dtM adkqlU\C;t of doctm~!~I~"ion t\1'.!1'!!>::4 00. .- ~~ 

J:©l.'i~w~;;tw · ·•· <IDM ·-	• me ~ ·!$';t<~t• W11<"It!r tnw '- srmtttr"'~-- '' 1!'1!,\ o·~ ,,..,

review, '\'+ 'iv'" ,§ · 

' 	l~·-'' H. Est111b43sb«t truld implem-ented Nm Rn'Ww P'~· f't;Ttf~~ Papers 1:,"·'''' ,;-;>),,;< 

lrr ~iitkm tor.;~ c~-rc Marmgemm:ttac!lo&~m:rlbed a~~~ ;~Ue t~ Olti, re~jew was ~ndmg, OC_.__:, OOC. and the Office ofthe Chalrmw '~''!M'~w;i ttf!irnJh~m~n, JA re<t1ew proct:ss for ;>:"!:> -'Z 

~"' 'b'ri!ren OCE eoooomim that add -ci.I:;,FAm>d·ilia!:· the e."<~it<,g· Se-t:-t:.-:m 8 

revlewofJ''ll'~' \¥$.$ rrot as ;-obust , hienti:i!r potentia\ aggre,gatio,"t ;md 

M'f'Mftle eMgineenug concerns raised by da 

,;,ntWiA!ed ln tk paper$ prod~d 

llmlo,allly, d1hev tl-¢ Chi<•:f h"'~>'il~;J;rl~t ~ tlmt n paper could be released oc, nt the· 

,e.r.:.e~ ~f t}ii C:lrlef Econotn)st, ~'(iG_f lllt(II;YH;y cvttduct.;:;;l t1 ri:C•ilt '" "Of J¢$eat;;h p~'Yf# to 

determin£· whtthff the statisti\1tli,dfttg-~ informati-on pr~ in Ute papers dlsCWsed 

"'l:;;;;;lnt:Si1rtnt:M¢ti0t{!l t:~rrom-~'*jti~ti$ t1ft>b'f p¢ffl*na00 trade ~rs or flAmes of 

ctrit•.>~" in violation of~i~·i(a) of the CEA. 01 M1iri:' frp.h;iflciill)'~ tr.e· OOC'$t'Wriliey 

oomp!~ted »limif!:rl ~~Q.~ paper to de:tenni!E whcther·lfm gfJ!l:(llti<NI dwt·!W!cl- infm:matkm; 

::----:~>.~Y t.:.~'' ••fi,.,u ffi)J:;t; Paptrn); 

411, 2-9,2fll4) 

il:h'»vUwing 

ll 

App. 6- fvlarm~<lll<'tlt Respouse 
U.S. Commodity futur.;;s Trading Commission REDACTED 

Office of the lusp~tor Geuerai byCFIC 

frlWlm1i4 Co!f!ltf;,·mffll'"' 


Autfmtgtl'l':w lffler:ttai Cf'fCDlmifrJttiM qmi ltrefnt Q!jlv 


ll"'""Md Jn the paper ciffitr m~ or 'li7itt-IYV:kcl, tl;e for data and hnform:ttl<:m 

£-m.o ¥;.tos ;;:vl1tl:!fn~ .in the Cr.nnmissiorr's Co~hme!lt cfTrw:l10t: {"Ctrr") R.efl')r.i>f4 

After the Cbahrmm wfurr<rcli!-Jis W21ITert0 1M O!G, the Office ofthe CltalnlW' C!C!l, nru:i.(J(iC 

1Jc~ Wt>t!tin.g throogll s r.cv.· review pr~ for p~~ ~t Wi,:\9!4. ~~P;l¢. ~¢ .~. ilQ .nsscJL'I 

11.nd k'.entify disclooure ofSection: S inforrr:.m.ion h!. dat.11... -thl!t'l...<>_ tsbles, and 

:r.~ce.s-Sih; ~v CDJn~lcted!te mwlew. 


wOO N'lil dmfte-d prtp.;rs:, fO( te>tiew & lli!)~ei (lf by OGC \Nlib fimrl 0(':f. 


IU'liJ the O:moo of the Clial!'l!'bllrl.~ On March . . scvi£JW of pap.ern forwat<i.,_ the 


'ltfbMO, D:STO, ODT, atMi-tXF- wifu 

papen for .SectioJ.t 8 lnfcrmatloo 

9', 2013, !he Chlefl::::oon.Grni~ 

review to tim Chief Operatt.;;g OffWer and W 

·ur it• tbe f'ltst RmVlcw 

,;,;);''"""'ii':";"'"' : Cmnrnittm on t.~~vy 20. 


~s :tb:r review."·! 


12 

App. 6- fvlarm~<lll<'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


lnforrrm!ioo u~; thi:l'dWt.J lind 'bdl)ftililtkih :Uil.i~tu., and the n14t!lber oflcm<lmi,,tlci«, 


<~<IY::r fa{'tfH1t. Ifissues or CJ:<llCerns are !demif'icd dy_ilng d;l't ':'':~:yic:\w, fuc l'i!per R!:'v(~w 

Co;;.mroh:f<~ v.dll then eng~~~¢ indiscussiont- wi1b tile :>:uJ';(:'i(:sJ w ibm ~c. paper(~) c:tJt he 


lt:IA'Qr1wi to arldrczs any ¢nn¢,"mtt ;;;b&ll\ tru: pOW;Jttlbl di:A:I<tt1ure ofSecti<m ll. ootfideiltW,. nmf:' 


tmbH~,, or »ther informat!oo and <ia1a Aftv:r t00.1M)Wlt.Rb-vl»-w.f.:f.lmm.\ttf.';t': oompletes 


its tt'titw, H;;ends tl)e it£ reoommettdati-(hl ~r. OOC. 


On June 1S, :11'!·1·1,·~~-¢; Pli!Jt'f{?e·•~ew .r'orn-xhree·pt(}";iderl OOC: wilh thr« papers f<lr 

T<:Viii-'t>.K> DGC attorneys next oondu::t a legal ;;;u;npilarte\i review whklt 1r-ittlliic'-;JI 

dotMtlilliltl\ln ofthe OCE ecooomist's struus, a W!\&VI cf ~r1bei'e W 

MSoction 8 data. or atf.Ar p:ei!>Xtobd clam m: hrfi::rmatioo, and a review ftw 

itfJO;J' tC~ii:iioos, reg:ula~iorrs. tho P:riv-a~y A-::t, llft:i Se~:r 

mlilition,·rt d;e wus 'Nri1tm :pursuant t0n ccnt~l. OGC nrri; ;s 

'kith the tBmL't 0f1hz ind\vidunl ·conu'i1.c:· aM MY "'Wlicab!e 

~~:~mt1~ U-, 2\lt:J, the Review Ctwnmit!u: _pro...·ldul ' ~~~r~; ft.'1' ll;l'>fieV,( f4 

(It: ;:.}i;;twW 1:3,20:13, ooc the ))" N;;•\·exnt.~r·27, 

20J;1, ~r3. 20! ~. 1inl;i D&xlrnber A?, 20!- !JtOV~... ID<; 

()()C hmt dtw<fl:.ed as many rtm.1tm'.G-S as , ro 

review ._:;f f)Oipe~·;,_ n L~ hl1f)',:,;W>i '!o- summer and fall of 2{1!3 wf:lk 

tl.e p:~~per ,review process 'W'ft!l pern:l~Jhetf"' nh'\)ct !egai i::sves faclfi0t (YfC. 

W£k~W;i ,c~pomliflll1D a<001!f"55loruit~~i!):,,Jhe {l,wrn,, CfTC 

administrative ftwltn<~. and <rthi::;~ppm~t'"hw l::sues, 

1\!Jili-~-tit)", the 11nte frarri:C~t)GC JCView and d<:::ar<ll'X'{', non~: <>(~e JXI~::Il which 

kaw:·btmtl:-BieJll!Jtti by the ·ornmi1tee have bmm.awll:ltU\t OOC t:-~ tbr:mure 

tlmn11w llt\mthl>, Cmriltt _ uuder Wi:lew and ilie Review 

l3 

App. 6- fvlarm~<lll<'tlt Respouse 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


iX\ntbtui!lg effmt'rti ~)V~ lh6 ···re;.;Jfi.W'fOiWiltd. OOC hms assigned :fnlii 

OClC a'd~"flt(l:r~- CITC Management is O!)nfident th<>L the papern:view JJO:C<::S:> ,..-m move more 

quickly !\<Jjng forward as all involved lx:oome fnmillar with t'h;;:; pmcl:';ss J:md tiNi®W 

required and bn<J <:tm:lmhte-1 tht: !'e¥Otlf\'e!l in 0rdet to accomplish a quicker review. 

It 

The Dmft RCt)Ott'finds dmnhe Ch!!i'l'l.lllit'i''S d\:tlsion to temporarily suspeOO publication 

potentiililjt violated Section 18 of the CBA.67 :F1.111her, dJC Draft Rcpor! d!li . -'''1 '" 

4llirl!ii'<iti.nfitl<m pro~e>;;te-d try See!!on S ofiile CEA {"'Seclion 8 dan;'') 400 " 

"':<1: ~ot tnak_e>; no findl::r~ <~lx•u-t the- V%1:' ufthb- d<:!ta by OCE ecooomi&ll:L#t V{p 

the Drnft Report and d:isi!ifee with the artalysis rega;ding. $ed:;Qit Ht SX~d S«:il~&' 

Furt:<icr,· we ooliev~ the _Draft ~eplnt ~oes rtot f•d1y urldress the issuf~!H:oecemlrtg~the use of 

information and Jiltti h' OCE econom)Y.l>- $.~-\:don A below analm\h¥~~1iernents off.ectkm 

18·and ·d<Z!monstrates that the Commission fully meets !h-e Secil'6q 1 {.re4Wemems <md ihat the v· ,. ,,. " ~cm_p;>tm';r' biU1 ®publication \Vas not a powntial vitJ>lii'!i01l'J.f~ct1~!1·:R~ 'St<;!ltiO :B 'PJXlvides a 

llriefl'l"MVofSectlart S nni! ilr>Jtlyt<tz of ilct~5 ~¢ Sectlon~ti-,yS&tioo C provides the 1t:gn! 

lr®%-:. fl.)r sl~arin:g inforn:ution covered hy 'the Privac·,· Ad- ''iSI1K:ti?r.l~l Dat¥! E<>ddre;J•: tl;.-ce issues 

;Jri¥Jag from access to- and use of drua and lnf<~~ati.;::{fu~t_;'is n::celvcd prrrllrBnt tr> ·a MOU or is 

non-pubUe. C.t'TC M'~~ettt¢:1~t lx:H~vtulht.tl t{te issdsoid.Cnti.fted in th.ia#t:Ciion are slgnift;;:mt 

4ltld reqnmlt that the O:rafl 00 revised as Jfsc~!1'.s&l below~ »'*- "C,"""" t: ~ 7 

t\, 	 DetisWn kt T~t:WJporwrilyJ~wbp~;ptf),ii:ltatio:a Mf E«»tatn:l.c Restareil DWJ Nt:~1 

P#tel'ltla11s Vlulate S.:i:ii~~ MtM1tommMI!ity Exthae~te At:'t 

« """· Tll£i 1he Co::nmiji--o;i~J!·~:)~nmin .a ~hand information projturu, and ~-l,:tiqn 

l aof the CEA pi\!Vide-. ('4dJifmlf-7Jon witb 1-rv"'ad _authority_ 1o etmdue1 research for_ the 

''dWiltio:pm<mt • lnfoont.tllona! matnilils re'<ml.ing. futl.lTil:s :rading fllJ 

dlssem-lnl!Aitm ,,, , made! a<mtt; Md thc·_gener'J.l • , . ,.,w. 'Iti 

addition,. the Q£/i"' om.>nis;;ivn t0·conduet research on other topics to can:-y O'iJt o!h(';. 

""' CEA.14 Th.e CotnJ;llission &:iO!TI~ki~bei; -ilifS iiiji.lli'<:'~t:C~Jt 1li00gh a 

i lu.ding; stuff advisories, providing uprlru:;,)(htliuca!:iot:nrWllX:fi«is («:g., 

·,{~QID.\!,lffiiD"..f:rn:ttd;lJ.l:illlEd!.~nCenter/index,htm), pubiiahing report$ ·tthom 

tile Commitment ofTraders Reports), iss:t<lng press releases, f~ilitmiug ~dws 

Commissioners and staff, end p\lblishlng ~f ~rll pr;;._p-<llW by OCE a."lil vther 

slaff. 

*'. DPATI. RLK:ft-:_ at h,, 15. 

1]-.,15. 

n_r.;_c_ ~ '-'-{a){Z} 

"'7 usc_ ~ ::1:{<1)(1}(trur00ri:ringre11Mrc}lmi.! mfrum!Uitm i'o~m; m ";;;IDy il'-'I llw (1;-t<.'»tml J:lWJ"'Nllb ...rthts 

'.:lmr11M"') 

14 

14 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


As noie4i in iOO')){flft Rtpi;irt; tam·am .lCAtf''i\!~MtOOt!c on the 

{';;wnml~~-k,n'--s prrblic website, !he l:tl:tl0t rectfrd <>fwhich '-0'4S publiish!::il De~:cmhw 4, 2000.11 ln. 

w~fi:) lbe small number of~ic ~~ ;;!~;;- Cvf!l:n!~•J{:; pu'bli:e W"!b$lte 

oonla!ns hundred$ ofothl.:r reports at~d icfu:tma1kmaltnaterinls v.i:lich the £;acil 

yt>lWiV litfl)ffl) dw vubtic alx:'lttt and :futu.M.~.t.:l'ili1tt~.S-,Jr,d.t:.iil'l~.hMMf-1Ail fiMbl.i-ahed 

during ~t 01-G"s and OOC"s teYlev.~ OCE has <:<:mtltj~d _;;(} p~-rf.V'Jt! yalt~t·l~ ·'':":.ortM!k 

~ub and re~ey ·tliWcloped lmd pt~!.il!mJOO the ·swaps rey<:~rt, whic!-i is based 

datU, l:mt i'w b-iien a ma.nnc; tlm the 

rr v,"OCH~- M_<M:s, 

!k'•siti::ns md-rotr-:Jti.it..+lz:e& tf'Jh:wtdo::; .actbt~ty. T:"ie:refnre, the u.moomic 

~-~¢;1!1 of the Crnnml:ss!oo·s efforts toedUC31e and l~;:~~;~ 

of CFIC ~,~;::;,monrists.anti the eoon;:univ research m1ppo:ti\\l by 1 

·lll"mn!Ujjto eoooomists m _publ~shej Dm~ l<..!!pr;ft, irr pri"ale mosl ,\'AH1t®:l:& nftF.tt _eo::m:tn~ic ~ ¥ihilc ;E~~~~~~~~~; jOurrnii$ iS il'ripo;tmtt,. sevoral t>f ilw papen;: at '"'m '" 

t2.rget dead«nlc z.uditmce m!:hl);l' than in media W 

in ~oo Il, the; di!I1Jl.bttiiott l-oa 

that 'lhei;e ee?ntn:uiG 

in:fo-m the ~t w..mJeoces li:;ted in Secti;,m 18.71 

B:ceti'~' l s staffadvJst.'t~-t;t<, 

~'•c"Jn" as ·w--en as by inlp{K"tiin~ ~cres~ end the 

rcsol.tl'Ces, lime and dattL lndccrl, oov..Ywro doos &cetloo IS 

econrnnk ~ri:b 1'1:ie mtt 

! to condoot eetll'lOJ'trit: 

pn::seotation otju;i;;;d «:voomlc ;ncar;;ll- .. , ;,:/:!''This 

cooslsleo1 with OICJ's C\)fl('.}Wfol(Jt'J di!tftfi;; 100'f!'•M<lt $JS~i;l;lilVi1 or 

iS 

15 

App" 6- fvlarm~<lll<'tlt Respouse 
~·r-' 

ofthe-CO 

economists ana 

effurtsto 

iC' :CSC!iicl\ 'SLjl;Ort:i<i 'by 

Bdata is 

,: <•f the genersl principles 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


publ.lcalion of'eC®Cm~c R.&•.nxh pt~ptr:> dlfe&felled ro violate S<x:tioo ll:l The 

'tempr;n._--:., sus:pcnsion of publicatioo v.'hile paperwar'" iecgnhuides a.9d ~urlt:y .ootkCt.;!.S were 

in·,'f$l:iguted did not violate Section 1!L These publl,;;iH!0t!:> are only one oomponenf of~ 

types of ma1er1al tlml tlm s;ge!X'; ptudw:cs. m1d continues to prodooe, to educate marlo:et 

fil:tJcipmts {tt'!d co~stent wi1b the requirerr:rent'b ·{}fSt>cti'1:1ll !R. 

As diseussed in g(t"ief ~tail .it': P»Jt.LH ab.)ve 4t(iJ J>nrt below, ll€enCJ slt\:.?P a 

thorough rev:l~' prvcess twA fit cWarlng pRpt:'rt on o t4:milsten1 with t~:;; 

agcfl1:y's statutory responsibJ!ity to protect Sectioo 3 aOO other non~r;ub\ic ®ia prpvi®tfpy 0 "''> 

J:ril\rkCt'partiClprurts. _For the duration ofthe- O!G review Into this ma1ter and OOi); · ,j"!l#laro 

. . . is eommittcl to l;'if;;\'Oting available slaffftlsomces to tire MV!t~ 

bocaulie ncognix-es 11:te importance of;Jwse ~roUte md;viduah< that !:tfiW' , , n:oo·r~m porenrial ed»catiOJml value_ they (Jffer. But twthlng lit the ~&~,reView proem 

threatens to violate, much k;.s \")o!ata'>. Sl!cd-en. 1 S cfthe CEA ~se_~,;;;rrc Manag>.::ment 

<3lliagr-zes wM the conclusion tltat, halting puJ?ll~ti~_ ofll,te ocooomlc resoo:nb 

J)Hj}¢1$ during dm Pf'l'ldency ofa review, the nt;ttm:y'hUil; i.it'til'I~~y;;;r»~R«tViGlritiitit SC¢tion. 1& 

fJftheAct., _,m <>'f«. "* ~: 

•3 '*"·­ '0 

·CI·w~·c MllX!ag;emertt IQ:1(,:t~~l5{f,";~ttt~:.S-.,;:tto:tt. I~.ana1;v$ls in11:te 

Draft betlau~e, by r.,1-tl;, mo·~ {N/P ~ ~~iih ts does not tire publh;;sti('ltl ib,Y'f' 

ofeconcmte teswz:h in academii: jou the ltmpomy actions ~hat atf~ a 

non~statutorily required part fJf the age~y;.s s to dimmirurte :inforrrmlion -ean-not risk 

v~·~~~=,-:'oo Ht We request1b2,t ttt,\~I!~--:~~eport be revised to reflect the 

_l.\ of:Se-etion iS ru:d tc'~~;nii:ZJt~l~~ su~estion that there may have been a violation 

ot potential vio1arlon .of that pro~Oll·,;,}n the altematJve, because there is no vio!alion or 

thre4:t¢ikid Y!i:tlatkm_ nfSet'-t1o9_c.!f}tt?~:~}Jeetior; u!'fuc Dmft be eliminated. 

,::; HY OOtn::r.ie and tire of 

~get\(:y, '"''C<nmni'frl•nnniiffffi 

and is not shared •mlcss authoriY..cd. We agree v.iJb. 

:v. which 

3·;rrnlted N:!t:iilif {}f S«:tiOti'S material in a judiclal ihe 


,g.j:@ C~ssiorml fX'UCet11 of "Widespread diaseminudun ufinfommfion not othcrv.-ise 


avfttl~e- tG the< public ''*1 


n Jd, al iv, L'L 


""ld.utiv. 


"'IJ. <~ll5. 

t: Frtcrmwv. St!li;;ton, 4{15 PL<i JJ::t6, U4ll-49(PX' Cit '%$}; iJkAfTR£f'0&1', ttt 1?>13-. 

16 

16 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Th.e prov:ision'Ofrr~· CEA Wilt ·is· ~Uri6111Y S«itiilri' Horiginated in the Fulures Tredlng Ad, IJ..,•td 

\"'a:;. ;.'{;"1'1ty tl~r ine~ed into the Grain fuh.;;.'* At't. !he :>u~"<'~,~w;.(Jr s!qtut~,» C;;Jli$fCSS 

iJUbslruttiaUy amended the Grain Futures Act as the Couu;Jorli!y Excl.m.r,ge f\c1; hu\V"CVCl\ nn 

rnbstantiat chaug<~:,~ were made. 10 tht lWJgw:ige ofSectionS.SJ The Acts provided the Set;t~ta;ry 

-::Jf AgricuJ:J.ltl) wi1h exlen.sive powern ofinvesttgation· to o:rnaM11 P11.derW llUpnl'Virdon· .nnd 

.re$d:atl9o f)f comrn~tdit:y nwkets, particularly to pr,~<;fl~ ;<;i<i~ .~ilt~it>~\;tOti:.IS;o;\il~iug.f~vm 

speculation, rrilll)ip11liiliQT'>:arui c«mtroL~ ·f{O'.WNeJ'• Congress recognized that there was,~fit 

t'tttm $(lfl).t' hetdging and llpeculaticm,. which would tl<tt he fmlli!e iheosif ' · 

115 r«gnrdiflg .t,\u1t activity were subject to competitive s.::rul:iny. Thns, Coogre 

S"'"''lm:1 ID C'>':l>l~ec! data e.'lsential to ov.;;rwm.r,g De operation ofC4l:nl'll.Odity 

0}Xmin{1; the.data t4 tl:v: pu'blit:: f*'\. 1

"%, "'« 

tti t!tiV' C11Btilil$ y<:ilt\\ fhe. Depa!tm~t 4f Ae;rtculture ci\00 Sihlttoo SJehl ~F'~\lUm to 

wftlt..,old ali trnrisnttirmi {}fa )Y.'toort, and all trade sect~J;:,~es 4f~..rn, 

ex<J.tpt·<.OO:w found _gJ,;,Hty of a viola1ion, whereby the d!sclo~ft-'l:~tH'ar,pUhlie ma public 

hcuthi.tt az provided by lawP lnuddlti:on, the Secti41ruJ' z~nt!~'Th\f&¢:·4 to·p:wvidc·daia 

contained in reports when requested by CongreM. citl:ng ~llJ:te ~p the busJness 

infhrtna~ioo c-onfidenttal.u The fl10St signi:ficant tefu"'-1J}~'£,HY~·'1:(18 fh,>) l\:",'j1'-l'lS!ed. h·,fun"l'l!'ttlon to 

Cangtesa o;;:c\l.trel'i to l94 7 when the Senate Co~tif·~¥!'PtPptl.Jtl\in!l ~~w.:t thei the 

Secretary prwvid¢\ i:n 'UXCYlltive SCSSH:-n., th~ n~s an~Ounts ofspccu.lmrs• pu:rchusmt The 

S~IW)' d.enlad the re<jUest hecause "'[t)he teq~&~~iS for di!?t:leNure, ttftbe ood sepamte 

busir_,e~s l.rm~tions ofpersons trad~1~00it}' (!Jt\lte& w!wse rtades m market positions 

am wported in ronfide.'1C;? to d}tj ~\o~J5~t··d1·\'\grlculture, These reports are obtained 

'\.. "'"'y F~ rf1!ld.q kl, § 9, Pub. L. 61·tiff;' 42~t:J,J,. 1$1 (1921 ); Grniu Futumg Act, ~ 3, .1*~ L No, CJ.33 l" 42 Stat 

\I\IS(1~1:E),.mlltmdwil(yf*ufd,, N~~'{S,"'J'$131. 1491 0'916). 4 Cot!'ltllMiity Ell.rlpm$il kt, f"W>. :f;. ~· 'r¥..YI5, 49 S'iw:, J4-9l {!936}, 

«..,, the~tfut'o~ i<;<d pti;p,tnf'~:tf.nlit:y 1,'rt "~..:!< !'K!W'dscf~ U1t mscepd!)te IDSj)tC»It>fiC4'1: 

lll!VJpi!lw'h:m. and Wld~n,or iiurwooaDJ.t flttttu&lum ill \M jttlt;"" '<bffl!td l!ti!Jilltt:.!y ~·ffs ;; «mlt 

,,f $!J~h ;~utr · · · · prv:lu~e< ur Jbe ~'J<M> .<\00 the pmsrn1$ 

<ntm'ttroo, and w:h ilucfuatioot ln f!fi\:;!$ an 

·"' intflf$till? ~.'\.lllll\l\$\\\.1 I•\ -:~ily an the product> 1llnd ~~~thCRd w;J, 

ihc vrotwlkm of uu::J> «mnnen:.~· wlil !.lw tl.'!Lk1lw.l )mh::~· i;<.\,.;r;M 1llU\1ll'; "' 

L Nc 1+ii15, 49 Stnt 149! (l!l:ili) {curr;mt veni>m 1111 U.S C. 5: 5), 

',~'l"'<ml,i''llw Gnoin Futt.cCi Ad. diahi ~'W:Ufes' APt,'$ 3~ 'Ptili. 'L' NO:. fi'J.:Hl, 42 

V\lb, ;..., Nll-.1'1~~t.49 Smt, 14'9'1 

{192!); S. RPV.N0. fi'/.871 {1912); 61 RBt:\ l,JZ ;;u, I,JJA!, 4,761, 4,7~ (192:1);62 

912); OOCo>iG. lls::.fil6, 8,lll2 (1936); kgufatilJf! pf(Jrafn&d!ll!lgts: Hcfirftlf( .f!!l HJL BJJ29 

vwAgric, ?Jrd CCI!g., at1<J {t'fJ4J[!'Whi~W\tt ffuwfr<g on H.R &ti9J.. 

u ln l1 it1t Frttd>!t C't.•. v. H;n-fr, th:: Stt'tlllh Cit< tilt ruhtd !hill SectiCilll eflhe Act plac<Xlu nat ofumfkfmlri&!ity 

t.l$"00 infotmati;;m ,,r,;gj,-,.'4 ln ff4'1!11Hl!fji.lh>d U!l<!K.r<~ G!<iill F!.!lu!\U Aet. "[Snctkm SJ 1\xhlds the ruv:mllng by:IM 

!i<X.m~.r; h\'\·1 !Mt &Mictam llfltldividu&l !ra®s nnd qf(UWnr!lot!!; I'Il'l<ltrn:: f,-,dillg) F~, Pfdi~ ~m ~~ 'tvldence, 

!i:llw L'illln lhe de<:&d¢ iffexputler.ce .siooe :1M act bet:llll{ optmtt\'<tl oo ill<IM,t;<l$ !>~"1!t whtrt> $Ji;i M\¢1< ,,rmfu.l!mce 

vlOI&tM ___ " 6~ F.2d :3S!l. :312 (7th Ck <!Jj!J). 

fff(U'lt!fi Qf! f{.fl .:<.:t?O.!M J~3;PM!7d<•H!C'{).'>r'11'Nlity Ex.'f.Jr.mgrs" f!f!Pfing rm iJJt Cf.JJ!llt( 

~nA;;:fc., <4th OlliS. (1935). 

J.f til ('r~'NG-1'-.t'C. f,32l {1921}; Hawing rm fUt 882ft, at 22~1l; S. Doc. 'Ntt 264{~91!1} 11iCO>«i, Fl!C. 47982 

{!'Y"~ S. 'tl!X:. No tit, 1ti<::Or¥;. Rr,c, 3,:1~1 (!<fl!) 

li' 

17 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


~ntly ll1l.de-f i}V~b6riij 'Of 1hio;' C6m:m6di1i.-':l:Xihamge Act,;+; Section SprohibJtcd diSJ.:l-osure. 

F;Jlt-;::.wing this event, Congress passed a new provision that :r\":la.U';d the Se..'"'tiun S prv.;;cription J.n 

limlwd citcU(,llstanees,. which Jed to the currently tflf!cre.:l ptOVJ:l!.hiU$o. 

S1:::::tbon. S wtfuorizes the Commillsioo1o make ·'inv~.l&ii~!<t(!S ·*'" ~~ ~¢:e't1l:S: ~ry *11 .lL~rtaln 

the foc1s rc~nrding the operations ofboards oftrade and t<th.er pct1'ons subject to 1he pmvlsloos 

of tills Act.''ro Furtl".¢t,.it.all~w*.tht- C(ij1JMl3~ion to ''p\.lhllsh ... 1be result.<> ~•f any 

such investir;a;tiOil' PJli.i' SW::h gmmlmti:rtital 'liifotm.ation as lt deem$\u 

intei'C$! to the pub1k: ... . 

411 However, it speclficatly exc}udes certain intonnatiou froi4l~;z~\-"" 

·l'\'blu:nlietl' ··•except .as rnhm~i!le ~cifiCJIJy authorized in this Act, the Col'tmlJ~(i~JU~::t-~t 

daUt and lnfurmation th~t would separately disc!ose the business lr~z~,~e\ po;;~!i~ns oi any person and trude secrets o-r natn!$$ cf~uslcroors, "'"2 E;;;C\eytm~:> tQ ~~~l;Vtl.~ 

iliicJOSrii<-i pr!_rvislon include disdnS'..!Je$ 0} in ooMOOllon with a COJl~ii~:pllt~ro&mdin.g. 

administ!'%tlmi ,)ijl~dld$1' pf6r.e6Ji0gs. bffi~<Ji,'it 'ilrnier the or c~jn'~plcy 

proceedi:n~·(2) in reports or orders rela!ed to the cortduet of;Sib;.tciit_ls~~ entity or tn ihe 

·~tions of any pen«m found guilty ofvlnlatmg the provl1;1&t"'.hf,ih~·.:CEA M'tCtt0lat\bns, '"'> "' roles,. or otdern cf tire C'orn.."fris;ion; (3) loa C.J:mgressional ~Ml~acting withlo the scope of 

l<ajm:i:W.~e<l;:;.n; {4) to another department or agency ofthl-Vnit~-d Sta1~ n<;<~ng 'i·Vithln tl<t• scope 

onLY ju.;isdh::ti~93 (5) to another department f-l!l~!fr,.iy Sw,e ·actitQ: within :tw·Et'iJPC of 

i-ts jurisdiction;"'~ (d) t{) U.\1tttht:r fnrcign futures ~~t!wri~£W!tmoibet department or agency qfru-;y 

fm11:1grl grNi':rnment or any political sub~ivision ~e,f: M't!B£ 1.v:lthln tlm r.r.•Jp&· -Bf it& 

}wUdit::tiJ.:rn;~ and (1) to the Comptrollt:q~al f.;w ·ifF p<Jrpno/.:: vf rnnilln:tiR!) .rn•ffll•~<--:>: &rod 

audits.* "--'?f''""'/~"-'\ 

''10 :;"""""~' The legislative history ofSection ~nst;irtes Crmgress:" clttnrill1detmandlng fh!!t iliis data is 

Ji;QP:i¢ ·or the ·mQ$l sensitive: ®~-~q~-9-!fi"rnl$.'lion p0ssesse!L Pust admlnlstra.dons. went t<> gr~ll:t 

to maintnirt the c.:'l'JJ.fktiatll}: of S~lim> 5 whlclt Wlrnately Jed to the ns.ception:1 

alx.n'c, Wlihl-n the limitc!(~~~'titfns tO non-dlsclo:ilh'"'e, specified the only purposes for 

v.Yticll fl.tt'thet diJ¥;l~fC~issi1:1e, The S ,;.,,'?~'.. ~_,<;". ',t' -·;/· - "''t ''1,'(,_,~

lht> euti!y's nbitity to further rll1$efllii!Jfc 'lie it.iill'll'll'liloo. wly in ''3.:1J' .:u:Lloo or pro;;:W"t!!;;g w~ 

&-ttfl wbiub it, tl¥: C-0mmimiun. wt'w: \Jniltclllhikm is a party." 1 iLttC. ~ 12(<), 

eurity'k ut>Eky to further diswmimte the in "wnn«:I!Qn with an 

f!d)udi~ ru:ti:m or fllm:t'Uciius ij; ;hl[lbt under :i.ill Act«' the ltrn-s ofweb or potltlwd twhdh'Mioo 10 wtticb 

w.;;h $1l!!!~orpc1ilil:al wbdfvio~ion iUf¢11!·" Jd, 

~''T::o:::c'.:!tilmlmhln shall wnt furnish the lnfornmlim miDI it~~ ;w;,!lfllfil Vwri\w lnfG>"ll'l»t\;y, miP r.cr 'n di~clu$td 

cxttptintoon&dillll wifu 31! "~judi<.>itb.;y ;,~lkm >.~q>.---..,_.,-<<Odiwg ~~tmtlw th¢ lnW!> &hwcil fb;Nil!)l §O"~flifi!Ci!! 

or pclitiwisubdi¥ltiur: ;, whldJ ~w;b !~!;;11 WJ"emmnH! .:-r rmlitknl wbdlvltioo, , . is t part:r" !rL 

""n~ A« prt>Iide$ tiltt in repns.:s tht Cumptmller Genua! ''"$.!'~"}! in.;;!udt< ;,~.d l'l1ll!'l'!'lll.il{Mt ~~\:!,( ~'tmld 

repamtely di;x!tmt t!-w tmsirle1Srransru:tkm cfany pemmand tt~Xk: ~ll!'i M H<lff.<:f ~,f ""'ltl""r,;;-~ . " 7 U S.C. 

1!2(!), 

18 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
umlenu"Wi''l! tl:z: :rru:.y eftbt SOOtlOi:dfdatu, 

the basis fur t"beir p~itl·lcati@\l:!r,· r;:,.,. Dn1ft Repm1 stales that~ is no hasls to 

improptr oot.®rdlng _~mpen'Kirk with CFTC C,;mfidtJ)t~ ~,•• , 

~;::~~ descrlb<.d in greater dttall in: Pnt1 tD above~ fills ms:Wt o:ftite t 

scme OCE ccott-':m!il>ls '"''eN' not propr.rly ""'""'""'' m'll>ey '~"""; 

\:.t~J~1J1:g ll!IIJ !JterefpJ~ \! WI!!': fJ(•~ \l,f!pt: 

U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


U1u.stmie Con!feSiil:iil>il i6t'ii6t t~ ·1WiriWIY tiilOi:·any exceptions to the ge.ncral przl:lribitioH· an 

rdt>'l1il~£, s,,,._.tiem 8 dal!L that, while 1bi' C•JtWrn\>:~1t1FJ n>'*i«: !']e_.{'.-flM~ g dais 

w c&1'} om Jts ~ry purpo&Zs" this dma wat'l'imlS str.:~r,g pmtootiorm -:»publi.;; :ru.:Jrmurc 

Vi a'V{)id subt;ta)1tht injury kl m!ltk0t particlpa."ltSBru!mi on discussions with !he OCE erxmoonists v.iu:, do'>"'llloaded W -data oo.to OCEN.rt, it is oor 

mftrntnntmfwhh these indhriduals. ln addition, mlf.:'iY ~ts had 

_~m,ers wbralt.tM.·ror ~f :i'&itk\Vi and \Y\J ·do ·not have su!f"rent fru 

di<il "<'><"..$·;ji%]~ tn ca..authnrs Nei:lbct ot · cli:v:.:!~j~~ o!Seciinn It data, Ho\vever, tlie Dtafl R~ort ·4')5 

diw:lnsurc (ll(;¢wm;{, 

Ctr(: M:1Kt<):~ent A!f;t«ll 'With the OlG's ""'et;!~til}t'ifft?,l~~'Munl'< '<~::"···' b)' CFiC and 

phy•sJ,ally pri2'!ert~ a! tlw CFTL 1m: gra,'•lted!!!: tion pr~ under Section 8 in the 

ooursecl"tltcir '-'t(•rk f'>it Hw, 4."X•!W;:r;-i~-$i>t~t«~ ''J Report notes that there v.il$ t>fi 

OCENetl'1 ~ and probierru with 

"::~;~~:~::.:~j{Qt'OOO¢>:m:i rMf 11.iA:f~!l to 

it the Commission and 

ffi the h (!(;£ 

, H'UH, !0 !# 

:<:;1:4~, Wltrf iitZ'l, lL 

W'1 Ci'rC M>l>wgement bt!le¥!1-tlw 1he findln,g !nibc tnft RfiX'I'l &-•.-u 1r,W1l "'it< AA "\l't>MM\l -(l{v{ll).WJh"' 0 wt 

~rnl.'ill'M;!l!, .!d, Whil\1 Jbwe Vfflf TWI ';l)l:l';lg1&\ld \'\PM& to m witfffil if.e OC.fl.'>.fm lfln'fitlW..lB'ffit thmi V,Wfl 

tiM~:~· &x:wM" ern: M~lmt.l im~wM~tttl <>f ®U 11ht¢~qMl\ly..t'I#MpclW;>~~~~)1.m CFTC aclcww~:tbi 

W<wl Y4ty tw:l? htve ~~- c!ttf\l'f>}vd !1\ 1!1!X'Jl:;l;fully ham ~mwnlly Wn 

ruff:cimt,, lm! crrc is <:fl!T>fnl!red tv ~ns~ Thirt cife>::tiV¢ ~!:; 1JFl! impln:oorkd «n·nnL 

in tlw Draft Revott lt1 ** ''Mbt®tt t>f P~~»Wt~!f' blltc>ti:kt!'-'"'"''"'''' 

19 

App, 6- fvlarm~<lll<'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


!Writ@ 4 C,mfi;Jm!lt:.fAw'iwri;ri Fu l.yternht:.f C.UC!Jistribt!flm.! attilllWw {ffllv 

spccifmlly!ll)fui; thJill(b ))~),A, ~liimi<l ~ piJPirin (b )(6), (b )(7) n high'''"'"~''"""Y 1t::wilt~g ~ ~ mll<Ject siru~tJ:w 'lte~tutial 'fo't(~'~ 1.1-J-mg __ on·,tm%i(m (L;1!1;_ \il'l ;xA&i~ftJ'JKtUy, 

ihe lJ!:m1: Re;l:Ort notes tbat removabte devi-ces were &l!i!ClwJ lV lhc r:omp1!t¢fli mMi,+ned to 

OCENet 1'" 

!n complying with !he rcqulretTI.f:nb o.fSeclitm, if of the LEA, the 

e_ndeaV<•!'& to msure lnfurttwtiun the Pdvacy- Act ts:nm 

pa,'t flfthe C;;;rr.mitt-<>inr/s e!ftxrts t;;; 

observes lim'l !he Co.'U!liis:>Wa':5 Priva;,;y A.,;t :rrutices 

:C:i5d-6Stl.t-CS"'~M ofdata C-Ontained :in the 

pcrmlssibk disc!owreu llrnkr Section 8_ 19"' The 

m!rin!<nln<'%, t:SC, ;ond 4\ssl!mbal~'>l~ ,'>f iof-l:.r-~rl· 

f'l)'\),'fd;{' ln tedernl agency tiles, -Aer in <v Wlarc;.-e l'he 

J?1711~'s ncod to maintain infnrnmtion aOO~tid~d~$'-\itiW rneTriiliVtdt!clS:'' Tiifi£ To 

pn:vmt unwavrnm{l;} use. irud dlzcio:ml't n-f ihei~naHdformatiun. Th;; Privacy A«'s tbi'T 

rr-illin. <t>~ectiv-es are to (I) re;trict disci~ of p~wA!y ldtt~dfia;ble- if':.m-ds; {2} iJ¥"'a."rt 

:nd1vidu::Uil records~) ~llelv\W.; OJ ¢f'"At1t in:rl:iv'Ertu»is dw :1ght 1:0 utn{!nd 

agene:y rerordz ~lwu-t 1hcmsch;¢sip cert;;l~(~lh:fih.<;:timces; and (4} establish practices to ~m 1 tl".t: colketkt~~ 1!t4lnt~, rmd w.ord~. 1

*

/,a prnhl~-lt.Th ag~~~ · '~~isclos[it1g:] any recooi wh:lcll L'> contnined ina sy-;;:tca> 0i ,-/ 

-or tecords rut" means o - ·-.,-:, u:. any person~ azen¢Y~ <~tV! :v_11PllJiit'>t ' J $ 

t<r 4J wniten re:tuest writte-n oon:ren\ (,f. !he indlvid\1a1 tl) -..<mO'l:n the recu:rd 

• 

with regard ta 

'" 


20 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

Amfwr4¢

f'rivik«il ' 

fw 

Q!tfi4tyrt@'­

Internal cnr pmri.tmlfun. fll!d IfJf!Jigw Ontv 

§ S52l(b)(1 ), ··fbf:· -<fttiJtlPf..1i;i;;') li~C-e~tJ(:iri ~llr'tY:i dischJ\l\!l"$ for a :routine use Q defmed ln Ihe 

Pci:vncy Act su!Js.ectious (a}(7) and (e)(4)(D). lot 

Cm:islstell.t wHh the Privacy Act. rei.;;M:,: cfL'lfvtm:tnloo of r~is propeton~y 

when th¢ OCE {;t).Qrltll'lri!ih have bwn proJ:1$dy tmlj>lo~~ ll.:(l~ #ft; (}r Vf{)tkfna on a 

contmct, service, gmnt, cooperative ~reernen:t, or jQb for the Fedetal!¥'~rnment when 

l'lt'lCt:SsruJ' tn at~ltsh..ati.i>£!,¢t:.C~ i\ttl~ikl;,•t'''O? TI:tere 'arnnu roitt!nc use en:;"'J1tk,USa!~ 

the Conmtission it'• ·prov!<k' the lnfmmatiQo dut may have been accessed by OC 

V.'£ll'king under expired wntracls, who did ;not meet !1;1:: ~r hiriug <:J:Jw!i~i~ 

access lliihC l.tl.:I.Drn;;atkm for.~ other than to aocomplish and agency 

Additionally, there 11/'ll' l.l(! 1x~u~i.J<t \J:ie ex.cei"t\.,)os tftat wwld $.11Qw ~to 

Aet ~>J:i\trrts: tQ private citizens. lf as the Draft Rep<.m sugge$rJ>. tb.; OCE t: • 

ptepi!i'tt'iJftlill' papets tiS privat.e. t:itizeus,1ll their act:.em~ to tl1e data ~Wlcl, lk 

Pr:ivncy Ad, Ahhiiligh' t~ dU:tii firiiri rne· OCF:Nci ·server, the hnrd x 

#t!.<i¢hl:t3 to·~r,oe server, and the various external hard dti:v~: 

m lilW OC£Net comput-ers v.:ere captured CFT ~~·flt hiffi·oot·b-.,,·}(Ik/mvl:ded 

with the fact ~}'Siii: oHfiedat& no (iCt<~ettc dllli.mnit!e Act \V<IS 

bJI;'<!-U'\&1_ If-s breach has occurred, the Agency, tbtuujh ~~-- gency Offidal fm· trivacy 

{~ Bxee¥-ti<ve is required to te]Xlti ~i;.:,b1.'1fftfikt:::rtn1The tmy re~ltJ)' remc<liation. The Drn.i'i Report notes ttilit smnF~fthek~tion on OCENet is pro~ by <he 

]>rl,·pLy Act, Ill but does not report any findings ~~u~i~ with m~t trt \l.the:thet atr~y such 

}Jlf-l)ff.nMiN~ WtiJl Np\ C,;. 

''.:.,;J·ci«,~;x·.·

CJ7TC Mltl:la.tml'!C\1~ !'!.'l{UCS!s t.'iat1h~· mo~~- any availah!e data thitt may have haen nbtaiu..W. 

by tlmm:>ic review. We agree :tb~:Jack ofse_gregattd aw..:ss to data •.vithln: OCE:t\et end the 

la<k ¢[automated controls tDJ!.Y'l!-'!~~nsic atm!ysis di!flcult; however, as oo1ed in the. Draft '-- , , - l "l(OJ~j nf,v-r ,.. <--., '··-'' "d I d Jt1 twgmnmg m ,are, "'"4:- ~.,,:~._...\' N'-<flln>:A~ J·HulVl ua user acenunts an ;:- '10 '•>;« 

""-0>\v"''''\ 

_. •1~>:> •$ ~·~~ wm of ~~teh1?WA! fur a fYJJP(l$¢ wblth if ct.trnpfl\hk whh l!w 

!iC?twn in lire F«fer~J .R:~~ll!tdll :\',quin<d fe!· "~'-':' tt"..l\i!w·u~o"i .-:.[the 

~':"''~~~~ nf\s<J:n: uN \00 of1ulih <l~l!."" !i U$.C .Comml!Witl!l biG ninettcll rw..rtlre !-!Se$ iNU'fiW!;Y'ID'tbt-'Ciliriffili&.>i/i~iri $1 NCnttls. 

f11i~;.£ijl;iklld'$1.0f.\lw .SY$><:11'-J<.Q{ \teoor>:ls: :Mffi'tllied by the CultllUOOity FetlHIS 1'ra$ng 

5,914. S-,1114·16 (Ftb. 1, :tOll). nw muibw: Wi4 at lM4¢ lim'¢ Is rmmlmf U, whk:h l0lll&S 

m~y be diwi<>Wd wClllllraelon, granrew, vnh.mt«r:>, "'~ tt!.lde%$, am! !)!h~!'$ pflt!"dm'!lng or 

untmx, slct'Vice, granK nmpentive as;mment, m-jOO Mt 1M F¢dM4l g;'l'drrltm&tt w:Wn tt;t;;.::ssaty to 

*&<:m:.y func!l;;n" ld. a! S,Y':-5. ''* PriV1Wy Aet t>!" >'¥!4, Nl:ll:iot; ·ruhli5;;Hon of the 5-y&<:m~ ;,:;£~ .\fal!ll$¢d by tl!tC&m:oodiiY Ful'l.lffl T!'lit1i.">$ 


l:;>:;ll".ttti;;~l<!fl, Hi fed Reg. 5,974, 5,915 (Feb, 2. 2011) 


"':r;x: CGt>.:mi»i® pOO!imed nim:leen routine nw1 llf'Pilwhl;; to ('n;Y.~'tlit.~ion ~y>Mtw ofli>:'{l\'dt, l'fivw.~ Act of 


i9?4; NCJIOO; Puhhti:itltm uf tl!<' ~d-uf' lt&2rttih M~t·d by tim Ctltlllt'Wdity f'mUI'tS !wlhlg Comroli;&l;jtl., 16 


fltxt Rtf;. 5}114, t91,P6 {ftb_ 2,21.1!1) 
 !P DJ.A?T~Iii'f:ll;T, «; 2{1, 22, 


m Jd, ;~t n, I'> n.tl:t 


;!:· Jd. ill HI•H. 


21 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

PrM!qM 4 Cf)J(ttfptAAt"'­

AHtlwtitJ!<a Fw IJtlltrnai CFTC DistriJJMtimt rmtlltCYiew Onlp 

tn OOdit).;m tn complying with the requirements of~i:it>n 1\ ;;lft.'i)<~. LRA. .and the Prlv.a:::y Act, the 

Col'l11l.ilsillon l$ :~ls.:: rwl-p<m<>i'!Re fur oon:>p!ylng ...-idt the terms ofMOt?s entered ltrto with otl:wr 

Fl?deralagcncies and wl!h foreign rcgula'lors to sh.:n:c 9at?.l{} fat11i1a1e the. ~rk l)ft!Je 

Cot4rnL~ion_ Many Qfthe MULls have restrlctions llmi1lng duta ~Cfls 1o Corn:mistlon rtaffthat 

"need 1D know" l;.i.pttfo:rm lhe.tl!IS'ks specified .in. the MOU. For exemple, the Commisslq-n 

et!tered ltlt(HIJl ·M(}ti'Whh'1rllt\"ibtt Bg¢tld:~$ ofthe Fb.'lt.t~Cia1 S!Ablllly Co111'1C_If'\ 

("FSOC").J '~ The :PU1J'XISC ofthe MOU between C:FrC and :FSOC la 10 share ~;anQ"~::~.,'­

i:nfori:itittiP!t '''in connection \•lith orwlate& k>lhe functions and- activities of the lz~SJ)~ofW6> 

Of:fke j)fFi~-da! R~!:.IJ'clt pt\11.11..-anilo ihl;" f};_ldd· .fran}: W.a11 Str¢¢t Reform :!:t!(f'GpnSUtt'AJf 

P"to-;~'tion Act.,, ,"m Under the 1er~ns ofthe MOU be<v:ean CFTC and f$}5C}tj:t.e"tl~n~publlc 

ilifnriilirririri 'shared lxrrween 1M parties: '" {·;·.? --;.~ '<;_:{ "' 

'YllfY .~c -shared only with (l.) officials and emp!oyees-iY(n g~;;q!!:.i-f'F'ifw who 

have a need tD know the infounatian :in the Pi"rfqrnJ~~7,;d(_ttf~fK.~ffiri~!. >wm:J;: 

dulles '-!IJniils!a-;1 wit114f'JJ!lcable 1M¥ N (ii) -an lndlvidWi}, urKJw'.the supervision 

aRece\.vl~ll:£ Patty ~J.,!;u 11<11 ··~tnent wtttttbe FSOC 

tl-oat continues in efieet. '· · UIHkr the 

lmr"'r.;lsion ofa Receiving •rmlltk<n·!:::: Smn:d 

must lx advl.sd of .1'11¥i, ti a oorA.lt' ~lk: lnforrnstlon, be 

bound by tl1e Ht-tnls nflhls MOlJ or the i~u o~thc r<elevant confiden~ialit_y 

ag,reemen!, as applicable, and ~::ted tO'b.'iffil<ly with all its 1erms.1

'" 

~ '* '<

On tbe CITC main network. the G_omnilf~O-f'i~tgrega:tea access to J_XJsition d~ trtmsactipn. clam, 

tir:)t'l'ld.M.rl;J.k. data, and enfurceme01_, :data. ~lilth mux c Blso ittclude .U,tn reeeived p11mWln,t to an 

MQ\-1. HYW.;Ytil', access t<> data v.'qh-lrilQCBNet wa.. 1\{'f s~gr~~lCil :t.-"id ttl¢ da1a run-Jaim:d in 

OCENet lT'.JtY have indn.471 ~{:Wt~U1:~dh thRt was received pursuant to an MOU. 

CFTC Marui:gement requ'f~~;iv,the OlG slate any uvai!iabii::'da-iu that may ~lave 'bee!: obtained 

by f-or-ensic t¢Vl~' w~~~t~}t the lac.\; ofsegrega:ted aci:CSS' t6 dritli Wllli1i1' OCCNet' and lhr 

Ux:k ohutctn:aff;.dl.t;~Is-t~~}tnttkt-f1rnr.$k oorilysis ~ifficult; ltotvever,_ as hQted Ln the Dt•aft 

Rer..ort. ~g~~}i~l~Rte 20 I t' ODT required individ<m.l l:lli::t ffi:W'i.liltS U!id r,;S;>W('>ith,l,11" 

!'!: *<k;'it 

A/G. d 'Z;¢ ~~ -~, ~i?, ""'<--_;rt; -,) 

j H The irther l<gt."11d<J!lndude: u~?"l!lll'Wl1! Beard ofGovemort of!he Fedeml n.mltTYC 

SyWm; Offioo nflh¢ Cm:rr;Mi'llkr 0f:N: Cuffi'llli:)-: l'r~ien; Steud!Ws and 

t:>cll<tng_e CI.JmmG;lM; Fcdtrnl !J~Jp¢sit 1ntu!Wlct (X•tporwitm: f~ti.l%fl!! ~I'Ju$il'l<!-k'lmw&e A,ye~y: Na;looal Credit 

:;J,,!,\11 :A,!\11)1'!~)rath:m; Office ofFlrnmelal ~xb; mld frnwln.-l~·1r.r.t rr.r.m!Jf..m. M~l•f.tlhlllm t~f 

U~!r.g f!.t'~'lrmng It~> tl'tct!!rt~rtl dNttn-Pub!k !.:;furmatioo Sbmd Among :¥1lrtNf fm(!iJ.ll\ to the 1\"t:idFtm#t Wall St:roet Rdnrm and Cnr¥.i-Z!b'.<' l'!t#~li<;~n Ad. ef!ei:thtl/ dMq Apt\ !;'l, 2011, 

H.'!>';/ 

m IJ_ :lt;Jt;, (,, 


1 ~' Ourr ltcron"~', llt 10.1 ~ 

22 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
we m;d 

proceed~; 

·'*' 

require Federal. enlployccs ID malnroir.. :t.lro l:ml.l:1drn1iality ofm:;nkp ret::e:ivcd 

tluxl.ttl.PI'k! (X)m'Se otthcir errtpjoy'11'1ent. 11 ' The Qnnmis!>ion 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


lrt addltkm tn tile requirements to maintain the confid~-'11iality ofSrctl<:m 8 m3terial, all 

::::~:;;o~f1t.~ a~ocy art subject 10 rlre: Ct:;m.rti.lzsiou"s of 

ln pertinent part, ''[a]!; lnformation and doo!llWmts obtained duti!)~ the~ of 

an investigation . . shall he ttea1ed as non-public by tl!c C:ommission D i!S staff. , . ,"118 The 

dam t~ ~11#-. Ct:*r.tJPi$$iii'f!.. !).$ :r!iGI~i,.~4 \<? ,r;:gti14tc'maikQts' iS 

fnlls underth:<:;'fo!l fl!'ovh>\f#.·.s~ r.w Rclef-,.K·ofliwcstigative infoonatioo is ;::.niy 

Cumml.stiion dirocts ot authorizes the public dlroloswi:: of tl~.e inv-cstigatWn; (2) tlu;; 

& dOCurn.ents are made public during the cnurne of an 

is requimi by tf& fr~l'.\fui'll: otInf01111i;\lm·:o Act. !i!l . ~, flt'"~ ·~1: 

,t•,,dditi>7lf!f1Jlr, all Federal gcvernmeut crnp!oyte$ nro'n;W:e·~ ~.) thr ethi.;;;,Jt1 'ift,, ~i-~~ w:hi;:.;h 

M!g;m:Hog tiM> disclosure -of .information that pn»'i<k" '''[' 

m;plo)<' siuU not divu!gt:, -ot cau~--1: or all<:w to 

>XJmmerclal, wwnomic or cftlviJi in:fOrruatl:on t<:1 

infoonatir,m in advance ofau1b~G"$i~a fin its~ 

Similar to- the 4ls:n;sltioo $Mve -on S&:thm S, u4,?tgre~OCE ec-onomists el:l'lployed at the 

C.tltl}r,1i'JPJt'Jh would ac~D the n~-'O'it~{Ji~- mate1·l:d~ b(A'f>:-'!e.l', tll.l;\J' hn>Je .ne 

auth<:nity tn wlease oou~public infoood\lgl td:fndiviUl.U(.ll> ;;:Jbide t~ Cnr1rnimllon, 'l.f the OCE 

eoonomists' ~n> W«¢ vrritimt vQihin 1~"$!.l'ftheir employment, the Co.tttmiM~ion would ''Z' --'.«t' 

,f"*'%-· ~·• n.c.r.Jq u.:;. "' ,_ -~ _,« "'I" . ' , L 4~'-""'<:n-L,_, - "'- f , ' , 11 rreiit9Um, roc oourt f•~ '"~~wu -..·,.,,'Y"WilrW tr>t' ,..,.,ttetliff)l c A:g.rrtm.hvre to !fl1!1($1tgi!le !be nperab:l!! 

1Jf4>:mttmmukm;: it)' 1{: • ' • r¢p~JrttofC$ffll'!:\QdityllJ1ll'kct !at!SEcnonJ. 

dmle' m hy 111:W<\lll ;Jf&ll't ~'w.dmthm tlr iu¥<$1lp1mn madt by,« rttum, rvport nrreOOrtl made lo orfiltffi wilt-~ 

~ut)l OOpmhll->'!!1:: <!1 ~ycr aifker or ampklyea ~lwrtof, whl~1 infom.3i<VA ~tWit t..><: rt>k.t% Mlbe lrtl.Ce wttl#s, 

·r:;;~:~7::~=·~~slylt ofwork, tltl!flfll!l'tllu~ ott¢ tit¢ i!l'(t{iity, .;:rmfi~tild !!ffiill'li«l: -dt\11., lllllOOI!t{'ff~llof ·1 l~& IX fl'~itum <.4' a,>zy ~;m, H..<Wt, panrt~.--mhtp, ~U&::;. txt rooocilllioo; «penults 

ey kwome rttum @ W9Y \hfflli!(rn: w:.- ijey!Jii: >mm~i»g *flY l!bilfl'\K! or pl!tticu!cni thetooftrt tm .«ea nr ~.X.hi 

1rt mw 114'!11*11 n;, providffl.! by iaw: anbe fi!Uft'l rmderlflir.-till~. 111' imr:rilmllml nctmnre l)v)n ,_ Y*#", or 

beth; jlt!J $Mil be tei!W'tletl !'toni offitii « employtnent" 18 U.s.c 9 iW~ 

'"' n cJ.K. sHo.ns.s. 

i!l5 )1-1<J ;a. ;;J:;J;, 1341. Si:'<i>;'ol.hl:_t ~~f AgiictJ.IlWiJ $h1.>Md that 

lied Willt l!!j \l\l'~~~l)~i)1Z, \t(;t~ )"j'.je J\!~;:r:ll)<):t)¥(1 .··~<V\1!4 ~'¢ 

'6 i•>ve:l!igkt!'XI p&+twta get 'h)!unwy toop¢'lll:Klft. 405 F.2dlll 

35.! ,51 {(;mJ!ng Fowtli Am.endment prohiliitkm against 

rettt~lrill# r~.:& znd diMI=:m.v.~·wilf', a:,lfl~l;il {l~'4t;eoseJ 

iU(:}l r!j:IQft$ JWX! d!J.ckGUS'\:H Wfi'-¢ rtiisoo.ably rtfK-<?Wif}' Ill pro!"ei:1 th¢ pu!;;!J<;:;t 

ef!\r:eror <lmp-kl'(tlt' nftJID tJni!ed $tetes m nfJlly d~J;or agtmey lhmlof; llllY'P!J:Wltt 

fi'_,q fe;.i~,~;.,;~l HQi.lti;";g FttMr,w Agw,;;y, M ,t:g1ml uftlw Depnttmer.t ofJrutk:u Mdefined ln 1M 

Act(I5 U.S,C lJ11~1J14), or lltrffig<>u ttupi;"J;rte of e; pnw.w WM-vt t~t~ivP wlw ts or 

ag,encyurn.letthapl.et 37 ut'<ilk 5, puhli:lh.o"- ;;t;~•_MB:f;;, -11;;:1.-;wo-~. ;w trlttl;.;;:<-l:!Y.•wtt in JYtytMmtet 

!i!!IIWti:tro hy hw MY M<.v;t,;ttiM ~OOii~;_g to him ill tlw tlllllilt ofllis tmploymt!lt or offir:rni 

23 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
G'TC 4id n.cl i'];?CS¥ ,i 

U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


have te n:pproYB '!hii f.i>J<li!iliii cif.itrif fif.it}:_fliihlki iMW..tiaL ~r.untit 1his:appr<>vai has ~tn 

w~mi~4. ll rtmy ben vkltatien of these to :;<;;k~<>:: ;-J<:J;,-p~;;Mk ;,.;funmttk>.;;- i» a;;y forrn. 

lncludlt!N '{}i!i";fteVicw or outside trerairliffi, 1\!J ~~ iu l'art !LB, ~rs 

\1\Ntre suhmitiecl t4) juron; f{ft ~,; rovl""" Mcl o!h~m were written with c001:utbocs wl¥> fmd. m.o 

filia:ic::mbl¥ with d:w Coounisslon, However, the Dta11 f!s:~rt dl'-t::l \'l')t rr:.<lk:~· fhtdin~ 

w.>rmmk.g whether 1he darrr Yt"SS rrlso sobmitted to frru jumf!; msbru."t':-i wl.th. ccHtlEhLw. nflo arc 

oot affiliated wlrh i!l:m: crrc 

comidct reoorw'i~'(l;bt!;& ~{!-di'i;{)JJ,?(JlW\k"'lt lfl\ l4lX! be 4ctemtined thut data 

Rt:Ctls:i\id ilf; Oi¥CL}$¢U, 

T:tc find&- th;n ttre i.iec.isioo to il"m~Y :iti ~ui!e:C_ 

in a First Arln!rnlrt\¢!;ct Yio1at'it)J; and p.a;~t:y ba~-d ~hl$ 'tmtlon that the ocn 

lbeooom1~5 \>;'T-Qte papers aa private eltiz.ens nnd tal duties,nJ The Draft 

P;IJ')O inwm:C"Jy attrib4tet t'hc de'_:h:i\1."1 to_ ' b-!Mi4ili:iti: w·uae 

Oeneral_ Coorn>d rrd(b )(6) I (b) ( ~tr~r tri")ht~ c~rtl'lian.!!4 Additionallyt the Dtaft RJ;Jf.flit 

~ri:s Umt tf-.;e z,g:crucy may have ~in prlo~~iut b-y it'nplt"<f';.;--rn-_/<'.g '\f.:'.'i~w r,trn:ess 

Mid -Kr: tilt\ 1-en~fft nf 1\me review hns t4~ ~ich V4Y: OOilel/1!1 \3 \W}l ;:nrwrcL 1 ~" lt'J ~1 f.:»11t in 

groaie:r dctiii bdow, "~ hiivu revie'?ftld t!1i'Uf~'J-~ ltidin-gsmJ.d believe thnt c¢!tnin ~~ 

W)t&rr,qts,. legal '.; r~ nK·-rlifi.;;-;:L sr.e-dfic-t!lly, P} H "'~'~ tbe 

n (b)(6),(b) ~iwd"idml<vw>P'<>l 

; (:!:) 1h£re Jlt¢ oo p¢1entfnl First Atnet~dtrBtnt vivlrnJi!l" 

e~~~=~b~'f~:tfl~ C fTC ·11>.~ :rv.1< ·pri'\'IXW vid;r~'r'~; ($) the 

!_h,·,.m,-i,¢-·k. p,-;,;t:;;:.,-;~, .an.:l:ti'~ ~&cr~y's 

process refl~ ~' Kt!ltJii,fds,l_ ar.d {4) ;he OTG'::. ofttw outs'4ie 

~_plcYJX<llnt rft1~'{#: nustnkcn, CFJ CMtl1ll'lgl:!1'h<J1'li requt~$\& t~t lh~ :Pt'*il: R.zptm be 

"""'" '""ll!!ill?"" A,~ ,~,f;~tt·li' Attril»!th•ll> ~r tt1~ n~mi~Oh hi!U~;:atit:a: 

~.;}~:\ of'fhw Draft ook::s thct the Cluitt!w;'$ Jan~ :Z<l-, ZOD !ffit':r stwAd: "!!\he 

Ch~~) ba'Nl d!.rOC:6il thfi CPTC staffk-. £l.!Sf1C•Ll-the extemnl publication of research 

romh.w:tect ot suppcrtOO (iCE,"' bt fact, the Chalx:'rmb's dftF.t:litlrt to isreif.e"l.lied :th.r-ffil$hout me Draft Report: 

1

"' I1L ffi: ji, Ov. 
 m !d,w;/4, 


24 

App, 6- fvlarm~<lll<'tlt Respouse 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


• 	 ''1 hi: Clwllrtn:_trt -3Wt..'ti 'lhn:: he· ll;td -4it>;X;lr:xi !he Cf·1·c staff!o $U$pend the exlem;;! 

pttblfcaaon of research C4nducrttloxs~ed by OCE , . "':114 

• 	 "the C-mnrniss!'Jr!. . p_rcv:;nte-d dissemixwtion ro the pttbl1-c :research." 

and ";hr Agency ha:$: no'! app-r-:;ved m-\1-s-'; of1he ccooomk~ it dccid.;;d Tv 

n:"View in ~ml?:t 1:012, aad anllinue~ tV prcl:1bi< new ~ean.-11 pubik.,t!on:> and 

presentatlott<;.";m 

• 	 d)Cre is a secti-on eutttled ''The U:!mmissi:on.'$ fktd$18n tQ l!mhlt>!t Pul~l'''~5il;!!\ » 

C:crnpJeted R~h. and 

• 	 "the Off!..~{: •Jf ibo: Ch~:Jrmat• ~~' "'~'!tVJH\ttioo with the tOOCJ irnl<,(il>ll!i/flll!llper,,J;,J 

OCE pubUcation and presentation activi1Wtt'-·-!ZOJ 

CfTC Manag.:rr&fhl a~tha.t lfw CPmfmlru:J, @!fu::',!th~:'~~:t\~=J~~;~=~Ilm pub!it:{t1l.ittl of ecvnornte !onatek pi\}1014 during tho v Ao'ld he aeJXt wilhtn 

the >:cope ofhis authority ln doing: so, Ho\SOYer, 1h:e- Dr:Jftiii:'l'l!;r.:i'i! inro:rn;.::~1y 

attrlbutts1h~ <H-:t!i:>t:.S t(< thli Dcpu;y 01%ittra! Cow>:wel fu (b )(6 ), (b)( 

Sr-4ttion 1(a)(h) ofthe CEA <:m~m-<:tates the Cha~~-~~~ and hnu:\licm"- The (hl'<irman has 

the st;Jl;utiYJ} authotlty to carry out ihc agermy•~xecufl'(C.Jilid arlruintstrativc ft:mclinns. wtlh:·h 

include supervl~\or M ~"'!net emp!GJ!r.d hy ~~_,(crg)tr\l'$ion, distributing work among: the 

wv\\:; ~t !lt;; Coo:unissioc, as well us tl:e-~ancl c:x'~irures of(ur,,k i>CC<ndi~ ~;;:;. blf:igets and 

yri\Hilbr: appttwod by tbo Corwnissio~'-~d,.i-&1~m!t th'0 C!mirn:;w rl'W}' ddl!g,"l1c tm:m:: of thc!ll! 

:1\mctlous, seCJ CEA scctictl 2(a){G)Q;), at rl'i;;,~n; dtd tlw Cl:taiooan the functiOlhl 1o 

OOC. ®r~d ;:di actions taken by Of1f"'-'Witm taken uud®r 1h('c Chaitcl-lll.'& diriltt!on, T ~, 

#"0/ ~:;:

:Bccau!IC the Cl1ltl:nt'li.!t d~·l:t;kl}tll<:(imi<:JJy s:1a1<::J that he made thedet:i$ion to'"'"""' /• "y ;

publica1ic:n, and ataff"s ;r·l;imqlltntw-.:tivm: >'r.!r<; at his direction, i!tlld because the Deputy O:;:ntri11 

Cmmoo! fo ~~bavc the tw!hority 1t) au~-nd pab!k:iitkm O)f p<~ptrs, C.FTC 

~tlhittl t,, __ _ _,the>Dl:aft R rt be c~OO fu dim!tW:r nny th:a1 fhe­

?tL (b)(6),(b)( ,,,.t,dcci,ioonwket Cl'lC 

t.- " that the ;;~ 1he- tmft'J«;_fll)r; 1ii> -d.:-""r~bd Le-hY"'< 

ii: -Oe Dec<t~nbtt 7, .2Vll, dm ;.t;.Jj:i_gncd Ut:puty Oencra! in 

'l,:'iln,rultarhm 	 the Cha:ir:nnn's Off:tre. insti'tiCt'2-li the Cb:icfEccnorrJst ..." shoub.l 

be corrected to stat;: "'The Deputy General C'oun$'<lL iic:tlng (H,! in:.L< 1'-t:L),In frmn the 

C.t~irn'IMl•r> Offici" 

'!f. Jn' n4 

,:,j .fd, ~), ,$_ 

'~ rt1C 

tr lL 

111 ii, ;.;, L 20, and3L 

01 7 V.S C. § :l(a)(f;:\A) 

25 

App, 6- fvlarm~<lll<'tll Respouse 
lt'Ji' 

··.:._ '""' y ''"' 

U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the lusp~tor Geuerai byCFIC 

ldtltcg.ufl; C-<>Nfi>l-.YnJkJi.. 


;.{(4{!-i~titl.r;' Flu Jntrrnal CFTC Dfsttlb:utifm rnut Jieykw Owh 


• 	 Pag£ iv: ·""Howe~:a, 1hc [>et\cmhu2fl12: im;tmclion from lhea<;signed Deputy 

G¢n¢1al Ccurmel all fv:d;ar vulJ!lJ;Mkln mhl prtztntat1ort _• Y 

:5l"tOvld be- chang<Xi to state: "However, Uro- t).;.;&e:nbwr 2012 i.niitnK!k·n frvm Ui'e 

CP:ainn;m d~:ir\y prt4Ji~~ rtl! fnrthtr P\lbEtutkm and pn)!¢nlft1!on 

• 	 l'age 1: "At dose ofl:nsiness em December t 2017~ d:¥: assigned OCiL ~ury 

Ometal C.oooset in coosult!!dt~!'l Vri:t:i the Cialm!ita'n')ffla, •direard the t~ef 

EvJ:nomillt , " s.tv!dd 114 chan:;-i:d to $tate "'Attbe close of busiooss oo J::x:~':flwr 7, 

2012, ihe Deputy Gener4! Coumel antif!i,i on hl&t<W.i;t•r. front the C::utirtr.,•ii\t;r;{tfiec. 

Jm:c!ed !he Chf.ef ECt410tl1 isL . ., 11

; •• 

j 

'?' '0 0 • 	 Page 2(L ;;A:> p!C\'!Oillil!f diJC\J$!,"'''-L wit!umt re~ tu the V>ntttatP•l'!:«: ltllrei!t® 

p11pcts prcpnrOO OCE ecooomist£~ tb£> l~P'Jty t1rne!'1',1 COjp!S~~'t~~(b)(6) (b)(?! 

dekrt:tirtt:d to bat .t;uhUQtkn:: , , . " ${lpuld be OO:!'l:'eCted i~?·As J;rcvious!j' 

diswssed. without regard tc th~: contcnl ofthe res);UtCh ]~~~;r,ared by OCE 

«:cmrunists, the L'hm~T~Wn deiermlneJ. wS~.t;;.pendiJub'!1CliriorJ: ~ .." 7<"( ,,, 

• 	 Patt. J 1 ~ H(t.}Ji¢ Offic.e l1f 'tht (:t\ili'tfl•tt!l b ctnts~~~~~\4ith the Office of the (;tnetnJ 

Counsel indefinitely ..." sttoul_j}.!~,~'t:::1'd tv iil:>le "Ll}!te Utfi.t"<' <lfthe 

Cilai:trrnm .. ;,_f!'' 2 

~~ j, {$' 

D:ruJt Rwpari t'intAulvNd:mwut iU!aly~~"}'A.: z!"'\; ""' 

'f!w Dt4!1 Report the Flrsf~~JJWPtptr>!C~>S t~ t:g!:ts ct.'~<:'ifn~nn::~t~ e\"t'!ployed 

by OCE to publish cert:ain ocnderiilsyarof&.,~ (ha1 thll'SC rights "\Vt!fC po:ssibly by both 

the ti!mpnrary directcd<b}>'ihe Chairrr110 !!nd the ~vitiw prnu!d\fl impl!!rmmted. the 

1ll£Ermy. 1:n However, the mq;al?Jl~w!edifcs tl<at "[l'Jcivu! il"<:nplo,-ec;s d•;; n;;;t l;'lly;.y We 

Sill'Tte Piut Amt:Jldng;nJ RtuA:t:S:J+i' w,ivm:e ;:-bx:t:n:s..tl! 1n the oro tf·.at 

th~ "Firs;, Artx:rulment oo;~o~i-~'hl~Bi from lAI'i f!XfrT«'-~k!P.~ }Mbli>J 11m:p1r.<tWlti·tr>ake 

f,l.tfS\t-&.1\.! ~r,; thcir1f!ro~totl~a:-qpe:;,,, ,"m ?ointi:l'.AA i.{> 1\<f.JJ,>.I\1;{0: in~: 2f,lt!t,; S,ciPf':'m-'.' 0>lh4 

dccjsioo, OO"'"*".'f:-:,:q~-ibJ~ :5,J~¢)Q; tl;;.'.\ "'>t¥hetl-"'t tOO fu;;l of public ernpit>y:nen~ s:itni !arly a!tvrs 

tiw f'irsl_. · 1\~figli.:s of p1blic cn:pl:>y~ei:Jga,gKd in spem.;h r¢lll"*d to scl:mlarsh.ip or 

->open question. m Annlyzing tht ";;;o;lfi'\J'' of:bt< <:m~:byn'>l!nt ,,f OCE 

e-!t>:<tll'l:.esdlatlhe b&-~pe!orle-!'ll::C OCE C\)i)l!Ottris:ts :t;dr 

&hould. be .;or.sld~ IDe SpccifieaUy, 

thc-lff<Jft Rerort notes: timttbg OCT\ t:COOl)IDistt \\'tote rheit papct$ as: private: dtimr.s i'AtCnrr<;e; 

(I) tlvi:t!C::E: 10COI11J!l!ists, in .ruldil.!t,n to th.:-ir d'fida: dulles, ¥~ere hired 10 '~lndcp¢rrd.::nt 

ucrulcm!c m~..;:b,= as a!:cg~iy n.Jfi>.J<:1cd in ti:;,;Jit the Com:mizsic-n 

'" ;~M-Fff>;;·l\·.m:r, at 2C, 23. 


IF (,;, ill :{fl t fot:m;N?. ''min:1<i) 


26 

App" 6- fvlarm~<lll<'tlt Respouse 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


the e;;:;.mombt:< 4> ptthlislt thdr n:scau:h fMp<::rS with a 4iscl.aimer that the vievrs 

ex~Ysecl d;:~ not represent tM v:ievr'S ofthe Chairman, the ():;mmission or sto.ff; and (3} pas! 

OCE :>~ttff eoonomic research has been published a;; uffidai crrc fi'{!Ut'tll '1->ti.!h.:lut di;;clahners. IJJ 

CFTC Manag.,-wl\t di~a~s with 1he:re firtdhtii(l> and conclusions. As explained in g;rearer dolitail 

~low1 OCE economisls eppoin1ed as eitber full¥ii:me emptoyet':lt or &$ ei)her <'<OlhM!b~Mih~il or 

um:ornpenSil!<ed oonsultnnts1311 ·wrote papers as part (lftlteir ctficlal dtlilcs; we dillll.'fl'OO with the 

OIG's applicatiotl oftlt? abtW<:·ref<:ren~"i>d l$1lguage in a 2006 Supreme O::mrt dm::ision" 

Fimt Amendnwl\ltig'lv:s of w;•veouH<:r;t o;;l;tptwy;,.'V~; and the inclusion ofdisdai 

ret'leet that !he OCE eoonomiats 'Wrote their papers as J.Vivate ci<i2u!s. 

''"" ·;.,_ •? 

\VbHc the Firm Am<.md."n,ent prov.idf.'n 11 hi~h degree of proteetion id~b~~ito,PJ;hy private 

citizens., the tw>\' ill very differertl whJt n:~>p<:.-:.:ll<:: !he \Vritings ofi.a r-~~"employee au.tl-&r<:ii ,f , 'f{ L, 

pursnant'\o and v.ithln the scope of his or her federal enlplo~t::_,A:l~Ug_h •'public emplayees 

do not :;u::renticr all of their First Amendment tight$ by ~-(}:~ar en>pleyment/ iliey are 

s~~ect !o ~gnifie"ant cc:~stralrds on 1_hdr First Arnm::~.!t:z.001:. awli:able to ~-lvaW 

C!<:tzen~t (iurcettl v. Ceballm,, 547 U.S. 4l.O, 417 (2\.~6}:''~-'H,£<~-rcetJr, the- Suprezne {A;:.urt 

ixmduded !lw1 "wben public employees make ~cteJI:fi~jJn,;um-it tv lbuir om..;.u dutiC#. the 

employees are not"l!peaiting ss citin:ns for fJm"~en9Jrieni pU!pQseS and lite Consritutian does 

not insu!ete tbeir communications from -erwloyer O'~iinr:_" lrf _ _at421T Whlle Lhe c,Jm1 did 

not "";i~H~,;~h~!e a wmprehenstve :fr:arn~t;J.,(:~~+~fivJttj{ t.l'v.< ll>l\J}v.l vf m1 emjJIDyel;l't< duti~s.'" id, 

at 424, it did nole the:! lhe "[t]ht :PJu,;edn&,~ is tl: practical one," and that "l.istlng ofa g:Jvrn 

task in ;m em plcyee'11 written job .):l~~plloli' is neither necessary nor sufficie-nt ro d?mbttsirate 

that on~ht·~tl.ni the task is wijpm,Jht;~ u-f the emp-!oye~·s ... dml;o5; for fJr;;~ ,\in¢n!lm..mt 

purposes."' H ai 424"2:L. ]4Rt~,f:o~ f.,.;.we iook<!d to an employee's job description, !he du!li:$ 

they n.t:1ually perfon:n,. anf1" ~ilb}~ct matter of\tw: speeclt ro d~mrine w!wther it fa!is in the 

stope ofempl~Y1f=n~~~~~-rhlta v_ Rodrlgu:ez, 73:" FJd HMO, 1069, 10'14 (9&. Cir. 2013) 

(en bane). : "*': _--",%,<»0,,.5 

lh d·~·cfirti1;~ r,p~}ti~}c~kriptions of federal employc::s, 1he (l{ficc vfPctso:r-.n¢l fv1<nUM,"-'tle:nt 

t'OPM" Ji~ that 

t'""" ~ ·-·:;. 

<y')! """ ··-i:_ 

H /d. 

HI CFTC MMI1!fi~lll r.«.;::o lf.HIMJrt'AOCF. ettlrl<);n·<!l> w)m dmfu:d pw,RG Mre !1!Jte::nployCffiofllw ~!Icy, ilu! 

til&.et ~!11¢:1 l'ftl1i( under Gl.llllrncts As <.:untructflrn,. !My :Jre no: subject 10 1lle l:MH<" limlutk>M I'IUlbtit Flrn 

Am;;;:.i;a·r~;! d(ibh u OCE eoon«n!Jm appointed as eillwr fuiHkt,tf \l{U}Ihl)·W.O~ ,lt td (--\11\f;;': ,1\1111pllrri"Ri~i \lr 

Ull:XX::ptniUJHJ tllMHhlllltl: Thi" tlt$,r~l't.> !~¥!l<e<'lt>1 1". t'l-lt rzvmw prDi::- dwwi!:wd 1100¥4 lu .Part U1 a;;.j lt~]N<> 

in l'trt l:ILC.:l. V/hl!11'\hfy liN ro<.t >.<J\~!¢<;1 Fi l!\l> Wnl¢ !imit~!i<J;}soo FiN! Amendment right! 111 fetl~m~l emp,~:';''i.~s.. 

their flio:LllmePA:moot ri-sf~tt are limhui 1:¢' choiw lfi the Jenru {'<(r:..,!r t(d:~"h '-'ihkh mey uu!hJJ!izf TI':<t!ew ami 

a:gt£cy ptt-41pprov;al before put.!iwitm. 

27 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
aruHo wntrihute to the ' 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


'la] pt;):iitk;.n 'J,{o;s,i;riPt16i1 Of''f<D'' lli a Skilimlcnt of tbe mnjorduties, 

ICB.J10nstbllities, md supervloory rc1atlonsblp~ r"f a:. fW_,~ith'i-rt fn its sirnj~leil1 f{'!l'1Y4 

a PD indicates the work to be performed by the poslti<m. Th~ pt<l'fi"~ nfa. PD is 

to dot:-uni.mJ! t!ic mnjut dtrti<:s at1d ~p;:.twihlli!:les o:fn position, :n.ct to spell out ih 

detail cveiJ: possibh: activity du.-riug the work day." Orr!Ctt or PPROONNPL 

t.·lo:.n., Frequently Asked Questions.· Class)j1Cadon, Jt11m iF d PoSJd&n 

Descript!on?. http://www.opm.gov/FAQS!QA.Mpx:?tld"'Y!2clc895241Ci:w434a~ 

ac1e~beii6ee821J.S~Pidi9;:9dfD1fJ~H5~0~f87~!Hla4-3e20125fl20S. 

Hnwcver, OPM has also Slated that "[ijn ibe eveni U!at a j)JSition changes, agenci1)s 

J!:it¢f'driti i;;!iginal classifi.cstioo lUt!Jntity; that in, ¥trite a new position descri 

11¢W re$jX)ns:ihHities, ar..-1 cl1!3slfy w;:.,;,qnl.ittgly " lrt!rorlur:tion ttl the PositJon 

Sitft.i•trlPJi ni '59 (Revised August 2009'), 

The positWlHillg:tip11Gn~>- fo~: C'f-H,.cy, Lli ood CT" 14 te$tJa1.'¢h odoosnh~~ if! set fl)rt!t tl),j; 

prlJX'Ary dnti2s and xespor;.Sibi!1tle$ for eoch resemcWl ecrnK!mi_it~po:~ifM}it,,,~m.:~ of1he11e position 

descrip::lom- provide tba! '11]00 iooumbenfs respon.stbllti\~;:s~jU'iQf!U~J;}&a!~thttt. m'lding rules 

and fm ~bcit ;;::m:ny-.:tti;:iv-" i>ilf~1ii uti pcit;;; distnv~rtl.v;! iihmediacv. . . . ad-.-i;;;l.':' 

, , . will he usee by the C<wnmlssinn's Vlll'lous<iivls.it:m~L ®Jidi!_~~rch ~topics witftfn til¢ 

scnpe ofth0 Commission's ugenda . . 

microstrut'i,W¢ qu.ettion:t 

~,gPIJ?~~~~ i¥~·1.1' f\'1-\\{~t 

~ %~·?} 

Furtl".ter, tf<C positWn 

hlillMUOOtlt also 

expected to be prepa:r«J 

and b-·r,Jiresemch ~N\"'"Yii&>s lli"vide Wat: '"the 

utian uf:,peci!il JXIDjett:., , [and] is 

nt professional and confe«:00\!<1 

tl}\j ~ffett'lllSSt>eimtd \Vith 

UO're< tmd jXl''lf..:;iell.." H:; Ali·:JJ<:\<)tm!Jy, !he ~1tiOO 

provide that: "the locumbent is expected 

sm.t£}!t UI.Jt m serve Gll ,J{l !'"""ill oandrevi~w- papers ·at profm;simm! -rr.I.Wtin:M&· 8!:l'ii;i 

conf~Jrl.'l)C{."S, to eonn'~C<J!ternture in the UeM.... ' '-~HI 

,, ~-':o> ii, . .J' ,. '\<,_-~{ Unrlerihe. Flrllf'A!tl'~<!~WJ.ef\>:·r.:'.rtrn;lLt;~~.,"'U~~ 4txi"<'tdn Garcettl and Dahlia, the writ"..cn by 

!he CICq__ecfnOJits~~'hltuu the 8X}tl(lntists' dui{es tO ''Cnnlributw lo. ihe li~ratu.re d~ field"' ns 

set fi:lrth'l,n~'c;!."l:J through n~JS t:sition" " t.hey quamyns fed<ral 

1· mi.'l;;k.· pn'.la."Jt· to tl-.&;r offi,-,,nl· l':lulles, While the Draft Report asserts tlw-t ~he 

were hired in part to perform. ''im:kpcnden< <;;:;o;_demir; H.:lillRrCh,"

111 that term 

in t1ut po'>illotl. dem:rip!lom; for the OCE t:L"'nomium, and none of thor pOOition 

authori:r.ed OCE &:rmt>m1t1s tfl ;,vrif.e "independent" academic papers as 

tl? CFTC f>®itinn ~serlp!icrlz- #.A~~amh F.~<J=mbl! 6!J!l!Jfl4, 00(1(1(1$, wxl600009 

1

""CFTC Pi!ri':ioo D<rer!ptiom- Reseatth Ftnnuml1-t 600004 illid rillfitlfllt 

1M D!t<.Ff !ttro¥T, at 2L !ti I& 

28 

App. 6 ~Management Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


citbrens on offida! g:VYernt.r&nt time;1"i Mcmwa. the papers were drafted go~t 

time,_ tilllhmrtes, and data. H< As nnted In tbe Dtuft Report in a discwisinn oft.% dnve1npment 

»nd ust wfOCENet by OCE ocooomlsts: 

(N.!)r tim<!, inlltJ>a.ger.cy use appem 1o have: dro~ :Qf(, :while .ffi:te.n".JJ .mm hy 

OCE MOO\)lnists increase& As overall delnaOO for ()CEnet !',rew, additiooot 

equipm!!-!)t. V'/&S tbr. its.use, . WJ:mt begiul'Jill *'::ft~~:=~' {and &-m~er)- !s).nt:ruiy t~ty, .J"r~ ruivMtng¢1! 


pUif>0$1!$ were many: like any serv£r, i1 stored dala so thai i1 rlid no< ffitl:ld 16 ~Jsep'..lftl1ely loaded onto the many desktops; it w;;s fi!;:;;:r,:-t, mr.-anitltj that U1~ .,~· V 


ntauiptli<ll:lmJ and t.1ucly uf rlat.w;i.s ro-ulci or;;c-ur more quickly; and it z:t)~etf'\:;._ 

~1:)\JU progrmns for the manipulation of datu. AdditionaHy, it al!O~Q-~!9 

bring oo outside economists t-o do ~b"Wh~lc li.uitlng ao.xe55 to th!}..cf'~ 

f$:tWOJk. 145 -0 ii(''""-"> ·,'4;-""
 \ ' /'*'.% -- ,,./I ».9 li. ' 

s:gnitiCrurtlY, Seclioll. Ul o~the c~ ~hoi Cll!.l fot ''ln~e~~~ii'ni..c :rese2!eb" H<'il.t 

dtrects the sg_er:.<'y t<l r.'$t1'tbhsh M!,_ m>1mtam fl."iJecseh 1 ~rmqpol'hprngrams that tim 

CfTC'stni:!&iott and JYJ.tPOlfts oftl~~: CEA, · " " vt::rtln'letrt time, mour~ 

Md daM to fulfilt this statutory responsibility~ 147 Arl 

ofthe the CummiMltm would ooi~;Ve to g;unt eamtHnl!lt¥ 

~ess to (¢(;C<TM tlw-.t rn\ah: be :Pr1vi<ey AN pK:~~,-~i ~ _ oft±telr ~~cial.1utie;; lh1llm. m>eessary to accomplish Mage~~.n!\'."'.."'".n.~--- As d!ECussed m W"etttcs detali m Part llC, 

lh~;re 4fC ~'!<,)routine: use exceptions to tlte~;~~:,Av~ tbat wmtJJ Allow 'the C..:>nurtlssl.M to 

provide Privll.t'y Aet protec-ted ir1¢Ywatimt':m9t£ economists aciing in their capecity as prlvMt 

\:itizw~; trl. lttdeed,. m aa::ord~~~lh<: directii:m afSt.::tlotJ JS #ftlw CEA, the ~t>hjoot 

tnattet·of'!.he·papers -econoo;Jcs,9f~odity futut<:S and related ropicl!: ~tall£ with.ln 

the scope uf the C:_'<lrlmi~<~.<_i_g:n V-~i-yit~s. e, J ,, -,, '% _.;t-'1­

--: ~¢$~ J;~;;mqmist600004, JS!J~ and~. OCE 

oo ;opit• W!!llin the reopr. oftl# CmvmWoion'o-p6lk;y IW"mla, s JeditMtcl serwr !.!Sed by OCE t(> SlOt¢ t\tlde ;;b.I;J ro fll~1hffillllls work arul that tlw: 

b;- »ll}'VI!t with 11\X<%1 to OCt .:;Jflw~t,· bm: coold OO!f 1m 'ffillil::l"W!l:lr ll l!i>.lld CFTC 

u_ il)(lti<g •ixo \ill(: ulo;:;~Nut, lu abliity m run cumpln ~~~~' 11«cied VHI«a!yu 

iili! 'thili l1e ilik~'lffi%tei 11i'OCENe1 hmluded 11~ efdcla tO th:t it wru nl!t knrled orAD 

t(> q1.1i>;:kly nvmipv\l!te lll!d sanly :l~ -:md ~~ \H\lqwr l-"llf!llill'' f!J• marripubli;.m c•i;:futs{­

,at to 

'.S.-c. 922 0' As -:litcuU¢6 in P>:!rt !! A., rt ~~ i:mj)!J~~c;;:. firfl>;> :htt, u.-t.lle $!;(;!kx; l$ req»irus Jim CITC llHoo:lm:t eti;l..'!0!A\i!'. 

tf!UI!l\'h 1Wl thus protltles Sllfl{Wrt tnal the OCE tcfJI!uti!J5t!J 'lf'f':!?l- ~!:1~1'! ll;l !liWJ l)i'J;lw.il:'l"!ffl~l\l.l ctut':i'.<>. S%ction 1& 

•J®;; flill <){<Jl.lptl qr requir{l fu? CFTC ts !lllhlish resmm:h lr llti.l.drmit Dt P!Of-li.!lllil !oomai!L 

''-'~ P:tvt~cy Ai:J of 1974; "<IJ.tkc; f';lh!ie$1.km vr&4 Sym;m vf Ru:nr-ik Mll\!liJll,cd by Comm!Jd1ty tmuru Trading 

Ht Tht Cl!mrnlli$ivn put!lai!OO nJflt:t«i'l r«utlne 

15'74; l''«i!!<;!; hiblitmkm uflhe LOO'i!JJOO~y fmnrc,;lr&:iinlf_ C<>mrntwioo, !6 f'P:LR~ 5}J'H, $,914-76 

Ctmtmi~ 76 Fed. Reg. $,51.t~,'~··=',:'i(~i:'t~b·~·':;·~'~O~ll.~)·:::~~; ~:~:~::::;:':::::~:~:: Ptivaey Att i.lf 

29 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


fiaal.ly, it is CFTC'Mll..'tijieiDOO;'iiV:iriW' ih.it the'O:CE economists \\Wte papers as part onbeit 

t-'1~.-h;~otl duti<m b«;;l.)lse !:hey were subject to strpervlskm by G!llt?J CFTC ~p!.;;yc-.;:·s. 11.;; 

C:.>m.irrnm.l hi.IE delegated supervisory over rm:x~i: ug~y <ifaff liJ v-mi.ous 00aJ3 ofoffices 150 who :1150, in tutn1 htive dc!eg<>ted SUJ)9rvi~<:"WY ~wh.Mity to other Th<!! 

po$.itirm d~p1ions for !:he OCE economists retloot th-~-.::: ·';)U~<'hJ.J;wy dd<r,aMioru.t · F<:r 

eu;;:.,..,p~, th.;; position de&:.mpHoos C:.fc \'2, ;o,-:td (~:t- 1.4 OCE.JA\Hl~1mis!rr ~mvide 

that the supervioor for:t~ese OCfh:cotu:mrists t~ the Supervioory Economist m The ~~ioo 

d~W'lption ;\w the CT~i 1 statm: that "l.!Jhe in.cu.rnbent act¥ un·~t~'».tff'e-% 

ge:l!'!r$1 ..!<~~-l,';fvisioo and guidance ofthe Ch!<;;f"Ec<lt'HJmit>t , . , keeps tl\.;; :'ll~~~~qtfB<>f ··· 

infnrmed ofprogf>:$$ ~nd. pOt'<'f:lilaliy tlJ{)iT.;;y;:;'hlal. problem!> concerns, and lsru~;f. ,·":yt<m 

sopeiYisor:rnviews completed work f0t rol.lrulness :and ov>eraU ~ro»kh, adJvr:p:~.cB'ltJ.\J 

~uirerm:~nl;,~tCh:itvement ofeapoct-ed results, and the l"e-~<liblllty .ofrc.tn;mrtind;{\i_orl~-" 111 That 

OCE econ!)rrJst!? 'i','U)tl:! thp p!:lpttJ:l..jl.$.p.?!tt. t;.f ¢>:zir official duties% f~~ ;:tpPorted by tho: 

tact noted in tilt: Drnil: Gr:!J<M11Jw.1 "'{t lhr Chief ~oomlst a~vett~l wlies for ecooomi..;­

resez.rch papers Viritten OCE ecoM:mists wrking as em~ti?Y'~;~~~tort nud 

ecmru:ltanbt"151 #i., "\,;;·-,,. >~"+ ~%_ 

Tilf !!lX!Vl'! ftlt;:;ts foreclose any claim that !he papers tvrjttt:lfct'Y beE t'->:m~om-isl& atte t~lthl:ed to -~""'"" --­ :!hi: Jilt~ t'SN,mdment pro~dons appiicahi¢ to Pdv.;J"lif~~!.{-.,;;·,~,d).;J.Ji;;t;"!;t$ F<hl !If ·H)14"7~. 

Just like '!he plaintiff in Gan::erd, DCE e;conom~!.li we1i~t£ii tu and did etmductresearrh 

Mtd draft PIW«Us part of iheir oftldal dttti:es, 'Sck,Ji~ U.$. e,i :1 J•L Aeco:tdingty, ill'l~t the 

"prt__,.;tiwl" srope of employment analy~~~tai<t.?ut iii bwr:;;iti, i.he.<m dt>!.it:a ~~oukll.m ilispositive. 

01CP$ contrary ar2iiysis is r<lis•wk~!L .,,,~;:r:-m;(' 

""+ ~No .-. 

ln. light of the above, CFTC ManaJ!~~t d~ees: with 1hc DIG-'s: conclusion Utai tim: OCE 

ecooo:triists wrote _J)3p.llrs tm PP'>'<1~~_Ji_-~"n->. 154 CFTC the OIG col'f'(:tl 

!:he Draft Rntwrt t\1- rd1e,;t J.h~?Fllial. stat!!.'> cftl!<:- OCE ecooomists, specifically that !hey \".1/#1:-.:t 

brought ;:;.n: to ¥trite pape~is;,~·tt·thcir <Jfficlal dUtie1" ·aoo 'the:n:lOW¢~ cl1d nOt' vvriic 'tite Papers as . .'H*' 'if/*'): ptwate r l" ""'£ _J --~c' .- --··§' 

:<'<,;..14~t. 

As rx:n{~~ib~o misappHes e stnllement in ·oarceril IS tiri open 

'}U~~~ fC);.~lwJu~; OCE·;;;:(!Ufm\Jsts rccdve'flr.st based on oo;~wms 

rd£af(iiug''~ademlc freedom.l$5 [n that case,. the S:;_qweUJC Cou!t held that tF-.c firstArne-rniment ""' :!Y ' did"Ji~ ptuttl<::t a govm>ment from disdphtlc tilt a $pOOCh "lbt: Nnplu;ree rnn<k in 

the eoahe of his 0ffki.ni duties. 547 U .8. at 424. A diasenti.nj opinion expressed coru;ems that 

:~ :11J.S:<:•: ~:7.{a)(fJ ;n CFTC Pti;iti<;¥', Detr~-71<'1'1~ • R&::t*n:h: P:f.<:'IWtfl~ {i<)tli.\(14, ~. rud 60()()()9.
 111 <:FTC POill!~ Dm:IW~iun · RmMrl:'h f!,;;;ilr:omlz<, 6~ 19 DkAIT P.£!>0R'L at )1: 
 114 lti_ 1t 11~22. 

lJ"14.!!12L 


30 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
t 

, ~ -

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

A@OT41!ti 

Prhiiegetf& 

F;n-lntunnl 

C;mt?tk!ti#!FCFfCDistrilmti.tm tmdhvi1tw Onh· 


Ute majority':iitiHhS Wi:tiJkt'Jii"Jdlirfiliitio:'"Jie.oo.tmtf: 'freedom in public aru,t uciver~;~lti~r 

la'- -Ol:t 43g (Souter, I. dissenting). 'the majority reSPQ\'lllJ;d by W!l:lX!<el'lti."Ig <ha~ "[~]hu~e is some 

ft($liJJ;Je.Jll ilia~ expression re.la1ed 1.o academic sclminn:l\ip ;:;: dus~tOOm it!:littuction impHcates 

l'!d.ditioMl to!Wtltutkma! intcre~ws." !d. a1 425. Jt spedfttd, hoWe'>'¢t, that lt "need not, an;d. f()t' 

t!llil'l"l':;rnm; d[id} not, decide whether [i1s] alllllysib W{.'1.11d appty. in ·t!1'.1 ~lt·rmumer·W rH::ase 

in:vol:v),.g ~peeeh related to sclmlarJ'lhip Qf teaching/' .fri... $;};;-;w: .kmtr-r .¥t\l\1;j~ f-.p;v,;; ~>,~,~~;<*that an 

academic oon.:texr roqlrirro:addition:alprateetiorw;but they have extended basic First 

ptote0t(ons: only ln.;;uscs involving stute.~rnn cull!:~ aM Mlveni:tl<ts, S#rt l:kmrm; v. 

729.f)d. lOlt, 1019~20 (9\L Ck 2013); Adams v, Trs_ ({{flit' Uni!·_ q{N. C -Wf!m.tfi.g_( 

55\f, 562: (4Y' Ck 20-1 j) ("We a....;: ptt$waJcd ~hanJ£trcetrnv¢uld not in ~!lh 

J;OUt~l ~f li.J)tlhlk: ~.t!liv¢rsi.ty tl$ rtrptf',;1.¢1Yl~ by ihll facts oftbh: ease."). t&'~~'"'vL~~<>;; ·~ "-<;;, 

rhe wm~rhere is.very different . ?C~ ec~no;nists ruv: hited io se~e ut~-q~fihe 

Commission, an independCll1 fedt:ra! a~cncy c,h. with regulatin~.~and swaps 

1'1lilJ'ket5~ ·OCE e<mn¢tnists have aceess to sensitive Commi~l~O'h .:t~ *~h is pooti'lift«< by 

&4-.:-1\1)0 ®c-f the CEA und tbc Privacy Act,. aroong o~hu la\o;,-z;$tZ :00 1\i ¢f tt.'t·CBA makes 

clear and as fue Draft Report acknowledges" this mean::h m~~"fl~J.~te<1to further ihe misskm Qf 

the CFTC, 114 Based on these factors, CFTC Manas;..:-me_11. g !lw.l p:ape-t'£ pmdUC!'.d by 

OCE ¢Jiot¥;tnis'ls to fut1her tbe statutocy -differ·rn.eterully ft>r·p~ses of 

First Ame.ndruoot i\.1'WJysis from tftat of r · publk colleges and unlvcrsitie:L 

'"·- X 

Even if the Supreme Court were to futlpw4h~ lo~'ie(~.,_' view tm..scd nn r._ta.,..__:etti that 

scho!atS.tt.lp and t~hing may be entltlf.l~~~-F!nn lt.!:!Wndmeru pro1tmtion, it W<luld tlke~y 

001 extend i1 to. fedl:'ml employN~i~rviHg~;Ma; ~e.ncies-¢harged with implemeniiqg fu:k-nil 

:iaw, Hil\¥¢v~r, il'!e.n if the wurta~¢~!0 aniato-gi<:e OCE e-;,:ooom~11.i' Tweareh tc ihat uf 

academics ntpublic wivcrsitiJf!-{~·f!~'Amcndment purpo!!CS, thetr'WQTk would still be 

to oonsidetab!('! ('-G;nmlz!>i9J!-i'~l~tior. <J,<d ov~Plif)lt Jn order f<>-r the First Amendment ~o 

proted 'd'tese public '"' ' ucli oversigJu:,"friek·!ipee.Zhtrillst be fuidieW:XI tii''inatters 

,. .3d ~t !{120 (ci'li!JiPieluwingv, ·Bd, ·af.&i·,·39l U.S.- 56-3,$63 

--f~ern mu~.outweltdt "the interest ofthe {government), ut Nl. 

clliicicru:y of the publkn;srvk-ll'N it pt'Jibrm:'i:tl'-Jr•~2.kH1l·<'fmfJI<>yee1t''' 

SkclbyOtry, Sch Dist, 270 F.J;;l. l036,W48:{6th Circ 200t} .Jf!his First 

·~j~. ¥.1!~ \i:ppl~\JI;;. (j~,. 1ht; {,.'<;Jmmlssion's reviev,r process would strike· the 

, Thlsls because must ofthe reoonrch li de>;oh::~ through ~llSS t¢, and 

Commissio-n resour;:;es, the teseat~ih '''mll!.t-:'te•J !Yl\lSt be \<) .:till'charge 

Corum ss!oo dmks, Md the Cvtrm!.l$$\Oti m\#rt ~ure that its employees comply with applicable 

llKVI11- $¥!d rcaui.Jrtions, socit as Section ll Tite Corrl1Til$l!i-on.'s • ~rib¢d in Part 

HI,~.:(:, ,lle;t_V~ the publiC interest in pt(!tl10-ti»g the efficienCy and p!O_priefy Offue public SCtvices 

ll<i !d. w: 7JJ (itt.t!lltll'rtlt rtse:ndt nctivitictl, gtttrtdly tt.ttder OCfJ.• iWWt *!'J :ltwrit<d in r.eur!y I:VCY'f ?n'm\Jal 

(!)fl'llflisS!t;.n ~. tht CHC> puhlk:.fudng wllbt;ilt- inditaro~ 0CJ.;: U>Mrt<:l$«'1111\llllk r(l$1;;$({;1L and OCB !iob;. 

acoornp)idl!l'lti'fl$ wcl! 1ll:l ~n wocldn.~;, 25 f)f1lMU1!irtltmi1, and !broe -pub!ict!!innr). 

31 

31 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
attributable ro the 

cfthe employee'» »fficial· ii:de 

;.;;;e·for f'!i''l«.!-t? ·gai:n and may irw.ppropriately suggest Federat ern:ionJertll!m •'A' 

a<::tivity." 56 Ped. Reg. .33,718, .SS,7'9i. (.htiy "Zj, l991 )~S41!t Hl-•o 5 CFJt 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


it pcyfonps by·eilii}rir,g'ih:}i lt$' f.e*:~i~~i:s, !nclt1Jlng &lnsitive cln!z, nre being u$ecl Q\lly for 

Corr";,;,i;;o:ior.-authorized purposes. Thus.. not\vithsttlr.d.ing !hat tbe;m;;_1(;g}' to <><:ademi-:;;s and 

publi:..: lrni't~rsitieslsl.nnp-t, the Cotnmission's acti<>Ms and :re'.·iew pruress w011ld &ttisfi tlt!rt 

standar-d as ~n 

1:1 Eg.ltt <:-f the above. Cf1'C Marmgernenl requests thrrt the .!A'afl Report bt changed to """'1!y 

refloot Garcetti. ami o;.her.tth.'Y.atit First Am~th'L;x:nt case which do net crm.fer First,~. 

Amendment fj(iJ!.ffii:;JJ\ .,,~'< ·p..;;;,;J.<;tt>l<; 't\i«'Airdi t~;~idtu:tvd by federal put~ tA.1- ~ir 

offu:lai dutie&. '< .• 

{"*:,,, ~> 

!n the Oraft llcpurt,. the OJG: Slated fhat the use of disclaimers by OCii ecn~_isW~ !he 

orriiffs100 Of'dtscL~hrttrs b .et-t.n::ur,.ic. p,;s~.;b published by the Co1Xl;rti;$'?ffis0~ll00 the 

conclusion 1hm OCE papers are >\Tirten hy CJCE economists USJJrivP'~~·~rn Speclf:;t:ifH)·~ 

the OJG OOtOO that Commissloo employees are requited to i~~ d!$clalm~XS in their papers 

pm,vtdlngthat ''their views dn not re~t ih!)::!l: Cllli~;~tdimunl.sffiOn or ItS 

federal agencies romtndy t~11ire _ernp il}~esibAtsc disclaimers both when an empteytw: is. ru::tinM; 

uop!oyees,"tn P;,ulht:!:J tht: OIO ;;tatJOd ~hat the Commi ' iy aware, , , that eOOJt•1&nK: 

researclt papnrs published under a disclaimer are ,. the mt!hor iJt ptthlU!hin_g not as 

4 U;).'fl11;i;;;;Jot.~ official CFTC.,Pbl i,· hUt ';ii dti/~ti."'1 Q.I 

We ;vhh ~he OIG'u findl.r;gu regru-,Eng%fue ofdisclaimers in papers v.-<:!tren 

bJ' OCE W..\ll¢tnlsts. 'i¥­ \,«-,,;<t''­

$1, ~ '& 

in arrd~Jm-~t.~e i>. in an o-fficial In theca~ of 

an e___<nJlloyn~'who has w'tiften a p+"'tu.his or beq:,ers."!nal capadty for pnb1icrrtioo ht a ;;cienfific 

<:t profct~s:Wrw.l j<.nrtn$.!, d1t t!~~\")'u.l~t.)llt-tm {>'Jblde emp1oyrnvnt requ.ire the irillh·idtd.to 

include a disclaimer to i <Lc. · '1.te views not 

. Standards ofF:thical C'anduct_(or Employees ofthtt 

u:r").5 CT.lt thO dffi~-e of 

tlml' w:t;.;;i;:at, .emPI(lJi*C .istiCtill& Inn printe. ~city. "'It}<! 

tu "'"'''P'·'Y'"''' o_ppcrtun!tie!j.- -or lirrthera '!he- !rrtere:::ts of the employer, 

ctcittCii&i !cast· ffilapJl<&">hOO 

S: 26,w1 ¥f seq. 

32 

App. 6 ~Management Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


agency regardinj;' i ·pacti~il!ilr 'ii;i;itf:' (!f.1h~fi:.¢f. The·disclaimef aloo ensures that agency 

ai!lJiO)'""':l: du not inadvertently misrepresent an ~iC)''lil,Yl'fldi'!l _rm\titk•l> (_<f)\\ p<l,r{\t'H\af JSSUC 01:' 

roru~L Hw mtl\1'11plc, the U.i:L :Sec.urlties a.nd Exelmogc Cwru:n.lssion {''SEC") requ1res its 

employees to iJKll.tdl.': a dl$Clalnt¢K whtm ${lt:hklng 1nihliely in lhclr official capacity. See CFTC 

Gtob<:JJ Mork1:ts Advisory Commir!ee Transcript,ai 3<1 {N0v, 7, 2IH2}}4\l ·'3ht1.il~tdy; t~J.e-U.S. 

Oep.m:t:mrni •JfDefense {''DcD") asks stafftn incluG~ .di.1!1.'ilf.im<;l~ w:1'1M tli.'"Y-~P>'•~k. hr ~l>.~r 

official capacity~· ~kJng'lwKVI)W Oj]idal Capw::lty, U.S. D£r'T01' DEr., at 1 (Jan. IJ,~W).'"- 1 

Furth~, a nM\'Uber of federal and dtpart!Th'.ffi.ts mm distWrnom. on their ­

f,~..il<:':ti"PJ~ ~~_Department ofVeteram Affairs' websil<J di~laimer rl!ad.$ as faEnw~. 

and opitrloM vf a-tahot& <JJ.:fltlZ&Wd fmn-in do r1ot necessarily state or reflect th 

Sts.l:t:S< Oo"ll'kr.rnnenl, n::nd sh$11 Mt btt for ll4¥t.:rti$ifl~ orr-rOOu.;;;t nrnlbn!<'n!'J!I 

W.rbtllt Palides and Other ltnpofffmt Links, U.S,DP.?'TOf Vr:ff:RAN:-l.AEf_l"llt,", ~, 

bhP':i/www,VIl.~Vf4i£C)\,irtt~!Jl.'L 0'~"\\v* ;''+:, 

h·i:>, ·:rrnJm.:>'l-'er, the Commission's consistent practiee \1) ~~~ 

ex;1mp!4, Cmnml:sskut l:1$uattta:t, i.ndudit:g r»1J<:ti<>tl'l~ 

asked question" oonta1n a d!scJ\lim.er l(J the same effect 

.:.vn<:~l:nici t.(} !:>l.tWort an argtanen1 tha1 those documm1s 

duti¢tl w''lere written by Com.missi<m ilmpln~, ·ar£-ci:Ji:a:ma, ·Without ·a 

disclaimer, it i£ JXY.iSlblc thal a rcmiat-llh pap« c~.pld d as binding Qn the Commissioo, 

While tm Ct;:mm!ssioo to adopt a rmrti¥&Jbict~ as the view oftlw C;:;mmiMlon and 

direct !hal i~ be published in an officialf<t):.iftrnisslot; Publlc-:ltion,161 th.<rt-d01::;, not lneal.'i t,l;at ln the ~'t"' :ib.ren.ce ofsucll a det--hitm that 0~£ ec0i~1~'"l"l:te acting as prival.e citizens .rather than. 

. W>wnis·'i"'' "'""'"''"' wi1et1 1he G~vniSiri-oii Oec1i:m:s to 00 oo and requests thl!.t they uae a 

_,.,............ ~~~ .., 

~ 

.,,, "<'!' 


1*AI 1±w ()cmb'lr::(!!2 j#llrk~',.,_-h.-iroqr(l!.lmmi~t~t~:, 44 SEC employee who ww jnvitad f¢·¥•rn,kin 


MJlwr oifk:Jel C>Jp;':tily til{)!i<;'; riit<:!~i;,; "h"tl$$ bonJm role.mllkinfl$ nml guldence-Rtad th¢ 


l'..!ikw.-bg: ~a..,tcr; I go n<¢'d tesmte Jllat as a niitiW'cifti<itWY 1.¥ 'f>f.(;'d&.i!illfflf.'Mtjl-i.'lfi3Uiility fur 

• <l":Wi\:$li ~y \<l.",;j {llf: <:n'<J't l'!Ud .~111'1<::( r:i!Ce>:<\\Ui.')'.:F>ficcl the 

r;]--m.g,*> oo rlw C<:nnm!Woo mafl:" lma«:t!pt efRtttml at 54, CFTC 

1<i pru~ M fuilu"''li -.theJ< >fl1'llkl~~g·i.tl·tlwii:l1i!.kill.l t'.ll{l-ll-:,it:y: "E~'l'..a·if:,u;.;aro 

llllll:e a presmllltkm at an ew11l. ~ill~ {')'a llOO·f'~N] <M!:ly, you ~hoold lmein 

10 llmtff'tt:l tlmt'the vNwa lOiliOOUt M~t'itit'illY'GWrt'filid di:!'W'itttwurily 

ltT!fN kfmy fJr Jbf-JX.j), \ .. Ttl~ 9fl!Y P\:ti!ii® 00 whk:h yoo m:ed not make WPh 1t ci\~e:ja:imer 

DoD (:oo)poocnt comtmmd or orgoolztdioo mrctwf!Mt yw to ):lm1lmt iu.!hmJ.l#.kwl il« W 

Prettmllrtg; infutm:rthm. ib the "Ann)" s p.;.::ltk>fl"" l$ i"l\:lt fl!l<l¥SW.Il]' tile Ml!!>:l :!!in,;; a$ spe&!cing in 

if;. Th•' A•rmy Jms not tllablisheda ')msitw.rf Mfl tat.J\ wx! 'Mtty ~1-wrw w--.w llbOtlf wllicl! 

y;m m~ ittvitctl illtpti!L fJtl!tH yw M-1" ablltdute!y Nruffi tlmt tiN >ti¢W5 yoo intend toe~ in ;out ~tth 

ur )X'tJtommtiw ii.:<;<<mMi!y rd"I~XI tht f4..-,nell:r ;;;;tM.<J!;;Il;;;i ;>r>l!itloo ufthe t: ,$, Anlly, aad ;txt !lave b#etl tpef:iti-":l!lly 

t.\f<.~>ucl1<• ffill)fu tllm f¢1:"mtlfly t:SI.;Il;lWiltx! posith.m m a putl\';;;' ,'.;-,-t'l;m. }"'"'" dum!¢ ~~I! Y""# l'l<ln!l.!'KJ> whlll tile 

;:U..:-Im~ se1 .!brill ~- Agair., pl$<!M bt rt<illdful ufillt fl!.f.'t &.at ctJ;~; may be .w~c.ted 11.> $~lilk ill >;t; uffi.cilll 

fiiPWitj iJ¥00 tMu.gli oot a.ni!;;.E.:md t'J f¢iltiiii$nl !be Army'! offiN! position oo a lllJtl.Uf," Spetlkktg i'f JWMf 

('J§i,cial <';-?{.!11¢lty, t)$ PI:P'"t(<f J)ttr., !It J (.111!1 1;.-,.]£1JU). 1 Su e.g. !ttv, (h !att. & Ser, !flt&)s. &td Fia. MkL A~E'a, CYTC N!YAtl)\);j .t.M:w!r ND. !3~51 (S<mt 5,201:1}. 

f.mjjfaN<! al h!tp-ffroyw gflg gpy/ugmfgmurm'tlyblit::J1i'jjlrl'f11pl't<.).oof!l;dil¢ufil~lil~~1J~Sl.J'!df 

w f>kA}'r RtroKr, et 21. 

33 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
offidal duties, restraint analysis still favors dw _government 

are government Ai; thC COUri :tin$ !ll<%,gnm,J, 

of pub!:ic mnployees that wm:.!J l;.: 

·' "'·' 

"'>' 

·"'flW)' itnj)OS!.!' f~'tltntiflt> ~#lji,l!;l-relazed 

ltutlona1 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


di~imer w!Wfl p1.ibfiithiriii n ~-.:.I}X't \Vl'liti::n as· part of their official dutielt CFTC 

Management disagrees witn the: O!Q's finding that disclaimer\> mean <ha< OCE ,..,;:or.omis,--ts' 

papers m~ writren by them as pri vale citizen& 164 

tn l.ight nftbt above, CFTC Management r~s t!:\.4t. ~¢: .Orit!t' RtmPJi !>~ ®~tt~. t0 :r¢;ficcl 

ihl:!t use of adlsc:lalmer doos ootmean that the OCE ocnnoTists wmle the paper:; 8!> private 

citize:ns. 

I. CFTC Review ofPacers noes Not Coostimte a Nor R:esiraint 

T.hr: O!G ha.s .also raised concerns that tba }lflPe:t revk:w pror.e5.<; may vlc•l"e'li!d~nll 

·~Mridrrwn:l 'r.pmh1billc•n(ln yr{IJ1'. restrull•t t}fJ:rt{!;Ucation. 14s 

restraini as i.t applies ;::;u.;si-:ie the emr,-loymt.int 1Jou!I/X1, tOO 

:PtlbilciatiOn i'Cview is problematic under the fltst 

trrnn the ;msumption that "[t]be government dearly may 

<ruployee'' S{Je¢eh ru a priwJiff t•flizeu if the jf,('Verrtrnenl, ,. 

S"<itj·l.r.g infbnued of public emp!oyy•':"':·:=·:.:~:: w•«k;>!AA<~.~!£7 for ihe rt 

taw ofprim 

even pw.· 

Report proceeds 

ofn public 

?'"'m''''e sufficient ini.er<:flt !1~ 

OIG's ooncluskm 1hnt OCE OCGl'.mnim:~ &..'11 s 

<'mp-.loye.:a 5peak:ing pursuant to their official 

cco!.low!!~t¥ 'R'icd Commission tfmc, +" 

citizens ta1Jter than giJV!liT!ITl§o!'lt 

As cxp!ainod Hbov<C, bcr-aW>C OC 8 

tlitl .;Lam., mld ~~ilicy wen: 

expected to produce rmw..an:h {}fl ffJ,aUe-rs _ to the Commission and lts statutory mi'i;ion, 

m;t~~t:-h they aut::hared wasp~ ffiJ;:\a! d!ltlm;, As Slll.'h. it is not J;:<rc>tected by 

JJw fjn;t Amq:ruj;ment, and regl)J~~ ~~';{evlcwing llmt ~h 1s oot a prier rnJIDiinl:, S;;muelson 

v, LaPorte Comm;ulity S.cittJo(i'J:<#j;":~~1J_;; r: Jd J046, 1051 ·52 (7th Cir. 200!1); Moonin v. 

Nr:r:~dfJ, ~u: F. 2d. r\,2'6n,WL 1628389 oo::~(?~ N~'/, ·Atn:, ';s; 2i/D); Jffll!rftilft V, !>isi. 

tf!,.oh.mrbuJ, 92S F. §UP£~;1~. 135-36 (D.D.C. ·"'•1:>), 

-'-:,r '~,.;{' 'vr~J 

Even assuminti'· ii&J'di;:ji~l~\>til:iri\li;\WM j'»'{iii:-i.·~lti<G ·,.youtn llPk!l>: OCE 

10 the public at large-.'' US: v.l'lat. Treasury Emp"L Union, 

'il'il<il' 454, 465 {1995) \N1'E~). To clewmhte wlmOttw tt reutr:.ctlwn DJl the speech of 

!JO''en>htolnlem,pk•y<"i" .11 pcinr r~sttairH 1hru 1A::il$!CS the First Amendtoont, courts "''arrive ru: a 

l'C.fd,. 

16 iri aiii~ii 

rit ld, trt22<U. 


ur: fri_ Mt :n (t'tl~i% added). 


!M W1:0 );:!~;; the' OJO's :;t&ttment llmlll!e Ctmm~.isJim lmii a thrttr il1h~lt:J! ln ~;lllt :q::;:>ti:¥~:d afOCE ~k 

ubclanbip before it is pre£.1Ulittd at p!.lbiidmd is ;;uPlei. ld. at 23 


34 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


b~bctwe<:n tht'ititi::rt:i>1S tifth_e '[C.hployee];as a citizen, in commenting upon !'l1atierS of 

public c.mtccrn and the interest ofthe State, as an employm:, in promoting lhe- effidoency 0fthe 

p>.ibHc Mlf'>'i~ it performs through i1s employees,'" Harm(!ft \'. ({,'Y of;'i't:w !Ork, i<l·O F.30 lll, 

117 (21\t Clc 1998) {quuting; Pit:kering '!-'. 3d afEduc. cfTwp HJgh SelL Dfst., 39t U.S. 5631.568 

096&)), lu <:.ortductill.g this inquiry\ as the Ol:G eot1i'lil-t!y th'Ai'l~, oontf.9.ttll:ltt e1:1~1~ that .u 

re_gufution'$ s-weep is "'reasonably necessary to pr-ot.-;-ct_ the ef!lct<:nt:-y_vftht-.:PUb:ii;; .stn:k:::.'" 

Weaver v. US lt~jtJtwtatiM-Ate_ney; 5! F·,ld: !~29, 1439 {D.C Cir, l9%) (quoting Jvl~: :!3 

U.S. at 474); see also LmlM Qfjlcen, Ass ··n '" Saj]r, t70 f.Yd 167, 171 (1d Cir. l~~~;"Y~.~~,, 

USltlf;'ilifs anw.tysh<. totlrtS have upheld reg:nlator-y scl:Jcrru:u rhm: mvolve prt?pu. ·· ~ 

of govemmeot employee:;' p~p;J.! \vr!t~~",S,:l, ln Wea!J<'r, the US. lnfoi1That qu!w& 

p~:e.:pubHt.itkm review of"{a}U speaking, writing, auJ t~hlng >H~" ,~fll>onably 

be irm:rprotl;:d .as relating to the Curren:! responsibilities. prognmm, 

employee's rtgtfrt\:~t ¢-t hi cJmtl'lt 1;J · S · fr.relgt\' pbllt:l_es, or whlch 

affevt-ihe fot<~ign relations of ihe Cnited States!' 81 !'.3d a\ J-43iJ 'AM § 6Ztt1).169 

JJ.tc~tll::l-e t!"& regulation did not Mbid spet:elt, the cnurt· folill~~1t "" ··rm9s~ mll3tC1,_" ld. 

at l44(t The- 00m1 noted tlmt the pnmro:Y bur&m t>:n a i"t delay associated wi;h 

$llbmfrttins tb the review process, iri. at144l, but ex:pl~~,!h~!Ki!US\1 _gov~m.t!nt 0M~oyees: 

<;-:r,jvy i~r first Amendment protections, !he ~J'!'I,l~)-i~~)j'r<:<Vi>i<W "VM·V>m~tuti(•f'i\tl .;wen 

though 1hete \W.S "''no SFJ¢Cint !lml1 on the du:.:a~pr. of~~\,lew process." Jd. at t443. ttl 

.t~pprovlr<,g this prepubilcatlon review, the court ~~...,t~ ttle guv;:mrnMnt.'s inf~ in taking 

c-on..;c:tl'>-.: t;(..iion OOfore the unauthori~4Js.-q,osu«' ;)f"'tl\.-"'~Wltive w..&¢ti!tl'' ls. anlm~.ant factor 

supporting _pre.--pubHcmioft mvlt:'>\~;- ltl. t>1:~4~}'-01J the whol-e, !he oourt ooach;do(l that the JY.C· 

.11\'!'i!•"l<'PN'Vi!;'!w program ""u::stri~IJ:%d] ri0-fflbre speech than is neoossnry tn LChicoe 

the ~vemme-nt' s intcrt:sts," kl. a.1{i :«-~4-quola!lon marks and cillrli-on -omitted},1liJ 

/'~''<;> "1v: -i 

Weaver is hardly all 0k!'E.,r.;c -fhe'S~OUd Clt<7.1!t similarly upheld a New York Police Deparntent 

~J1ky reqvi1ing all '"·g'fve notice ooruoc tt~l~}+t;g· o~··n-;<dtt.us, ·a Sh~teJtie;tllx:fwre a 

.~· t) written nulifiwt\un·of-the -»pp=~; aml (.?}it ·iiummatY 

,_1.affttc.Offi.:.f!.r%A:t!!.':!r, 170 F.3d at i68-v69, 172. Noting tbe City1$ 

.~staying :informed ofpollee offi\:lEm' ·puhHc 31:fll_<Jmill'lt';; aihlut tll<l 

lburt found that the oo1lce and tl:)pmti~ pTWJ;l>.h>J<O-'~<i\riK;;a-a rt""""-Vm..tble 

SilllJlerly, a. CO!lft _upheld _a ivietropoUian Police Department Regulation~ (·l-} 

ers from dlscu!lSjng Department ;'pr<!ide:., prutedm'tm, ml8£. p:¢tmn.·ml iss:ues 

, and (2) requiring upproval from a SU.J:"~iSt>r OF.fhtt" pro-viding ,,_~-i~ fucts" to the 

I<W D'Jrlr-% 0\¢ !XIII~ l'f ti;r, lit)~ll<,m, tf;~ ;,>g<;~;q· f,O:'f<Sl.>W:<:I\im Rgll1111lon atMt«IIUtJ:wriyflnel f11tfj futm«f 

p11nbhm.;<l\ f11r pub!J.:ttitm ofmmeria1 disapproved by lim ae«<~:y, "'' !•:~t1.§ :§ i1 ww gubmJ~ !'or re>4tlw 

l:'d'c-rthlmd.:' &1 F3dat l4J5, Thn agency was free wdlscipilll.t cmpl~.¥3 fbrpuMiolllng !n~Ullrllllsin vlelil.l.iim ur 

ll;id$W i;;t QiliCi .fiJl'¢NlY gnlid«< id_ ~t l4J6, 1441 <'!,5 

mAs til? Oft) n-..~. 1tm CIA 00.~ t! rntm~! pre•pl!blkmioo revi-e-w procedure tlmt the Supreme {;Ntrt hll£ ~id. 

Swpp tr US., 444 W:L 101 (\W}< '!'he CPUrtnorud tlw impo!Witt nfPf'.)ltellr',g r,;.la:atf'M<J intbl'matkJo, but 

axpl(!i~d !h.\rt ltle gnvmlrr£1!1 may~ other "sub&anrial gowrnmtm inte~~ by ht';ttitti!'!~ 1ht 11-ee~ 

rlghb el govmmm~t nmp)Qy~m:. !d. lit 5111 n.J. Sre tlii.AH RP!IORT, al 44, 14 n. j{l(l.J{li!. 

35 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


pubilc, Hawkliti," 921 F.· :Sil.Pf 2d 3i l3.5~.M: Fihd:ing that these restrictions went tc madf'. 

J.ll,),.('Suaut tQ Gfiiclal duties. the coort found that they pas.w:i ;;~m;;tltutl>ma} nlu;;t~;x. kl. at 136.111 

When compared. ro- &"Jrl t.r6i!lyzed \trJder t~ cases,_ the Cotmnissiorl's review pnliiflllllc is 

.consistent with th!J first Atnetultnont iit!id twt zwt 11$ ? pri·OZ ·'"'""'~'· 

review prognm is not Jmended 10, oor has it operated 1.0, prevent spet'i'4l' R<tther, as the OIG 

nows, the review .is. usucl. to review .papers ~~fut:infor1:lliitlon prntctfCd tiiu1Ci ·sectton·g t~e 

CEA], and for <ltt!tf ~~w,fid:Jnti;r!·ot #i)f!lllih·e ·Jnibmwtirnt"m Thls ~se is bradly sirrlilt:T !t" 

the p!~,-,.ntbticatiou upheld in Weaver and signitTcani.ly lc!."S res;rlcti;;{l tb~ 

r<c\'lc\ip;iogr,l.,at is<rue in Hawkins, amo;:g_ olher thinJVS:, betanse -eoonom.ista ~a®.fiinU~ rn 

thclt ability to «>n,uwut <m C<!trlruiS-si\m .w>1k;·. m Thus, any crum~elf~the reYiew 

program bas on: more then outweighed by- the C'"Cmmlssion':> ln\:t::r~" iriip_rV'ifntlng the 

publican:on of infutmation protect~d under Section s tm&'or JJth!!T ~n~~rrn;sensruv.e 

information, Cf- 'W~tlrt<ti, 21 PJd' Uf 'i'44/..:.AS' (iiiK:hing a similar co~i<W_,)'ith State 

Deparf.tnoot·prepubl.katio:n f.-;,. '0:. \~'" '~. (• ,-~ :~·7( ....~ 

We 1llro do not ti\gflX with t'he (JIG':. wn>:t:;,>T that the !engt~:-~f~ ~vi~ proccss may infrlng~· the OCE e.;;0n0mists' First Amendmtmt rlghtl!,114 The: D,q_ Cl~ upM!d a prepu'b!lcatioo 

revie-w prognun that had "no specific Iim.lt on t~,f~-i$f!,~f;~;;.~zyi~W.PfY~~;ll," W\1#:1-Wr, 87 

F.3d at 1443. Tbe -cuurt expla:ir.ed lhat althcng~rthln &.;s!_4)re a fattll flaw outside the 

em!)!o:Yment c~.mrext, !esa d~!lmdmg standard.:t-ilpply !9 fef!;U\atht,n ifle of J!PVemt.llrutt 

employe¢". ld. Acoordingly, the oourty'*r~e?,:[edf\iftidea tiW priN revie>.v in the em_pl<Jyment 

context must pt~ed undt:t a pre-~li\:'1 tltOOi<~ici'!C:. !d, Tlte delay in the is twt a 

prl(lf restraint OOcGo~:;,~;. th<:: l)..;.q:tr/t~& 7, ?.&iJ:~n was lntcl\dud whe a:permMettt 

prohibition on paper cleamnce; it f'ili~tende:d only to tempor-arily halt lhe process pen<Ung 

CJ-'1'C ~ement IL"ld oro f,*'il~~(,,iitlfX!rW.rlt!y_, thia initial delay was the resuh cf stan~!ng up 

the pap¢t revi~v.- :p'{t<;;<;;J>'l: i~t·~i)th/-"'"Qffh¢ ::ig.ni(k:ml issues identified the ag:en.<::y's ~vi¢-'A' t)ft}Jeco.t'l(;t:ms expressed by c¥) ~&~ver, the ongoing :review o(p;apen 'il>v0iVa anaiy~hi of 

sensitive and COq!_ple~tt1~a.~/s'~ffing has boendifficn.lt'frt ilght tifother·presrtlh[t COltlmhi:Sl¢11 

bwcin<css,,<c P>arfJ~~&~q?c:1't:rC M11n-ag.-.mwnt h!ld t<> determine how the review proc-eas shtwtM 

e-t:-exi:J.< \'tlth: uwJ:Jr.Q'S_,ongoing investigation, before i>..~i fi.triii:lgs· :it-CUt' the trobJe.iiS idffitified 

=-~":4,2'"'"'~_::_..... "'"' lllii~?J .}));;> lhfl l>;<pwt;;m«t'£ ffi<'Kfl limita! regulation of pt'fWI'Illl W1& ~f;· oou)¢ reqvirethal: perwoat view~ h~ \t:>:~t~ "t<ff·rlttf"f and cirl:i~'' it!l.X be jlrtlfawd 

l~l'~·:·~,:~~~;,;::,:,HmrlW>%, vi£-wu l\4\ Y.H WlfflJ F. Supp.2d "$ \i!lli\m'n WI H-6. 

VI ;m!!~ S:Willlrly, \\Wlgma" 1M D~1t tn.d thirt 

u. In P'ltA7f llOOkY, lll :lL 


;;_, Vnde pri« ~is llill an~AAue with regard- t<~ OCEecono;ni!!l.t who'"'"""' tm;:th:rj<td hy !l:!i "'*~y. it is 


!fW>:i~~ W,) :vtPT rmlfllim v:mr:ems woold ;wise wilh J'9rJ w ifttli~~~~ l«ltO lll~)' hlll"" ,l7;,;, ,;l,o.:f,l\:1~!'\\ fl'P¢in!mert! 


~rk, EWt! l'ilO>JJ OCE.":ttirt-ti((!iSW \v!itJ \\'6:(-\: t.-6: ~-t:rlyappt;\ntctf, !mWUW!f, WA)' bavt Ji!Yled4 nt:-rt· 


di&::l~ ~'~'\\: ·,;;r,.,:l!;r whl.;-ldtw:• '!i;l,ruJ w. ~""'---'V'~>bli~lfiioo r1n1¢W, 


m DRAFT RPf'f>'Kr, et '>" {''The length oftime Ager:<;:y managtJnt•nt ;.""~ t:lkt:-t< ~-ti t~l'iew 1<!.:1 IJ¥Jf!L>>:l! M>:A'hllic 


t~;ID";I; ~is notru:~lc''}. 

";S<i# PW1 U1, Pilrt m.2, and Part rv E, fur ll..:tt'w!r di$t>)i!.~ion ofrbt rwrwrrtvit:v. prooxs 


36 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


had been made:F>\i· T::'liJS~ th:C CriffitriJS.~iOf/S 'ri;.Vii':W progmm passes constitutional muster oo th.e 

timtlir;esll ik\"nt us well. even assuming papers wrl~e:n by (}('E ~v;~vmi?l4 fu an uffi;;}al cmJa<ltv 

't\·jjuJ;;J. receive First .1\m:endment pmlection.117 

in light ofthe. 11\x.ve, CFTC Maaug_ttutnt requcst.s be c:J}H~teiiy 

relled TI'tcv!1!1t case law on prior .restraint and to note iliat the Commission's review progmm fs 

consistent wltb. d~<: fi;:~ ,'~""'"~"'' .n4. """ lli'~.&ct U, a 1>ri<rr """ainc 

As briefly rlist:JSS-ed hi Pttrt I..H ab.t1Vt. tht C<;otl.ri:!i:mlon bus diseretioo t;;; de 

.P"l':<SS lDr)flllf""\VUttetJ by the OCt C<.';tlt!OI'l:tlSM, and the rev;lew Sfan4ard 

status as a full-time or llmited-temt employee; contractor; or i.nd:ivldual 

With 'the il~y. 1111 For ur: employee who wrolt the paper U$ part ot' 

discretion derives from l.lJ.Co foHo~'>'iug; {1) thi' papers weru p 

rewurces, iltld information and by OC:E ecoooml.sts whc w<e 

as ¢wve~t wvrk product, lhe papcrn ere no! eli!libhi!rn 

tuw;m and (3:) txccpt ±n !imit~d: circumhlrutcer, gove 

ahilityto exercise free speech when they accept pu'bh}-"'li!'">I' 

ibis dist:retinn mw;t be 

rei~ of gr.rvernro.ent fnfom'ta!lon. ·i 'pro~ OOfure apupe.r i;;; cleared, the 

Cottll't'l.is'licm rn.m:.t .:.\'jl'!fit'rli <>1l•Mh;•rti~<'1>~t~OIK>m~l received any suppl~ti.M<lf Mil~:ity 

lt ls irt~pottnllt f•~ t:t<)1e, i:·:"~'":'v~:"':,·~,~:·~ht;1':~~h;c:~;~i~~=::in~:the:C:om~m:islli~'~ort~':s:d:iUD::""~';km, 

., 

~·rtrtl 

'TI'A II.'A 

;!,>}hi;, !'W 1Wf' p11jli<C . ;a ,• 

;,,t,J ~'!'iji d&.:W.,"'\,w; !;,.cfrr-:-;.> 

a stt;"' <i?f'ines guwwnn:wnt work product u "''<~ Vt#~ 

r,flloo: t¥tt~P<,._ <Jffi'..;i>ll tllit4" !'J 

;1 Ullitt>dS~ 

37 

37 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


prohibited by 1 HLS.(',' §' 2i>9; vmei~rihe: rust:nXh fults under OM\ ofth.e Coromissiun's 

ll<att'flt<ry ti:seatch purposes in Section ll.! of the C'l.k"a, wa:~ whether ilie <iisdosurt l5 wrillistent 

witl! tlw PriYat:Y Act rf 1974, 5 LJ$)2, Addi!!onaHy, file Con)rolSl:s:il.m mus! !''i9i1ew !he 

papers for complinnt:e· with {l) St'r1it•n 8 of the CEA; (:l) lY: U.S.C. § !005. which prohibim 

4g'WW-Y p.ffcers or employees from disclosing various·form·J-orl'·:ccnfider.tiz,!·g_::r/~1 

:inf~JwmtiVf',. f:ncludlng trade secrets. proce;m~es, cypo:crtio[lS.,.stati:rti;;:;n\ data, .eU:--;!f0 m:n.l. (3) 

Ctwnmissi.oo regulm:ioos ·d'Jiti: ~hlblx ;;m:rretw :u.nd :rcwmer CommlSi.lioo employees from ~:>in£ 

{)f tal.t1-l.ng \'It a11uwin,g: :ll:te disclosure uf "oonfirlt:nMl q:; rnm"}}ub!i~ l)(ltr'J:»el'l:iat, i:!oong~~, ~>ffl<;:1<tl. 1ti'l1inPatlon t<> any unauthurit..ed person,« relr~~~" $'l<t:b inf!;ltm:~tion '-r. ;>.:tV:icr.&: };f'<:0 · 

autuvuzat'U:m: ""~ ' Ior ,, J\:) - 1,-.,; em&\l","''Cl~n , ',r.., § I · l.4v,;;;;,;~ , "' >:;;- z·_A" 'I · """'~5 "0+ '\,~ ,__,,_­

·~·" WhllC most,,' :Ifnct aU, ofthe papers written by OCE economists a.~ written ~$ci~t-tb their 

\1ftlt!al' ihtties•. lf M ()CI~ ~COfWJnlut )Vf\fesan ecooorrJ¢; tett:tttth pa.F ~·~hX)vffi time: m:.d 

v.itbrmt CFTC diita or r~tSDUJt:l!&, ther; be V<ri~}~$lf persons! 

capacity: ·The Md :ll:te standard for the revi•!>V of Pif-Pel-k"_)"'til<ef~ employe-es, 

OB>k!lli;tQ!\'V;, nr ex:pe:rts l:n their personal capacity ls ~· Gtl·tt}lt;sill~dt;•rus-qrcolid¥itl, 5·£:F.R 

§ the Cbn1mislllbll.'it ll'tlpplerneMtaJ ifof:u('!ltlftn$ 00 tmWi4tac~vnks 'Which include 

illt<-'i.-'tl~J.'IC.!~$-a!M writing, S C.P.R. § S 10U03, and {l1,1; tef),i1UMh.\m;. \\n tit"J '"'CortJU<:t ¢fM<>mbers 

nnO E!rwloy~~.;s and Former Members and Emplp,y.e•:nr~:hb;;'t:Vmmi:,;;f;::<n;-' 'l'? C:f:f",: ·§ ·]·40,735· 

t~s.m Finally~ before tOO JW.iper is clem"'O .tW 1\{lbltca'tkt!o/fue Cooimlss!on \vould also~ m 

reVi.~w t-IW: ~rs for oomplitr1100 v.ith Section 8'itf)h~"cEA, 1he Frh•tro"t Act ~nd Com11liisslon '¥'"-- - " 

ttg\!t»tilttl!llii'J the disclosure ofht:fonntt1W. 1t , \:Jc_,_.,_,,}__ ,,, 

Fo~JXipef'S wrj::ter; <'.rtt!rnct OC-ES;,~Coonll:ii~; dte aut:ho:rity .and standard for Commissim1 

revl.i!W ls derived from tbe temts. ~lfitljvidtml rontract;;lwd agreements 1111d :ttle CU restrictions 

~ t'''> ;p ~ ,,,,., ~' 

. "~.;: /~ ,......... ,. ""","''"" ",''
 ,d$'6/0mdutt, 5 C.PJt f 46-.ts, >1\tv llf"l'l!l-0: Ml "rrtpl&j'M lf-'hl H~tl';ftiiwfly 

· · cwn privnte imn~ if- ~t cf au.-;~.,;, Y<ilttfitr t,";;~.-;.~ ;;;ly;~. or 

. ._-J;d;tth:Ji:ill'e"." S CJ<R § 26J5.70J{n). 

('f' «,>.:ptftt ('{ o';'(>))~r:i!uatt v.im Wh:lkl pnpen; h; their p(!f\Mm! Npcil)il~', 

OGC, ~<~; l!lll imlkt prugmm, wo>lhl'!!>':t'i,l tJ; tk!$mim'-·tll-'t'fl\liuwit1{1; 

i. <:- ·~' eoo::pernutkm il;.>; p~•. ~ ~.\";~, ll .~~~~-~-tJ7{t,); 

iL f''*:W'~lr-><r> ir>l)ivi\i1mi n<t'0offir:ifll f.!'}!l ffl';-0Wtoorets Mwnta the !Wfl!l\ S.CJ\1<.. §


<:%. :ttr:~.&ii?{&)ft_i{i)(:A}; 

-'~;;:Wb!lber the invitation to wrlre the paptr wa:; exltti,&d !<l the w'Jiw pi:m;;dy ~li'&e <Jfbh offitlal 

jjm;ilioo mllwrthiln hh n:pert:i$1l oo !he fl$;!1k:llh<r9-.>hfi~ot lf!l'l(l<'•- 5.CJ'.R. ~ 2!):;>,$_g(l"1ill)(21(i)(B); 

Wh~!lmt til¢ li>..ilt:!IGt, w v:tll'* ilit- paprt W-M ;w.ttttded to tiw lndividutl by lit\ imllvid~~&l {If entity wt.o 

1la:< ;!lifl(e-~11' 1hm 1¥Y hi.l- "'-:t».ti\:illii\.Hy l\:ff¢ctW by the p~or ~mmarn:e ofthe 

ifldhidual'!i cl'flcial dmies, S CfJ:L !i: 2635Jl\lJ-(Il.;(Z)!i)(CJ; 

V, ',1;')"wlht:t tim Jr.:lividlifll <tr M:ity provi\lmg ;my ~fl!;;<Ji!)rt hrtt imm-ll>tl tt-ltrtwJ!y f""'nd11'4!, befiw the 

'CHC, :S C.F.K ~ZS',!;:S,Hll(b)(&); 

vi Wh:fur.r lilt: ~r-,er &-!l....'t ..~mn!i#!Jy ':"' ~or o-ff:'itiilll \lal;! lln>t are em r.tnpubti::: inftrml)t}MI t,l< 

J.lolo1lrted lrt 5 C.P.R.§ 2635.7U3(b)2.mi5 C F.lt. ~ 2ti35JW1(t.){2)(1j{Dk t~nrl 

vii_ \,'1/)w:!lw the ~r telalt;; tt !roY ongoing CFTC pr-.Jgrr;:n, .p;:.licy zyn;_;.ern;ice ill';he CITC- 5{:,F lL § 

2635.8\1:7f;t}(2)(:\)l'£)0), 

38 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U _s_ Commodity futur.;;s Trading Commission REDACTED 

Office of the lusp~tor Geuerai byCFIC 

Ptirllgg;yl & '"mrlldmtiW.. 

_lf_$k>lrtff!il fi'>~ lntel11fll CfTCplstrlbM{hm WJd RW<>:rOAit' 

on Ole release vf Set'! ion 8 :infom'H'!tlon, '•~ rwn:;rumt to the ofthe Federal 

t\t:t;olsi1Jvn t{egulations (''FAR) at impl¢Y1!ertlcd i1:1 the contriletu for t;«~Pomic miC«R\h. tiN 

&gi!n::y h~ the antho:rity to review the contrat:ro( r perlhrrn.ance under J c1.mtu::t and to e:nsUTC" 

each pi!ptt v.li;;er, u!Y'..e; a oon!t£tct c;;omr1ia v:ith the Mntrru:J's terms. The 

mJp<m,lbilily io iflEpi:Cl and ~pl umi<A..:t di:iive,-:ahks (in this cmw the resevn::h paper) under 

the oontroot Is oflen reserved to !.he ugeru:y's Conrmcting Oflioer's Repmentruiw, SJnre most 

oonh'm:ts inch,~,!¢ proviclaea resanfi:~~ a.cc.et.i- to, l:aruliittg of, ll.l:ld dtsclO$UtC of setU~ith 

wn!ideuhai, iilf>G'pirbllc, t<rothcr-wh'J px>:<t'J:;;:te".:l ivJorrnation, ;~;;the IJJMJ«m'i<¥' 

~m>IJJc ihat d;,e oontractor did not disclose ptotcc~ inforn~tion d::::=~~:,~~ OO!ll:taet and Wou_gh the pwblicatkm oftf)q-paper, 1

*" tr. ))ddftloo, aslV?ted 

be reviev;,\?d for <}C't;mplilmce. will'~ Set"Ji:~;~r, ~ ~_-.f ttw. CE:-\ and 1he Privncy 

A> Tht Oiti eunmr<lli. tlml ;mum OC£ .~rn!:m wb;:; pm{l.lit!¥1d wo!k oo t 

tv pm"wm ill<W;>mOOm t<tR.e~t'X"li i'>'itr<pi>:';: <il~l '"too n<>• ~peci!led ul>l.lm' 

5rcifi<:<~liy, !}~~ [):aft !iqm;t $11!rt1::Hffi!l "l?;cme !.Utl!:wit tmpl'-'"J''-""! '" 1 

rtliltp;>nf£M ~><wrnh oo1upies lppmted by 1M ctirf BrooumWL' ftl " 

ciTWin OC£ «:lJ!IIJlflltt,; "~'rl:ing ,~<Jer tnl!!!l!d hu-:l Jlllll.._'fit,:..-lo perlu 

evea where lhcSf' 1::rpks ·~~ !!ill. ldmt:l&'!d m~der !±£ ;:ootrnd b 

CI1'TC !hill !hE &11\Wrthm 


tPnlt!<'~>Ktt• ofany kind wlli<:h ''"'rn'~"~""' UH<hlr6e ' 

t;rpiw bt- JW! *f:•:williliillt 

qfgo'!fllllnwnl tXT.tnw'".r le"' 6at lim11ft spttifiN!1y dffitoW in a tmtllmmli ijf 

ll"\ltli., f<. ~lll<!\1 of wcrk mu& Ill lim 'Nc.-1: IJ;) ¢¢ ~ll ill <lll~iru; 4r 

JYflrlutms Jh~ eoo;Jsk> 00 rl?llveml (::Ull(n;::::iw. (t'<!t(JY;Lu';, Ju~h n~ (i(~B: 

.;;~bb, wuilld Ill!\~ 1111 tlgl\1 ;li ;J:trtM,ti-t- hl !rll!t?::lj\iM:!!y oJ !merest~ ;h-.J}' (!nh· 

twvumhrttiry !\' h\\>;\;l,ol.;!\ i!,oi{! Wlit<l !\!\ l•'i*"'t Jlq,l Wil'! r-;~~~fQ!y ld:mtlfw( inliw 

<:!!ultocL Lib~u.im, rlw C.!'TZ: oodd :mt0fff{l12.; OCE tt<l!l0mi~h U')='t"rf0fm >">Jfl; Jha; lt n>."">t ~p<;dflnlly 

i:limtlf~:l lrt !1-.<l ~t (/mttKJarptly;}i~ptP}i'tL> oare '.aw ::r F.-\~ pr<Thi;ii)!J IV 'i',.'J:-);W ~P,;t •A-G'f r.<*"Wn !hal 

the OCE t\>&tl'liti: ev.:mv!iu$1.::1 ~.._.,WWI\J!•1' :r,;!,r.~:~1-l<:n! <~>>twmk oo toakt lli!it ¥-'Wf< nct ldootift."'.!: '11~1 

OOtfMii:t. .$A-'.·<~_,, __,.: 

CFTC M:~~ae,uwmt ' kaporl ht clumii~ ~;;.t(;!'"WI;t!y rriMt '\I'll' IY.)j\1\rr.tm«IV. '<'fthe r AR 

m_ mty dt.e~;:;,iell e%0C 

CE \'illVi'ittih{'()l!Vtiik!, \lllilllY~ tv;;wl;jt£ 

tM, iht C'nmmiw.km m\lft roviqw (!J!fpllt:m:¢ <'>Sb Hm 

39 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


For indivl.duaJ~Wh:¢d'Mf··~· tti:i smrus 'With Hie ·agent~· because they either did not have the 

e.r,pmprlat-e .l'ilJpolutmcnt pa:pet"WWrk 1)1 a valid contrll>.::t til~ s-c>;<pe vf tllt' as<::ncy';; ahmty to 

;;;;q.uire It iif1iew of!:he r<:seur;;;h paper is depcnden! Qll wh<!lhut t!~ in:liYidw! With no sWim> 

signed 4 oon-disclos:u."'e a,g;recrncnt C'NDA "), Iffue lndhiduat signed an NDA, the Conwui%Sion 

wvuld havt «uthority to review any PBJ'IClS written by· thnt intdi~·idmtl ·1hrJ,\·wrd·CFTC daWl and 

infom;;;tiot-J, ilt1d the review \voutd be oondw.:ted c<»;<wl:>t'i'81 :;,~;\#i ~\"!. ~m.il;>. ;;.f1h1>. ND.A, :'#ltich 

includes revi{Y,v f~Sectivn:8; rrmfi>kntial,: an~ Privncy Act information. u; On the ot~~at!d, 

iflilf iw:D.vktttal with no trftldal status did IWi slgll rm NDA, the Cmnrn.issimt would ~y,~)lt~~,ted 

<>tr!ht.r{ty t.j request the right to rev-lew any papers and woulJ: oni"V t.-e ~'f;le t" revietv til oWs·· 

fot eompliance with Sootion !!; om;i th~ P-tl'r'>hY ;\~r, .. 'ic{" ~i;'"''· fil>.J~ ,,, " ~!J 1h~h1 ~j' fht' above, CFTC Mlll.agement requests that t!w Dr:t!l Rt.-11"Jr\ :im;l~~~;~!fetssion of 

tliffetent~ds of review appt<lptie;te for cmploy~uning in 1h.;;ir ofiie!.U-b!;p:icity, 

employees ac~tr:g ill 'th<iif'~""-:ri'4t! 'd;iJ!Ci~}', ·.;;.on~rW.:tor1l, am.t i»?ivi~l~ .M status: CFTC 

M!44!1£.:W<:t!l· requesl31hai the Draft Report ~fie;;t tb-.11: the Ml'f,tii<,.-)' <i"l'ffO~~tCiJ take<> Jl.'lt-0 

a;;:~owu Ilu:, utatus of au individual in the paper reviit\'ilpl.'iiC2~.:('· '>;''·:r:'\'"~' ' " '?t. '» 

ll, Draft l«pt.irt Aualysi-1; ofOGE Etlti£.1. Repiati~,;p2:f.~-l;:nc Outllde Emcpl<~m<ml RegrnlatiDnS of- :c:,~ ~\-- . ­ M'·C~" 

The O.rafi Rer-Drt st!ltes 1ha1 the OGE ha:> :reeo~zed *:afi '"'~<'r's!lriJJ review and appruval 

cfa F1::tleral nnployee's publication "ri~ vlclat~~iJ:i flr;~t Alnend_,'l~i::nt." 1 6 Spediicldly, the 

Q.tu tJ>il}•& that OGE proposed a regula~r.e"q_~tin&; ac,ency rc'.,·lew rutd approval of"the cont~t 

ofany apetX:h, bMk, Ml::i:cl;;, f!t %iOJjlar p;~~~ 1 However, comments <"lbout 

l+ti~·!"l,Jl·e 'f"'l{~t.rtlally violating the ~Arndtainent,. one \'1"\-l•lt'd the m!<': tf\ ltldnde & oote 

sm.;lr.g.tl:tutwme agencies mll1':J'e~qLree-ctva.uee te"View N appt;;wlli cft¢l't!litt ~. :>:~es. 

etc, to detemtio~ wbmhm- ilip"f{4®JitstDonpub~(<;; oontaln an appropriate dis-t:fjitniif; 

;tr ~·11\t;rvJit.e oomply wi !thloiregn!atlons rut OJ.W~W:.;·~lYpktyJ.Yte.nt-'64 · TP..eDmfl: R~ 

:E's propooed r~gula.til.l:tt.Mpplie;.;.! :ta. a:J. vtlttt-:~,J.--etftJrmed by 

F it v."U eompk:ted in the employee's personal or offici.U 

·IZ's regulatiom suggests tblli ihen;.la.any. First AMem:itlh!nf.coneern 

writing completed in an qfflrl-RJ, \'-.;<~i):y_ 

ree-wltlrthe Dr<>ft Repvrt\~· n:\'ia;};C(; on OGE z.nd CFTC O'U>liidl:· 

ehij'lt'.i)'o;£<AtJ The Draft Report eentrasts. the treatmenr of publications m;d (!Utsld!!'- mnployment,. 

niiilt'i,tbat CfTC's ethics regulations clV lil>t raqoire 1$ID}lk<y<:<it$ w Mhmi1 arul. + 

'"1 l1l$ll nvmmoo lind loogst;ndffia prat\100 fur ibe Commli\$iun tc re;r.;ire A:Jn..CI!l'C 1:ift1Unterl inrlividunh w!w llrt 


'(R'F.Wt>l.-t!l;-1"\~i)pgo atrtlprerentalli'lflS that ~Mt1'1in Stelkml! m.ftuw,r.HMI ''' ~lgr. ";~l".h\~ !!d1t !lmk ;h~{r .1.b:iity to 


rem.,w;and use 1ht lnfnr:ml!t!Jlll. ~; f'(J_, Requrn f':y !nf<:-m-mti(lll Conf:.®nli?llty ;mct N<m"'f4$Gl~ Agt¢f((lll!(. 


BetwtHt CtJifi:.>mia Alr P..==cn Ikl~.,J nnJ :l!t-CrTC {Jan. 2fiB)
 ''* Df<___.,rr l'::i'i':\'<.r, a: I!< 
 mt M (ft.<ltrKt.t' omitWd), 


)Mid. 

•o 

40 

App. 6 ~Management Rl!sponsl! 
' 

itfrom the Prior Restrl~. "':li•~Jilliw 

ann· i:rid+Cattid amore !h~n 

· the Dta!l 

U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


re:OO ve apprtYVsfs oi"pOOHcm:iom; but thaHOCy dG ~rW'" priu'"'l'l'""'al for ootside 

eit'Jftloyrt~tm. I J9 

We be!JC"f<; Mv.~wet., i!lm :fue Drnft Report's l!.1id 1he Commission's 

orrtJ!icle emp~trq;-platiem; is il'Jtorw-ct, Both mthese ms wlwri an 

cmpl4yoo wort in his ~~tY; 'tOOl!{: r,;;gi,ili.~ioru; ·av r.Qt l!.Woi:v VA!en the 

il'l4ividu&lls fl«ff_f(ffiltli,{ .wet&; ss.~tt of his {)f her official' dai~."Bl' ·S'c.; OOE's Oms 

~loyment R~~ni,_!ir,ml!, S(;,.f'_:t\,!} 4435_:3Qi(a) f"Th~s:~~~:~:=:~~:~~ v<:ttci&: e.'<'!pbyment, outside activities , , "}and § 26J5--M1; CPT 

reg(tlm:Wrmo -:5 C.PJt § :5HJLW3{e)(ll ~ging in 

Vlitlwut «mt~ll1f&t)Pn, Uft ¢rilpl~ ofthe f.:!)ft';rnl1t!Wt4 other mana 

~pb;>ee; UJ!;v>11Jhiain wtitten frurn his or her di•,,;4inn ~r offioo 

mre;;1o;;". v,i;.& may seek the COOc:ut'TellOO oftht: 0C'J'IH:ra!. Ct:r;mm:~L"} 

CfTC l\1anagemexu requcs~ \b.(l! the OKl t¢'>tl1e !M DnlliR<lJ®:'srl 

fm m;;;ny dtll<: -tX't':: 

ermrn, jCf.!C fVI.nr,:.ngemcnt agrees wlfh 

"hJtl.l:l'neth.ai l%!di..:a~cd 

~==:~~.f~l.&w)Kt 

finds that tbert~ w~rt . 

'lhe: Draft Jtf:p:ilrt 

fot OCE ec<tttomi$ts; 

emp1nyrnertt ~tioos by 

and 

in a 

!ilcumPlC!Ie paperwork amD\lflt\Cd · · , " nnhnatd-lng e:tt:Ot$ \'<.-K:trr v<.1luminoos 

prnMcm; nrtd there Wti1t au 

also lltn1es thai, because the 

':;!:!~~=~!:;;;~ dtpcty wu i.!i!t?J.t It! t~bllli!'l ftti!ll¢4 Ufurm&Jkn <ln::4*fflll!J !n OCE~ !>!.:llhtlimlu!(pl'tilllWAfu p;x;~01z \l:l!:QCE. 

K\1!!-\!U\il:t'l ' i<Lu\! II. Hi, •t ?~'1\V, fu»,\!. i\HI•.im\«~~6v~:t-~&i/:;''l)ffinj;: W#l'? 

lmrusdl1!fu!v MidtN 

&«.;;mbe;:t,.:;:oct Aft~r 

!Jttlc illJ.!a !iliOO! '!if!,;; ViW! proparly !l.!lJM!ffiiltd Lll OCB by 

infiwrmu;ioonbm\tJllmii;OOL 

twOOilllsh !ry ~ns,dlliotlh>m lmman w~~« ;ul!ahWh :wvurhy lib: {whoo tti¥lhbl¢), lti:l 

flrot\ll*1\ll\#!lt fi~ NH1 tGlllJMrias tlmt infuntJfttion ill dClt'Net end iMCflltll!km m&inwi:l¢4 

~the !.lfl'iee-o:l Dew: trnd Techoology. 

···' Lt r: l\\ )1}>17 

41 

App. 6- fvlarm~<lll<'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


-explanntioo fi:W' ~iii fai1Uim W.ri '6;~iriji!ci£, th~ii VWS- no nppr.nranoo of fieuJ or !md firith oo mi:· 

f-RI'I >:-•fOC~~ the by the ChlefEeoOOJt!i~ .,,w;w: ~wlhr.<lti'kd~ f;!X- tl\'c; ·~;;&l'~~ of the 

Wtilintittrl1i1'itC errors to us t0 be solf1C'Wha1 tr'ivia! . 11~ 

Cf!C Manage-Jt.i:n! U»!l:\~ tv m!iiJ\tlin tlV!!t \1 


wifu JID1'P!1!'1y appointed empl.oyees, .expcrta. COU$11Itan1l! and rol'tirnctnrs. 


nppoinu"''"t~#:~t?:;•. u~~ ;; .l14~0~ty,(r,r,, '::=:~::;.~:~,;;;;·::::.:.::·~ to tiC(;(;$$ CITC dal;:;-·pror<:r1!:.1'1il'J;<;l;;;-:'k;:ri<n·8. ·! 

wa;; ~ higti :rllik that oettain intllvidua's, '?ittt: imprupcrl;," at:~l'r,!1. Q1iit"yuhlic dn~ 1t~

dl'H:iffciCOOM to this dam, temJl&arily OC£ ' 

review and ~11 OtO hlves~li<ltl•w•, lll>{\ tt\tl'!bl!;.:lfJ>J a ~view ptOCe!!$ to 

i1Wiu11 o!indhtiduals who 1\'f<:<!e OCE peper:ot CFTC's Otdskm 10 ake 

'S<:JI)pi! ·<tf me·txtobleoo, 10 :;:::wventMy fllr1hetltUJ'f0per ~ttx:~$$ w 8, 

and to f!!Viure tl:iRl OCE'Jlifp!;hl: \¥.dti:rii !1y ciripJ,Jy;.,en. expe:ts 

·aptm!:nim<m1:! did not oontaln Section ! and otloc' tJIJ~Jbtie 

CFTC Ml!Jl.tlgvtnll:<i'> t>.':>.~<.>t;,;J,$ !-1".,.! tt-..-:oo DrJf1 f{GJt<rt address 

adnritlls!rntivt rnv1w u "'!Yhrial'-FJ< in MII:Yte sectionv v,ru;! as "ua;m; than « 

crivia! :pr(t<i;-lea in t<:eordkeq>ing,;M in otho:r ~~- f,inl,ftJt_~;port 

reflert thnt Cf't(' ~/!A,mgenl<:n! t;;:<,e--~ pj!perw0Jk ood, m> 

desi;ribecl iu g,~;;r ..l:;;!:i>il tr. }'art LD­ c!Teedve :iut<:tnttl 

oontruht tu ,1'11"CV<:nt stteb errors 

w~~~~:: i":~"~h~t~t that lfan OCJ£ t'GJJJO:tli11 wl!l.wut !ht apj:i(!(«~Vj/YfXI'IS(',$ ~"' V p:;lllm' ¢hill ~ l:l ilr n:l:hm nm-4JAl!ic infW'lT>iiliil~ tiM CFYC wtmkt net -1; ro h!oot ptd:l!cttkm nf'l!w 

~· li&wt:\'&', I<? Gi,.-:Hs;OO ;txi>tt:, tbt Cf'TC w-. ,'Jbhgltttm 1\\ Mttmict¢ wM<hW S«litm &1ft othw neeput-lie illfu:rm;\th'<n wit tt¢¢¢~~;erl rev! !ilultmt 

,~();AfT I\:F.~.:lit'1 1 at t?-11. 8 hlirt)7. 


l¥1 hL 
 10 !d.rt10 

it<!M_!tt1i'_ 

"'ld 

42 

42 

App. 6- fvlarm~<lll<'tlt Respouse 
"(Ylerwn.:'!el.actitHlS·. Uld.uding ,appointfrlenb, 'citiiuH>l'he 'ri:Vide retiUitcliVCij 

eff'ectiv.;;. \OJl-lls!>.dftfk41i oc~drninistruti\ie eaorsnccurrod that l} prevented a 

perwnuel ru::tian :from taking effect as origirml!y int~tnlkcl, 2) dl"frrive-d lill 

emp-loyee ofn right granted by stnl:!Jtc or re~wll;llon, ot J) w-..Ht1r.'!W!:I!lt. 

dw fw:it 

~appojnt.nW>""lt ar.d whvsc app!.:<bw.m~IDt 

fur an administrati-ve or de:rital error."! 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Based on the fucts:ktX'i'A'h W 'CFTC 1\'j~&i.g,ert'letlt ~d se1 forth in the Draft Report, CITC 

Mazwgement disagrees with the Draft Report's cnMlWJkm tWt ~l'l't!iu ~J;;-grs bt appoi_ntment 

r:~~·o;k c&n be "'easily fixed"w on% rctronctivv bu~is. Ii.miteci c-irGliD:llliRm:~ J,Utder 

'*Nhich apciiz: m:t: permitted to W.rnac'L':Yely w~perswmel acti<>-n£, including appolntn.~. 

Spu\lifioo1!y, the ComptroUot General has ruled tl:tat: 

to carcy- Gill~ nondillw0tivni'4-y tldrnid<!trutive re:gulatlon,.oc 

rfltr{)%(;ttvcly.'' M#ilur 4;l WfiUam A. Kerl. Jr., ami Richard 

lJusir.es:s Adminisir11iion ~de j.acro employees, B· i:si414, 

{Mauer ofKeel} citing 54 Comp Oen. 888 ( i975); 

Smaru"' lk Facur li.l'f(ployec~ ·fH88574~ \Xc. 29, 

<- ~ y. 

t'nC ConiptrrillerVeneral, however, has .not found that the f2\l_lire'4?"eli!!WJe!e appointlT'!ent 

pape1"W((rk is liS! adminiJ&rntive o:r clerlct:l error. For' ~fii&?ii~,ilii(jCY"Ofkeel; 1:-Wtt lnemhers of 

then President C'41rtet'4 t14tnslttoM ttatn, W.i\lkm'l A Kccl, Jt~Richard He:rtwtdez, 'Were 

IIS!fignt'l.1 to work at the Small Business Adntinlstratio!V(QA;t,_'!t-•tJer ofli¥el at I. TI!e White 

HtYJ,!Se illd not ir.st.rJC1 SaA on the per¥G:nnef a~i>k iJi:uipe'¢:i,ii>l0}'i:CA' Ui:rtii 

after '!hese employe~ S!arte-1 worldr;g_ ut: the a~cy; ¥1are, the ap]Xlintmeots far Keei !IDd 

P.erru,>ndo-z Qi<J. 001 occur until a later cl~ ld sfA~ til¢ C<,rnplr<~!let (hmet~ "witether the 

11¢\et!C}' ooulO makc the awoi.ntmenb ~":wi~l>~~~i"ih1~m!;, 11!tiDHCiivc. Tilt: CD'Jtl}ttro!Jru· Oenernl 

ruled dmt the f~wa! sitn»ti!>~ reg~ding t~ ;;; employees did ru;:t lJ't?et MY qf !lte criteria fm . . * * tctto!l\:rilli'f'f:~ttne:J ar:ttOlllL Jd. j:rl''~.

i. '{.~

Siniliariy, the Comptro-11-et C--¥{.ewlrt.!#-d d;atlbtt,t was .oo adtnlliis1ralive or clerical <:troi~ when 

an Vr<tS not · -· ·'' UueJ in Matter liS! 

Army employee had hoots prioc<o the Army's di;;covery- that she "lmd not been 

properly proc elying on Malter »fKeel., the Comptrt:Ntcr General ruled that 

f41t'Git<WIM!Jt \tid· <IDt'MJ.t!s~ {lf tfie.¢rit:;t.Jrt ~t .forth. ab;)vc 

or clerical err-or. ld. at 3. See aiso Richard lii Wair. &1%620, 

t of Health. E.ducailOJl-,.' 4rld'W¢U:rini Office iMW:iri WhO iAX>!ked 

was ruwer oompleted by agency 

:fuilure to submit certain docnmentation c-annot he c-f•rr<;;idet'OO a ,--Je fi-i<:fv employee 

intern could n<Jt be retroactively appofnled OOcau\W taw d~:~ nvt ::mti!!fy iUIJ nf tOO criteria 

)'lm)!Mt. ~Q Comptroller Gtm.ern1 d«:isitms, \ncQJ.i)plere papenli/Qrk l)f the lX!tnplete lad of 

pn;,mm;,kappem not to- satis~t any -oftbe criteria that pcrrni1s to cDJTe<:t 

adminl:>trative or clerical errors, espccmUy where the errors appear sipificant and ru;:t lan!aood, 

43 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Applyins !he hOldiFtgs· onhe;re CiJfri[iiW:ilief f.'t6!kr~! dtu:isioos to the OCE eoonomists, unci· ha.wd 

rm !l¥:" cum:ut tnfbmta!ion a"'<~llahle to CITC Mruw:~e!~<t, '.V<,J .;~·ncludt !Xmt !he- Cvnll'nission 

f'r'4i)' oot tit l!m.thorized under law to retroactively oorn:et cerl.ilin dNl;;o;iencies W1h¢ ~intmenl P'l""''"''' We disagree, th<l'Tilf.we, with tlw Vr~tft conctu.sions that can be ':¢#sj!y 

ct'TC Marutg.\>rtttlnt l'ti}Ul'·ll·tS: that IJK;.DtJ.ft Repnrt.lie revlSCd' iO rcfi.tct ifuti thit dreumsi~.es 

under whit:b li.~ll.C\e!'i ili'tJ'J'!')It"tili~ed·1(i P?!KW.<;;tively t:O:t'(¢(\t cerlain antloos, iool\;ii;l~l~ 

Z.Pf,oinim¢nls, is limited. Additionally, CFTC Management req;~cs.s ~ha;: tOO r, -

~ 

'\> 

~kthiit it has -obtained and identifieci which the GIG believes contaiM or 

deri¢$1 tm.'?f$, O!K.'i: CITC l\·la;;~erne<!t r-e-,.'i:l.v;o3 the dlxumentatio:n. we wi!J .• • . 	 - h~ turt@:( :tny ad.m1nts1rn.tive or denca!. errors 1(1 tlm e;;:R:ni Fl111ltk-..i by law, '\', •.,,._.

D. Draft RtpUorl· Appli~iiQIIl -&f' Compk-»lkw General Dt:cl~ g~ltag Dtt Fat._"'lo_ 

E;mpi(}yccs 	 . ,,, %:2 "*s,,__'t· *'"' 


·Y "' ".'; lR' 


In addition tn asserting ihat identified erro.rs mm:lmtOmttilttvi~~gf'iM 'PC ''e.>iil'tttxerL"'" 

the Draft Report also stat~s ti:<at errors it. the appointmentd;~~ ~r ether app0intmer,:l 

deficiencies ,.roce eooooml.sts could be easily rerr~!t~tiy,,cs~gorizing the hnpropedy 

app:rir.red J..n.:livkiuals as de focto emp!oyees.:m5-/~1)lci:t-~;-tl!eiJI'aft 'RfjX}t1' StitCS'U:\a{ 

"'[bjecau: t:h:e:re wru; oo i!trllcatlnn i!ffrm:!.d N lil1-d Wtl.ftty'the ecmt001i.sts, m evlderu:e tbat tht: 

"IJP<linUT;"Wts by the ChiefEooMmist una~t~~': t:'JWt PJ'Itm{t efthe ad:n:ilr..l<>tr.txtve errors 

ap~ ro u.s to be somewhat trlviat ~~~ty fiz.ed!"'*' Actt'11\1lr;g tc iliC Dltd:'t Rep-o11. if the 

OCE ecoru.:unillts are utr-oactlvdy,{lll~~_Q~'~jiwf&errtployeet~, then any a-cts of~ 

em?foyet:'lf4'1!ormcd deU~-~J,r;ai)~, oo~;ld h'-'r 'l:¥bJ/71UrtJt!y ratlflced ZiF TbU. is 

~veo.as s.t.;.pport for the coocl~l~!n. Otaft Repvtt &mt"t.~J't Sipp;:~ nr be M l.mis t11 

lnvat!d.ate or ioti~;:t1oltdy ;J{l_!~- ~~i&dw;;t by QCE ecooomists who 

imgu!&YiliM ln their - - • rk!'!(!$ A>H:xpla1r.ed-hdnw/'A~ d6t~.Yl:· fbi! tfte- oases 

· e 01:11he fac~JJ i!X. w.~ ~J,u:r~tty .;.,~ndl;r~eim.td. tbem,..ln any 

ootablislwd by CffC is oot desigt)ed to "'i:~tvalidate or 

ecoooiTtist£,'~~fff_ Rntlwr,. it. is de£lgmxl ta.emS'ill"£. that 

rapers d.~.@ p!lbiicatioo do not contain Secti(l;r; &i-''i.G~I"~( !l:~'1-~lf;>P!1~ q~~ i"r .P,~<;<:ted 

lnforron~SiG-·lJ dcttmtiml the ;;.mp!os"mrn1 ;)ialm: ofthe anthor publication, whivh 

lN ld 31::!7. • H atlJi-.19 (11;$ U!G 'lrnPiam• the t:m;povl!l:f CeMu\ Qjlinkms !!boot dvjac~v empkiyves and fuwtd thirt 8ud;­

emp!!J)'''-~' W11tk V/3£ not ifi•:alidattd by J)t!p¢f*Mk etrO!$}; Jd. ill 32 (!ht- QJ() f'!(i)l'l)n!tndt b\Jillg tdflrl!\l.! t!Urt illlffi. 

r~~:1,y.?;\le l! {fflf$01\ is ltntlng JtS a de faelfJ Mlplo}'fe l.llf Villi,~, ill'lil fhF. agtmr.y ihli!Jl<J ;aticy ;l;iiif f,-.">00 faith 

-J, 

lfJif ld.at f'7, 10 f.d_ !& 19_12_ 

:IW id <Jt l%, 

=:d 

"% 

;_-t·l 

44 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


ccu.!d affect,~ Oilitif tltiriiR iful:'Jiat;.W;t lJtid \:'OOtent offue disclaimer used and W 

!IJ'-'J';~'I~trlMe i!!andatd and soope of review t-o be applied ro Htc fl1lf!1Mt'­

GAO has long tt:t-t~gr.l.z;;:d fbar ~ deftJCt.tJ ¢mployee ls ooe who the duties of a Fedetal 

office or vosttion wWt apparcrJ rig.1.i .md 1md<.:> co!Dr ofan ~intrnent atlfi cjallfl. oftitle to s-uch 

o.ffi..:c or ;!XISilioo. Matter of Martin Mendelsohn Payment fiJr &rvictts Pvrfornwd Ev/orv and 

After Appoinorrft'f!,.~:?P.~'14 ~, M4Y .~,. 19~~ {a. t-i)n!;Ulthtlt WhO <Uvi;'d.&vllrt'IYJil<tli!S & 

during his 2~month·app;A:v~ment ·&'t1ught tl'l ha·•'t' W<:>:rk perfmm.ed before and aftet his 

credited against hls indt:btedness; !he consultant wa;:; lllll a d., fw-:to ;,:tnploye¢ and~S11 

entitled 'tO payment s.tni:t' be did no1 acll.lA!dh' vol<>r of amhori1y ami hnd no · 

expectation o:fp.nym<:mt}; l!Jim F D<mlldly: J)c Fndo IIf!fJl!O)Ye, B~l93605 

(.'iJUliftf- ,_tfDOnnelly) {oonsu1tant who claimed couw~r•l:ittd•;.:; fur !}e<'Nftlal, 

Arnly Corps of:Engineers c1YUld be categorized as a deJacM nnp1 

Browning and C/f<F'lf¢ t;. ·(h:tt!,_furd :v.; E.Yjtll'l1tl'A,ojliJintments .-. St 

2.;:1(}5~4; November 29, 1995 (Matter ofBrowning .::md Crar1{o1t'dl-, __ A \P oye-es wOO were not 

pr~ly ap:pqint«l were tv be J)t%id _as tie}n•fu·ern:pr!~i'tn~fr< 1:'-·thrn;·wh;:m:·ihey \\'ere 

not properly apJxnnred); Bktckw111. Eb2:'i7669 (amtmssad~- ippoinied by the l'telli4ent 

bm 11\lVX';ll!"rl to his new post three weeks early was n q ccmptms:atirm as ad0 facto 

!l<rnp¥ry->::"-<: 1l'I:'<:'Al.Use he coutd no! provide-evidew:.}md: h->i<·""""""' :<¢r,..l!i!~·!i!mi¢1' wl:or of 

authority); and .i-i4'ftet qfActirtg FedeYal ltrsw:Wu: A B-l!B612 {!:m.properly 

appoln!M ~ce administrator who str¥-ed tik4--~--~ii tmd>St IKfl improp:t a.p,Pi:lhmnent with 

thee fu11 knowledge and approval ofth~WJ ofHOU$ing 1\."l.d Urban O<.;>l¢k•tffl'lt:mt <md the 

President~ &t{;} fm'IiJ employ-':t entiiR!'~~W'-1J.llid for !be rcaa<H'lt.bJe value (}fhi~ iltt"'*fl(e;l, but 

appo:int~t~ent "-'eS nftt valid). ·\? ~\;.~t i '\s.;. 

l~ t~~·d!zlin_gutnWng -fu.;ts/:Pe~,~-$ta-ttcr nfA:mrwlly i#)J.\ Mauer vfBrvwnt~;g and Crtmfi;rd 

on the one :b.ru>.d a..'lii the sil;U:at1_qff in¥oh'in.g OCE ecoo.omists: appointed as uru:ompensated t{'"" \' tW¥>illtatlt.s vn tho oth.er. r;t;'l~. ffi0"individaals ln tilt::«: GAo· tW;t:S'1t-!til.'lV(t:k}~tk\J't"B.r the 

outser th11.\ ;hey -~·):;_mlf tJ~f~!o/ their wo-rk. Witb reYfiirJ.·t(l tb.e·OCE •:-XiotMJn'ii\l'!i¥·.appuinterl o-t 

lntertded to ~~>t!'ib~i\!Ri\J(l'I;:Qti\p¢'1!~l!W ~QI!S\Jitants, CFfC never had any inteutico of paying 

;hem ftw '!llcir ~.ecs-eand there was also oo expet tlll:iott nit tlte· OCE ~!.At:WmiJ>t' ~<~ ·b~>iwJ:t that 

:;!;;t;y w;;;6l!!~nliid tbt their services.:w Second, all~ftf;n.(;;l,~;it,;:lJ.dteo.kolxt-\:(1 f(~ oo hvw to "(" "'"'*& \)f payrf1enr ro rile individual. .seryi.ng under an imperfect &PJX'lO!ment fm the 

' 'ces rendered; !heae C$St.'S wtntlcl on)y De re!ev1.1:r.t- to the pre:!~ent sito».tioo if the 

t-o pay the OCE eeonrunists serving HH \l!li'->::I!TI_pen,-\:.!tffi.i con~mlt3nt£ fnr the 

::c=-~·~~-,~-

Jit 1'ht Dtaft R~ !lill1iS dl«< 1lw {A~W Nll$d !-l~ bj &:-<1 QIO htwt !J?Oh whcthitr indivithao!s can bt pa!(ff(l( :4~it 

W~~Vir,r.t ~\t!lrtlltndin& i~app;:~ii!IJT,¢1ll$. lrl.lll IS 11. 1\<. Ht>I'I'!VM, l.lw Drnft Rf'(.>t'>rt rlnru 001 r:mvid¢ 

-!:;sis o:: .;;i!!!: l'wll'wrlty whlcli W<.lul4 e:<twd th<:' lmlrlillv oflh¢ ci!OO cans 1o ~~UW:icnsln whiM ;he i.ndivfdwtls 

lmt!l-vtld W¢1'i-llevtr Jntemled te fl)i;eive payment 

45 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


servJczs they provl.d~fiJF 'tbe :.;,.:t<;e>; Cii.ed' ibOVe dO nnt provide CITC the authurlty to 

rctt!>ll,\.ilve~y cure nppointmet~tot paperwork de:f1clet!l'i<::> f<:>r t<msclttnl'> wh;.> were not inten.ded 

to be 'Jilll'lpi!r'Jsated $!l.d who were not servi.l'lj U!lder n proper i!!ppclntrrtent'Hl' AdclltJOt'Jaliy, the 

cited cases.d<> nN prPvlde tm: CHC with mdboritr to oonvert individuals brou.vJn in~ 

cr_,ntrlli'.t im41 de facto emplo}"'"' 

lhe Draft Repon:r.ei~~:oii:Matiu:af'he:AcJinjr.f!!edual Jnsurar~C~J Admi!'lfstratot's Star~tmd 

Autlw,lty (Matter oj'Acti!~ Ffkieroi insurance Admirdsrrator) 8~1 83012, 1977 UJ:L C<:~P'\flen. 

LEXIS i 00 {June 29, l91?}1n as additional :>opport for :lh0 ptojX!Sitiun iha\ CFTqca!}:7--:;~ 0*> 

··~=~~;:~="':";'je imj')'!'opcr appoir.tmMt'> and acts oorom.lttecl by lodiv:ld de 

. , 11" 111 t'i'Js decision, at. acting_ insurnru:e aclmiu!stm.tor signed 

issttOO repuns and testified before Congress despite an 1mprcper appolnim.en~;;_. 

Gcii'LEXiS ·~oo $It **9·.1~. Tht: ~ompttollet Gef'leral held that thcJ?c~i~i"Hoosi'lfg and 

Urban Develc•pltu;nt ;;,;,uld A\.tlii;,r,;;liU<Uy c\W>l: the UlipropetapP?Jmi:1ctf!Pd ooted t;Jtat fr~ 

\Vere· ~loos the legality ofthe acts (;{JJ:nm1ttetht>;i qw~WS~.ce administrator 

unOer tl:ie.liltptoper appointment ld. at** l!J.-1 t Cl:'rt: Mai~61l~¢:ik:.{fisagroos Wi't}'i the otG's 

reliance oo thi£ £1L"!£, becau':W (J>CE econnmi&ts w!Y.).se ap~i~rin~'ls oonsu1tants ;w:re defident 

do '!VJt quaRf'f as defactq employees fur the rcasoru: -ilia:eU·~l'bvve, /;>':'<;., :c:k, 

Thcwfor~ the p.t~l.t!M ci1ed !li.llte Otdl Ref,'J';t u}'~ ~~gaged in iOOMciual with de 

fi;lcta status have rhe !l111ne v,;e-ight as iftbe tndiv1t1,~ "!fP an. -offi;;er dcj<H'tl" is il.'llXPP!!;;;ab!e to 

t~r OCE ecooomists whooe appointru~~eze deTI6l:i!nt We further d.~g.ree witlt the Draft 

Rl:lJDrt'srellanct: oolvfl.tm.r ofActing Alii.r&l/£§1lf'1Jnr:R .4dmfmxtraror as a bnsls ofuuth(lrity far 

tl:te :o ratify the :ac-l:citlff: of aJa$'Pen -written OCE eoonomists \V:hose 

ap-polnunents were deficient Th~di-.pJ!;'atlons ofthe ratifiM.tioo ofOCE roseareh papers writlen 

a:ct.ltc.rs :L"id non~£':fri!i~~£ CV.llnthors would different from the 

ratification 4f an ugmcy dJ1.f6"-oiiG, ~"'Hey ox order, . ln_the case ofan agency: diroofl~. polk-y ·or 

ordet,lhese docurnen1s c~~;he~fi11:p.1y re-issued wlth a. new e1'fcdive date by an li:i.div!dual who 

wlill a\t11}ori~Wr~,-*?'*) 

~,, ."Sv'%. .. } .-'~v 'Z_, ,,,;; 


<':: 'Z;,. 


. far:h I.Wlt. ~b!l1!t .t!tltj somn.ofllw. oopakl COI\1M1liWri fl($'(4led p¥)-T?Wf'J 4t lhe 01it!if'( tft~ 

ittdivlduah., and !he crserin ofdefiwJJ -rur;pk>•/ffl\1 aw m¢1, !;; 1iX\kl bt r.¥.4:tmlnct! ib!lt 

mnplu)1!«, 

"~~<crthmoxm:tioo of JYP<J~!W jV))::mt'W@k M4 !he flf*li»ii; lit .m "\cti'<i>l.hm!Ma 

de fa luyw a-u Eq:wRil'i i&&iu. Sp4~.Jlfisl!!ly, in Mii!tJJi" ((ffVWJrU tOO Cofll!l:l'Wll+r Gemm! O!}lMd tha: wOOf 

an int,lh-\4\1%1l:$1lt"\$flll\tt.:d "' 1fot a J,·J/;tJJJ ~mpffJ;.'tc, it '">lm;dtj w:u be mlliW\demoo4lll' m¢a~~ing he h;w boen 

~-'l!t!<!d.hitly ~imed!!:! the p-oo\l:l!ll1lt, which he v:aked. R:tt;'w!·, Jlte;'Ul¢ is t!'h'tt ~~!'! !l-~h IDl emp-k,)'>tt may 

>~~ 'l->t tT/fl''-"~it.ively f~f!X!inted, he mayy.:1 r«~iveo;.}mpen;at!r,;; f;;v hio ;;;wl'hX:} lfht if fr:-.!00 to X <1 d!' jafl{J 

t:~tt MIW!tr •ifSf!'i&rl, fH ltl1SJ4 nt1 

m DRAFTRi::?o!U M 18 !L19~ 

;,~ }d lh !ll-1¢, 


tB !rL fit l!t 


,y, Mufler qfAoifnt; F<!tl.lft,!! b,<:lll"ttlli'J: A¢MiN~;II,ltt!t; WTl US. Cill!lfdh:n. LEX!S !OOut u 1~1 f 


46 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
·l~ne· .:Jfcnses tc a pattk:ula.r lndividual, ~hen 

individtJ~J~l w· 00 utilclid 3llltUS wli:i tile ngl!M;t. -~[i)\llt~!V<:r.llZ di~ussed in Part HLE. 

produced b;! that indivirluat 'iVOUid be teYlewcd fur «itrtplim::Jte wltb Ser:tkm 8 

in <ITOO:fur 

wi1h thv DrnJl Roprrrt's 

', 

f l\R, fAt:\ 

._phief£t.on1Jmist,dso dr:w.s mot hwr>e ac.100rlty to 

Hcies in at~-..vith 'frdc 5 of the U-S- CY4" l'lnd OPf.,f,~ zwtil1ft4 .aru;J, 

Atxuvzent, CF'TC~ OHR is the only authorized office :u this 

U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


i!.E'lfu:,rilii ~-<'.r,-JWm!c ~papers, In CF'fC M~~1'11 \>~P\'>', Rf'/J rru:ific:nk>lt I)§' ~wevioa<;;ly 

atilho:t«i may Jmv.;: to IX: r~'¢ by tht- Curr,mtsslorL 

1'his 'fVOt!M U:twrt an Jlddi1Wtwl Sop to fuc :paper review process described in Part Uf aht:we. as 

~he t'.ttrnrnizzhm ¥t<nild haw to determine whether m11fio1.11tioo. 'WWi ~~late. few ol'>ftl'ih -.\\pecitlc 

;;.~cz priw '"' its n1leuse. We no1e that, ifCfTC is-~,.~~):; t\) .<:l~f~~f.l>;;~1'9~4vl:'h- ·"'{~1~1; 

athnittistrhtive <»· ~tM?l;t ~M Jc}4-ttcl 

!'JDA, t-trdf:k4lti4rt we.ndd m;,t I'~CC$-turl!y bt 

appoilrtmenll v.eJ'e dcfideru to be 

l!.W<JI.tingf>j; CFfC Mlmagemern 

factc employeas·.1

"

1 ·CFTC Mar..u~rnent 'fni.jutm-nhat tbe !ira* 

;;(;'i!Wt ~!;n;. CU.l'tmt stale ofthe bw with regard 14 liejt~i"'# t!lWl~ 

Dr&ft l:t;:p;ni should bo reflcetthst (:FTC M 

de.ficl\);lt(;les by- &lslgnating imllvld\\ali! t'fifft impr~s 

rut~pt1~.'f\!11l£

g/:t 

~'i 

~TC M~'l.li-(!;elttct'lt wllh ilie~ysis -i~ttlM,\.dl);l:ft RejX~l~ >.-'>.'•t1lr<txltiAt\i, ~tt;: Cbld' 

Eiem:~Qrni~ ' · 1contr~*l1S:'%$pecirk«~iy, thf, ~Jr~tft Rci!f(!f' i!<-tt'lWJ tMi (X\C 

lnclividua ( b ) ( 6), (b) (7) rorn:r~.ct lli:[i~Wrnist, 1M:LUppoinred hy 1he Chief FA"4lMrnist 

~ew-t:m-;tnr:C 100 LIDef~isi}tiwevet. IIJls 1'¥1' ~r &r MoritY t.;; bind the 

C~:nlr'Thi~rot>Ji :00 e tonttrrct U~~t~ ~. the auth:.rJty f,;,r ~ ~ril #¥it-tU.OY t« m,)t-.:w hif~:o 

rontracrual reffiticr:riPJp ~Qgifn~Hlie: Guv-:::mm~t to tho offunds is a delegrll!!'.:! 

~ttr. wPicb PVIJ.$t !;n; cr~ 1n wrltiJii to a. oontw.ctl;m.Q:ff~.. FAR .l,.:#H- .Con~thlif 

Gffioet$ vdth , e the only indivi~uc;;h_ le,ga1ly @l._lthr~rlzr.d_ t.;; !Jhxl _file, 

~t11t ·· $\lttd signing dct¢rniirmtlons and tlMO 

ilW·C:hii::f ~1-..:i®!!'Ulm!' M AAU1h4clr:r. on. 1:«$ IXWf!l to .bm.i the 

Ecooaumist 

an individual to fudrim: 

n his {)VI-"IL CPTC z Office of Hu!Tl$.U Rew<~ i''OHR'") ad.ilinis:~tl'$ CFTC s 

hall 

lJUAvt ~;,¥ li.w!9 {tootl:.>dil:g !kat prior W<~:S: c;aup!ctvd by ¢mpkl}*IJ wltb in~tllJW teturlty 

tleilnme>w, ewn !fMlflle)'M ;;mill&~ % Ml~l'i$!. iii"M ~M wcart:y ;;-lfflraoo;; m~d, llhodd nil! be M:@~!W 

t>'W11'Ytt: liM5 n- 44jnrJW Ml('lt}*IJ_L ki 1rt 17 (fM tet~MY ilhlm!d tttifY tim jl.OOd I!J~h wwY! ffiflfl'! j'lill'$llP 

MVIII!J ~><; t d4 f;NtQ l!mp!a)m~:<). 

i-tt f<'llli HL 

47 

App. 6- fvlarm~<lll<'tlt Respouse 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

P'tlvfkget/4: C!wlk!Mtirrl~ 

Autkwit#J fhT lNJ<tHtnl CFTC Diittibmion and Review On!r 


l'ltOOlved O:!>M i:if.il)fciVf.d fii'JiLlhi.iti;m:er 'tiM:\ ~il;i'biJ)i;nf# ofTitle 5 t.tftlte U.S. Code. The (;blef 

Bto;w;rili;.i has rm atahorlty to appoint any.cne to tho: t"'J:>lllon ofoupivy.;;c, C:Xj,.'t-'r1, or <,:l,);:truJtant 

The :ruwstion ln the Dn.tft Report that the Clrief ~viDJmlNt Im~ pfnN« ill hincl the> nge.'Ny by 

ronttect or to appoint indlviJualt~l{) prn;ltkml!uX <Xmt.ractors ll! in oo.nflict \l<':lth 

:h<-:-.:e ~!.1th•Jri11etL~M· 

CFI'C l\1;111,1tJi.W.et~t :t)."811¢®~ t1'.¥>! tl'.c. Otaft Rcp;xtt .be U:itrei:itiJ to fett#Ct 16at ibeCni¢lz 

Economist has no \UI.ihority !'(l ilpy,;iu£ etnpk·~-ees· uru±er Title 5 of 1he C".s. coo"',:'·;~.~(~;·~~% 

CfC'f'( fvlmm&ement requests that the Draft Report be wrrzcu::d io rcflcc1 itll.i41l 

&OOrirl:riSl: :UOOs oo1 have the .nutlv$!ty to enter W1tb "'!~~~ ;lh 

behalfo.ftli¢ C-OJ:ml<hskm.. 

:&. . Willw,er of Campetmttlon -,-"'­

0 t >> 

As uoterl al:xrve, fhe L'rn!fi Report conCiuOn: ti'.at paperwork def1d~~,_,vi fi:Xtd/'7 .:: 

4 

The' diSCUSSiOn leading to this cooolmJon focuses on inootr:~ig W~!@ed hiring forms. A 

numOer oftn.e OCE economists pertbtmed the tvorki:. WithOUt ~~ifiiri. tr,, (;,,JliJOIK'ller 

General has U.;dlnc.d. ''volunlarf s:cnirx:s" as ti:.ose :e.ervice:v+'i4v1<>~ y;-·q without contract for

~><;.:mpel15i1tiOa, or witb.001 an advance agreemen1 that ·- · -- .,.iiJ be grntuirou:s. ,l?ecess 

Appoimrnent ofSam Fax, 2001 US Comp, ""''"'"" 


S<rrs. from the Am. Assoc_ ofRetired Pen-tm TefU:irers Assor\ {A!'71(Y's Authm?fy), 


19:82 US Cili'i'lp. Oen, LEXlS 667, at.*3 ~n il 'l'lll not vi<Jt.-ue \he Antiddicieuc'/ Act ifan 

«~tucy \W'<:eyts scrviens"»'r)if riiA agemc~' ncenpts sctvi~:l whtre it {5 auth1Jsized by -.........,_ ,., 

law. 3! U.S.C. §§ 134 J{a), 1342; J.;,riftcijll(£'?i]j)i'edcroi Appropriations Law Volume 11 

(RedfmtJk},.at 6-ll (!(feb, 2006). ~i -,·_-rv '1-L,

<f,t grntulrous S¢tvices. First, au agency can accept 

?Jid, bi:r.dlog no~ OOll<r&'' r'fior 

has begun 4:a No-Cost 'or Event Pkmnfn~ ,)~rmtiu:s, ZDi)7 O.S. Cump. Gen. LBXIS 

220, -at *9. Set,ljq;l, ~n _, ~.::,_ n acc-ept grntaito-u$:.S«Vteez· tn:mi ai:i cipert or~onr'lll1m< 

"nplo)'XI uodtt>~],i!'&hrrfll;rof5 i.i:S:C~ ·§ 3'l'Oif!U pli)v}rl£~ that "lt ls. . ufkierstood and 

agreed tll.;lt ~~tion is expeclerl;" Redbook, i'!\ Q..tJ'J; See ahi} Ci..tftiJI!rulivr GMeral 

Warren ifFifliNJ]_!;!!ctor, lftl.reau ofBudgef~ 1947 U.S. 'O:irnp.· GCrL L!XXIS "1;41'(lilW'i!fiV 

1)*~\f~.-.­ ,~· ·ffire (!fti'gB.t C':.0t.'n'><~l("'Ol;C 'lr.l'lU U.S, Oovernm.<:nl At;:cmmtnbility Offliii

.4: "~:'\,~ ""::::,:r-J!""'""'Y-,,,.~---

~r> Jd~ n ttl'-« O!G ootet dxltt Wl.IS UV eviiltne<.\ th:tt tbt lilpp?in!mentt mil,;k hy ltm Gbid l?.;,:cu=:h:t were 

UI'!Z.\libiih:wd). 

mid 

r: thi'tho;wiW:,, t.;,S,C, ki:34:2: havtdffi!-'1'( ~-di~!Ff:!n'> OCtwrr, r;<TA:i'-'1\e<:l -v-<:~J\!II~ilry 

otfti'kt~:'.:..M tcrvio.%:· Su Rtdtx.uk, 1Jl6,Jlfii 

tn lil iffiCiPt &'; euf;m:,tl!!bh!, a C\l!!troct --.iifu ~he Unitiffi Sbttcr Gt>Yt111'!ment ru;vimr an ?ffer, 'lWIXlphi!'!lU' nft~ 

trfflit\ fi!\d(:p(!$ld::rntioo. N&-Cxl Cootrxt.r ftir £!-'it'll f'tmmlrg SirvkH, B<ffi8968, 200'1 U,S, Cnmp. OcrcLEXlS 

:nl}m •.t.<t2(d&g JUck's Mw:hroomServit:e, inc v. tJnff«{SJMM., 7fi Fed_ CL 25U, 1S9 {P.ln7}; Tad M4Vcai 

3-!'lffiJ~t, Jm:. v, L'llited Sftltes, 104 f_jJ 13!4, l319 (fed. C!r.1997})_ 

:m Thiv n;e!;qifY permit> Jgti'IC.ftf m l"!t4Cllre exprn 11mi 004t\Jk1ml wrviws 

48 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
---

U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

Prlvlt!!l!Uld' & C'fk"ffi@!ltfel~ 

.4uthoriudFofJt lntgmgl CFIC DisrrlfmtiM f!fJ.tfReview £.'flh 


{"'GAO") ®;iiciOh~·aa,,;;· i~OO hll' ~Pi:JW:ht to set\1! without cruupensation as me&ll.i~Jt 

ittf'.l th-e~e sl--&~24 be ¥:rlttoo docl.ltPCntatiou ofthe u,greement Hu•;>teve:r, I~ant OAO .;1,.ecisions 

mxi guidance. as wen as oilier agoocy regulations aOO prec;ic<:>s !lig!lrdi!lg c>Jv.sulum:Js and. 

require that iheJ'e be written dl)o..1m<OO!atkm ofthe agreem.ent.m fn Mallet 6/ 

lk{_:..:rnmtwt oftJre efVoJunt<tJ']I./kr.;Jcos,. fi-,3242.14 (Jac..27, 2014), t.lt.e 

Cwntj.!!XV!kt Gtmeral fuund that: 

+ 

WJ'JTJ~:;•'l<'J' 'rio!at%1 ·trn: volunt~:ry scn·icza: prohititioo oftlte Antideflcl.cncy Ai;t, 

ll U,S.C., § 1342, when it aceepled the unpcid u~rviu.:~ ofibm- iOOi-..-idua~, 

ctjtChey may accepinnpaid Eervlc,e;. when mmeone off:Crine; sueh 

an adv~V~w written ai!J~mznt tt.a1 {i) state-S thai. the aervk:es: are 

e;rpmitatioo ofpaymenl,. and {2) 

We govemme:n.t. Treaslll"Y obialned no sueh writlll:l} Rgl\'£'lll'·~j' ~" 

Treas\Jr',Y ~h\:l1.l!d ~rt·;t Vit1li!~i'nrt 'f'>fthe'AOtidefidency Act-* . -~by 31 

tLS.C. § 135L'' y/ <± s.-. '\_, ';­

CFTC ManagetrH!-l~t is ttV•tB.te that 1ht: agtncy !Ia.~ &t: obligt~~.-~,~~~;tf~;~-~ viol;tth.)ns qf the 

Antidefkieucy A"t tv !he 1'rcsidoot, C:ongt'CS5, an;1 OAO:~ ¥~time ofreferral. CFTC 

~ 

wai··'('!< 11.ny fttlW¢ pay d.;~'! !5t 

' 

. I fur e-m:utiw ; , Elill::. <x-rlL'flOf''THE 

49 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Commodity futur.;;s Trading Commission REDACTED 

Office of the lusp~tor Geuerai byCFIC 

Ptivilepd & QmfidtntittJ,. 


/tuJIU!ff¥4 f'tg lnlirfflf!l CFTC Distribttdon and Review P,Jy 


Management ¢OJ.l:!d oot lo~tG dim~Jmootation ufagreements to waive compensation fort~ 

OCE e..."'nomists \\'00 were not compensated by the Conlmlsskm fl)t theh work.."v Cl'TC 

Managemoot requests thal the OIO provide any infortnil.tiOft co!!ootbil. durfug their review 

regarding waivers ofoompensatkw. 

V, 	 Additional Factual Innes 

fn addltion to the j~ a,'td oone<:rtl$ $ct funh ;:~.OOvc, cr·rc Management has i4enti:!icd tiJc 

followirtg il<!it\es that we believe apptQpriate for the OlG to mview aJtd ru:l.drf'ss in <he Orn.ft'\,<_ t> 	 "' if .?"' '0 '"'port. 	 ., c ..f" " ·'%• 0 ~ 

A. 	 Statmleab that Tempcracy Publicalictl Suspensit>n Was a Ban {),.J;,_ .fc 

Rl,lMlt~rdt -*- ~-

On page 15. tM Draft Report smt.es thnt the ('_(ffi\mi_ssion halted ail~:f;~areb in 

i)t(:etnt~r 201~- Thi~ as~ion is ~ot aoourute. ~s ~n; Otafit:JW~;~~,ft&i¥~· ~~ "l!ooduet~ NS\lm'eh on ma;or policy tssuea facmg the Comm!S~!oo~ a,;m~ fh~\t'(.'OO~:mi;:; tt:np;m.t of ~ 

regulatory eh~ o:n the fut~mm mMkcts aud othet seckf~~{~edmomy .. , pl'!)\-ides expen 

i!Ctloomic support md advice to ¢ther CFTC offices-: a,'!~'Wndi!~rs-npru::l.ni ~diU$ tmd 

<;"V1il<J~ltkmo: . , , ,-;nt \Vhile the December 2011~_s~st~temp.-111ui!y Jmh«l )Jti-Ni~1)Q-n of 

outside econo-mic research papm., OCE co~ t¢ -)6y economists, who spent the past 

yMr<:ornht£ting economie :researeh to fulftll the'l-r#.~gn oftlw. OCE, the Commis~ion1 rutd the 

CEA. 	 ~Jl ~. ·n· 

'"<-<'·'1&.;-;.;ib.~" 

By asserting tbat the Commissi<1~lted di(~nomic researcll, the Draft Report overstates theChaift!im!'s decision, which was lihift~.d to Suspending external publitill>O!i oflndiviJtl.l:l] 

ne:sen:reh pnpers and 10 restti to non-public data to full-time CFTC employees-. The 

statement also does oo~ <'!C t wmk perfonru::d by OCE dutlrl!$ this past year. 

There fur~ we ask that mit wind~ thnr only Out$ide publkati.on of 

ind!vi.iual res~h ~S~i~ed In Decen:lhcr 20!2 during lhc: pendency of rhe review 

intn the issucs'£~ill"t~n,ffiei3futirman's letter to the Ol-G. Additionally, the Draft Report does 

Mt e-xplain t~~~rlnan•s direction was l::imited to the pendoocy of dw revi;;w and WM! 

n«Vi!f c0nt~t:n:J:L¥br implemented as a permanent pub!lcatioo su~perHJ.ion, As discm;svd i.n Part 

J.H iftet the OCE matter was referred wthe oru. ~omce of the ChainutUl. OCE 

ped a procedure for revie'Wing and dearing rerenrch pltpers on ~ <:ru~chb)·-case 

p4>pers ltaV¢ been cleared through Mth the Papet Rcvie.>•; Committ<:<: and OOC at 

Pftl!Sil)!J,..-y, OM& Cmttn.Mt No. A· II, Pkf1'Mt1'.1lt)t<,$Ul~'.!!$$10N,AN!:>EXOCVT!Ofl0l' nm Bti!Xll't, m4. ~~ 14~.. 

~1~~~: ~1 rp)(~ (b lorflceofBuman Renout¢ts. ~(b )(6),(b )(7)(C) ~Mat\ 1,2f1H){R.-::Wmvm compemnion). · · !il DRAFT RJ:roRT, ttl 8. 

50 

App. 6- fvlarm~<lll<'tlt Respouse 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 

Office of the lnspector General by cvrc 

Ptirllftl!lfll .& Cv;W@•r•MfA!tiktJrl<£4 F;rr lntrrnlll CF1'C DiMribtJ!i.!ln and Rtv.ft'w Or#y 

CFTC Managf:iTh:':hi: 'ri>(j1i~ tP,at tf<ii Driifl. Ri;piJri: 'be revised to reflect tha1 the publicariofl 

'!-U4pt:U:l-i>:.lil was Mt pennancn.ti'j.r!lj that OCE fu1l.4iu;~ {~lr<pk~.;;~->:t~ J'l-t~d {\l:'rtrln OCE- >X-'<'!":unist 

ool1iill1ttmfil i.Hlid ~ontractws bad access to Sertkm S1!I.ill other Ci''TC ncTvpublio data fur 

cctmomic research ltr!d other Comml!<>ion-tdated purpos.es. 

B. Statemclllt that OCE Wti Not Permitted till Hirr: New Eoonm:nisb 

Page: iii oftiu~::PiMH~~r(~f!U~:~~(jfji;jf *:Y~i\.1. OCE was not permitted to~ on~v eo.")n('!mi~tt-" CFTC was not pnrv!cled .::on!ext or llllptlf!IT fur thi£ '" 

tfu;,"Tefun;,c,.it:o> diffi~ul1 to resp0nd 10 1hl.s couclusl.oo. Wt> ;;~<1ft', Ju,nltt'h'>f, W 

speclfical.ly addr-e$$00 tlw ct$$Bilon of ptihlication dutitlg 1he ttvlew to 

OCB emplt<yees.:&"f To our knowledge, ihe r-eview did not «ff&et OCTI' 

OOdi.tlt.~.r.-'t!. ::t:rft'or~on1ractors to meet their needs and f,c;!fHf_ the C-::trn:n! 

that Fiscal Year .20B was adH!icuit.t.hr,c :t'i!.>a.<dal.ly for the 

l,l'f.lvtrrt1IDllJll:. shutdown and m.*11da!ol] l'utlough &ttys fQf all 

e=;;twmc budget oonstraircts which included the termirno~io!l 

addition to firnited l:dring rr.;;ay have->U"'!ected OCE's ability 

alf offices in tbc-ngem;y, Wh.lle LFTC :.-tarJ'tlgemmtt . 

Comml;;s:ion's offour economists positions ~~~-em~r 2013 is a positive &""''"'"'"'''m 1h'C do not bditve Llnn di-N? is 1/1 :CV~'th;U; OCE was.~ flXllrl lririn_g i.:n 

20l3 01l acc4\lfll uf tl:'m ;,;,)fll.'ffM !hat }'f;:\}IDf.'l.:-4 \t. Chaf~n's dcciskm. to :see« an OIG 

'10 _,,,_.,ft inYcstig,atiott t'" -~ "' 

CFTC M~ent rt:qlhl$.t¥ that We mQ:~fu~J¢ the basis fur the assertion11.m1 OCE tvas oot 

pnrmi.tttul.tn bring 011 new economl_~-~ ffffiihasls fur OCR being unable ta bitt! :new eruttwmists 

~~ n~t. t~~- '(1 ,ne~ummt review of"PC~c!mt tether~~ t!e-4. IV t.'te broader bu<il}et \:(ltlSU.tiR1S ,>f·"' .~. _/ affecting; the entitt:: a$C!:M.~f,}"~ ~lto/#ttM;: ;he OlG remove these statements Jrom the Dtnft 

Report. ~>:0::%: ''~%y:'

"'~~--·· 

(r/~~slnouunil!ng 

'0¥~-.,~·.0': 

· · approval tltal it appearn·the OOC'1·prnpo.90t,l. poticr [io ~lo-ek 

written by economists wltho~.V\<lf-m' :JM-iJ\>.'1":<;Jti; J/ilk'< n~i. t:..._>ttl >if'ficially 

:thl.'t !)f the Commi.;;si!Jrt."151 rt states that there ls unfaim~ 

;>ropul">lp>nlicy.:.;m· H~'WC\'er, O{j.c hHS oot PfXl?Oillld rm.y tlnat pol.icy wtth 

OLE, but mther has raised a aariea oftorn':ems related tn the t:>nboardinf;: is.w-~e;s. 231 

~~---------------· 1

"' Omnlel: Lct~e: 1;0 0111 <1n OCL 

mD/I.Ar'i f/.G'{};<:T, at7$. 

midl>t!lil 

J;lJJ: 

:m TIW<:!Wrmn mlwd by OOC i!wl'\We, Nltam not !imi~Q m. ihe fu!Wwtug; (1) if on illrllvidun! is oot ~y: 

~®;$:, :h.;r; e;enm1o S<:rtioo l1 ami ctlmr :xmpnt>lk inli:dmmi<m is 1mprt~Pf(, t~tlw 4{mm:y nct::lt :robe 

abKJ ID (jl.lle!dy vmfy tbflstilrus oflho:ne 11-ho are: tmiJtlmd at the~ t~ml wlm Ita% l:.fltm 1!J211ted m:rcUt wdlrta; 

{!}'if"'' ·lm:llvk!ual did mrt sign a wah¥r ofcompcmatirm thw.. )"!1'.4~\.tUl Al'ltk!e!lme!K':}' A\1t im.ftu w; cllw-u:Wfd 

51 

App. 6 ~Management Rl!sponsl! 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


The Draft Rep(i0t'rri<iY b6 !i<jl.W:rii:if! too· OOg.:'1ifig lilglti tev:iew#f fiAt onbotlfding itsues with a 

f~:,rr!Mlt -ocrr The Dtatt RepM also appears 1.0 nibf.'<'& l1l~l\~l;!::'!t w:t;;; :);));1,1>; ~\;!>!ky 

irAict:heg t'li11 the OGC to fucns oo and pens.!i.m un!y ClCE ~tKnni,;Us fur rll0t ~ing 

ptc•p¢tly hlltd,?M Fw -exMt'!pf.#, tlw: Draft Repnrt oo1en that "no one in OCE « OOC VrZS Mwat# 

6fif'te li'JI(l)flilitt'lliivc et'TOfS in 0Cl~ ~miSt&1iitlb!J!!tJ:!J!\J,tf'{lpl!lt-Wtltk lnl~if. _ ), .':<' ~, 

(Nj{\1;.;..1;{ ;k;(~umented or !o tl1e attentiM nf r;!;>t~~~\ i~.J~,f. \hi,l. (b)( 6 ), (b) itinl 

.request for _ncp,o,wk ace¥M~·was rnad'<j by dw.J"Chlef'&oll!M'I!ist and in prooes;; wn 

thar; ;,)JS Tiw Dmll !Zep!JI~ fm~er ))14!&;% !lt~J,~h:.J~ 

''<;.t >~ aoomacy was- nev-er Mlphasized befu~~ Dec-err:ber 2tn:r't~~'vttrY 

the "Is oot kiug~i-mpl{;m.i:l~too ~~y-widf-,.4:>& Fmtbet, the OM ~Al-~.~ he 

''I<J!<!iliJJ:tlllJilt only (H"'C t'.oost\k:tn OO:lkMng pro["<'¥ tl.l ~~~., · 

'\: *:.. 

]l 'j)!' {ttl¢," to IJOf k~owtc~gc~ L)&! 1\0 ~li¢ ill ()0~ WkU llWutl!: nf ilie ~.mit~-~~.j/-fSeri:wm. Witb OC£ 

~Lsts' tm!iOO.idht~ p-l!p¢t¥.-"Ork 1.11'!11! D:~nETt;b!;ir £012 and that t~~'~ wi (b) ( 6), (b) ( 

doourr~-tfili!.ctlM ~mot brou~1 to the: atte.Mioo of CFTC " · ~ ~ • "-¥ -s 

:lllm:-ii.m1 ns h:t;nl advlsor to the Com~lris:t!ou, OOC 4'>0 'Cft:U:y:Jssue wlw:.n it was 

it:fOftf'b± l.t: Dee¢m.bilt 2012, CFTC Mal"ffl-gemtmt 1 tl!a1 neither OHR nm the "". . ' Pr1J-~'U!'<'4.11~!lt Offices were awnre uf the breadth ufd!e~ tm.OC<I'-~\:lirl~ <.!.1'-~~·w-{ll'k i~N~ b OCE , , /W;:. 'S& ' , • , ' , , , p!'16l til ~e-aiber 2012. The OMRt:p(lrt rec~;::-.;_·i!:tai·-:"fri::o {!;$:;Uv~,; ot dwt>·iut·:!\£ 

for new OCE -cCJflorrdS:s were oot fi::\Vamen~ .attention of 

l1llt'tlil_Q_~t''' "'!;,____;; 

'-*>' "''" 

A£ the Drnft R~t):Xn't m!!.ktt& dt&l, llro ct;~,~;:A~~tifll.list was ''very in pusltln~ %1 1\.Ct 

O<::E eooJIGIJll*-'" hln:cl '!7y u-A;nt>; ;il:~Ji~e 01~"!f~{d;; !rnieed, tlw Druft Rt:Ji)l\11 

furtllm' noi.CJ that that the Chief ~W;1St Would ".submit the llfi!T& individual mbe b.ire4 as OOth 

¢6J:rti30W bitd OO!t$utlau111! t~e s,?._~~;Jj}'fie, rtptM.rertdy 1nJet:J oo the ~n as 

as po$slhiB.''kl\1 ih.i? a'fl~!f,v\l-.gh!· until O¢J.l!.lm1-ru: 

Ztl! 2, 'It wiiith point rn~~'f~1 OOC, om, ai!iJ O£D \Vtitk,f,.i Wftl.i:h--:.:it t..1 'd.itt&tliilk: the 

~ofrue pro~l~~·-tifiijfiJt)ly advised the Cltiiirmili)·li:l iill:Yc the· 010~ mt li\J)j~ 

''v'*'i!ll>", ~~,iJM;~j!¢,l'ir.$~'H Th¢.Ck'7C Mrnmg-e4U:ll1<iecision to f¢¢01ltmct~d an O!G "" {' ,·~ ,~. 

itt''"~ig!,l'ffin ~es the Cotutn.lssion's strong· OOtnit!itintilt ·~o tf;:.~lj\1\'i~l!- ·.::i-!lbtifir<:Hng 

<:Q!plvy-t~~ct9~.t&f eg:<:n;.;y, 

~~.~~·~~~d~N~>~,M~~:;;::::=~~~tltun iht t{lf;~;;*'-,-,-1 ~:rn-.m>-ii;t-!h-,-v~,&>~t~d~v~f ~ ltih\H Q!l :We $W:«H>ftha !!lt!!vidtd<X:Il: tl:fl!l!lmi>l wl:kl! m:ut he 

fd. 

~'1 id~ \':-;;i~;;r~ i!'$ imf'!)l1wte-O(J{; !liJW ghrm io oo!xmrdi'li mt):"'-('l,q!f'f; ~;~i W.\1}'1 W< ~nw Xf. of;>ft. {~(It¢(!~}}, 

lnu. 

Tl1l !t1 

'*" id: a1 n_ 

u~ <-hmJk: LM!tT 1o OJCI tm OC.E. 

52 

App. 6- fvlarm~<lll<'tlt Respouse 
the 

'Aitb the new CJlle:f EmWJrnis 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


Further, we dO licit belll±Vi:'U:iit' DCE iii 'hciO!i; 'Stil!j{icted to unfiiir treatment141 To our kno:wmclge., 

3(Jcl. w~ }ll<:'l~ not been provided with iacts proving z_,th!Yt~,>,'kw, fi\t J~Xlhlt'll"<'<: \V{fh (l!'<l-t!.!i:tding, were 

wid~ in OCE, which the Draft Report ackntiWl~:t -th;, tm:lm t;,.'et¢ in a vv!UI.ttc that 

indic#ted a mere tlmn trivial pmb!em.""'3 The volume was n:mre tlum. trivial and the~ of 

t\n\~ W.il$ wique {(} OC£ because 1rf the "very agg:mslliv.r.':444 rnl:lrt(Wr. in .whkh tlw.Chief 

f:<:(>J~Vttili.~ While the Draft Report ~\t4-;>~~l;;~. ~~'~ ~. ~. ~!l.>:li'~~y!:;.t~i:,'' 245 

aggressive tacti~:S uood by ct.c· ChiwfEwn~;~misi' rnsulted In the serious problems dc;<ril~ 

ru6rnorarulwm.. OED arid ODI' 

gT<: ¥"'-;a~emeot believes that these prohlems have bee;; fully ad.Cres~ and t~t ni-­

ptO<X'ilures are in pJ:&Ot to etlliute that tb!.l ?tob!emz do not rooLJ.4411 On the 

awa:rt to rugsest t!\f!i other Coo1mlssi.on Divisions and OffiCes 

manner to create onboatding issues, and V."'e bel:ieY't: tllirt p:!"i)pet onbnardiqg ~-~.and 

to be, .empht!ilt.ed 1!$-er.c;~wlde, ~,,;~ 

CF1C Management rOI{nests thm the oro revise thh S&lion \.•f~ port w r~ef!€ct that 

0) Otfe ,ji.;{ n~?l pro~ or any new policy fi::g<~n.lin,g ~?i~" ,.r;. by I'J'J;(}~Sts who were :oot OtfOOilt~Wd 11fflpttly; (2) wvoo {K.K:>s " » ' , it reasoOJJbly Wlffl 

rwt awilrn of the problems v~ brm..tg_ht ro OGC' s 

ii.W~nli\"lf\ ~Tl ~)ccember 2012, and which time it~~ j (J).o,~t< CflC 

MaD11Jl•menlr!!sp¢m;.;; tc t.,'v,;: problems >A·4s fu+d :use CFTC Management h;;td no 

m$.rotJ, and disoovered no bsais.., to believe t:b:st ihi;"'tm!tmr-dlng ~b!\lms extended beyoru:l 

at;d (4) tmhi:JPiing aoouracy ls viewed;as''§mp_wtrurt';fi.d is emphasiz.:d agency~wi>N:, Jftbere is 

evi~ to S!Jrut-~lli t!mt -onOOadii}E pii~u;w}:;~¢U.mcy is a problem wtih r-csptrottn ottwt 

l)ivisions .aru:l Offices, CFTC Ma4!Wfuerd-totfue\A.S that OJG provide it Otherwise, we ?eilllest 

tl>o Or<fi R'!'<'ct be mOOifind a<~ifi\11'· 

:'"''-': ':& ,i' 

D. Oraltt Ri;!p<!!:rt m~t_t.-ll..?:ifi}i;tit:~$~:llftl ()Cf_J!,iet 

We Mte fhe OtG•s ~*~~n that OCENet shDuld ,hf; .rtSta_r1e::t .~" ~(.'191] l:I:~U-'1l:J:$,'i~~,,~. 141 

CF!C Mii.11!l.g~t{~ ~i: :sy--n~i)' tf~ OKI-';:; Gonvern '!hat physical and inforo1ation SCC'Wity 

ti(iiifwt«>lL'<' ;"iti:.mtl;-lj cit cmitr9ls~ .W.t: heli~vt:. protenting 

,i~ the possession and control 1Jf tOO C-om.missinn from M!la\1iliori.1ed 

v.:lt.h Str.:\i<>H if:, the Prl:.,1;:; Act, and all other statutozyn:quite:-::ne:::~ts 

impoJ1il1:i.{;e" 

t•l !JO?.H Rl'i~'i)RT.lll 19. 

lQ fii-. i!-~ rr ;+j tiL 

w !tL 

:w. ]>1(4At 1iK1 -cti~k111 ~;t !,."fTC Manag;:lt\tlll au:lun In P\!111 HL almn. 
 Hl !')RAfT ltff'IJRT, at :n. 
 ill Ill Kl3l; JV# SIIJfffl tmh: H'XL 


53 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


The Draft Report· cldllli!i ilie td¥rn11aget; 6.f()(jtNtt 'it stored drua oo l:b.at lt did not neeO m·be 

s:epi!ntely loll.ded Dtrto the many desktops; lt was fast-<:r, nwar,iug tbat We ri'I~J<:!pu),\ltl<;m Jnd study 

ofdalww:!i! cm.~ld oceur more quickly; and lt contai~ unique pNZflMrlS 10-t the uiaulpuJ.Won of 

d~.ttadW The CHO ~hrmrot~ri:;:.q~ OCENef~ ebitky t£> run the ~rams nco~ -tez 

a:m.Jyz.e eronomic data'' n a These analy;:1\":..l.l·pro~;p·Mw;:w!'.t"e:1n ma.."ly i:;J!UlS coded 

usir,g wftwru."C or programming: oompHet$ prwddt:d by trn:.Commi~on.aml. "'"rz in 

OOfiW' cases ''J*1i ~e :M)ll\Wtfe h(jfhVSilllhJe Ofi the CfTC main lliel:\\utk. Hov:ever, ~was 

not sl.tict control ;sver software itma:licd in the anvlrmtttlrot, r:md it is p;;l!illiblc that pern_!)_l.'~1y\ 

<rw>:Jr,d .~:r~-~<was _load~ onlo t>CK':."Je: o: t~e :x:E ':.';'t.lt;omist~. ; 'nil:'> ~;it.fntl·'.;~~fl·r~i!h othercoostdetlllHJfH Htchid•ng:tl-ill CurrmllB!>lO:tr:;; lf policy,<'$\ wh:ch prohtbr!s ~fvl~!/:fom 

insta.ltb:~ p~u.lly o;,vmed ucftwere, Witil.'i!!l:l$ a ttW1cw by CFTC Matm:gern~tJ2f~0ch 

pr(lgrac·n ~W,rernents, archil:eciure, and controls betbre a dmerr:tlnatiu~ ri\~e ~ether 

OCCNel shou!J .b>:: ~f!<;;;t '~ \. ··~, 

lhi.r Dri1f! -Report identi-fies another benefit of OCfNet as ili\1>bi,!,I~~5' t~ <D'f connact with 

OD!sJGe tX:OU.<Ymisls 1o de research while limiting aol.-'il:SS'td il\0,~,~:rr~'lfli¥lil Vlhile 

this was the historir.:.:i!l prn!.::tke of1he agency, if OC:E eco~S"i!}:e flroperiy appointed tq .;k> th¢ 

work l'!f the Coro.rnisskm or are property brought m '*'· 'lt>¢11 th<:y z.re- ~utb-v:tiz:ed 10 

fmve ~ess ~;;the data on the CFfC main the!: nai fo;:--cn::wss to: the 

data. Based on this, it doos oot thU<Jw thM required, Staff in 

~veral C'-<tll'l.'tlisslon divisions, includln }il."ld OCE, VdJ'n.'.nt!y havg -i.l{'C<.'-W!- to the 

Uii~tii!uo 1:00 CfTC :main network nnd ~6xtn>£Ortlj}W.~· S:>m'r.illl\nt."il ant.i anelytlc . .,. \;l>lng tbe main 

server. CHC M~ent belieyv:; ,b~i-~i~- ofreseareh progn:un requirements. cunetll 

ttThnlytir:s. platfurm C'iipabiliti.es on<file pF1~m net\vnrk, and the. oost ofm&intaln!ng s separm:e 

OCF.,Nr!~.~~t4~tld be CQnducted bf:,~:: 1Cf!?:t¢trulrurtioo h t-Ji.\>~ i>:tJe<ber oc:c::>.fe; •• )Jl<!~ t 

restarted. .'~~''-:- -<:,,,,,,~ 

" ''&/' ~ 

£':!" "" jil-l 

·'">: "''· // 'fl'.ere are a variety of i~f~~titiVechnology solutions t!Wt wooid'al!Ow -tl:ie CF"tt' tc its 

eoonornlc resel!l'~~ o~v'ei!Y~ Mumlgement'llitiJ'ivJt itS peefei.ttll' SolutiOTL 

\itbile CFTC '!'1-'!a,~~~~~t~s:-~b~~~YfiHO tho::·i<t1'ia dut manlpolatiug data can "occur more 

quldtly"19 . on ;;;, """ ilian rm. a desktop, \vc nre 'tita;~,~aoc Ot ·a ~~ifk ~~riiiCfi!Cii t:C cnm~e a 

llePffi'ale·'~ . __ · of using_ the existh111, CFTC tn:Jln ti<'tWVl'k ·W'f; i:dmnrre l;w~v..'a!e of any 

roasont~:{ a.>imi-'tjiJtr.ative.-t::Qntr\'!Js used fur all ether Commission employees an:: 

h~.,-1im.t for the economic resanreh oon<lucted 1n OCE. Ne-veflh.¢1~,s, CFTC M~em.ent has 

..~·iJ'4j1u,.a"'IJ~St OCE. ODT, OED, OGC,a.nd other oa1~\l will 1Vviow ~h~ b\1$\.!W$$ r~t:t.:d for a .,, 

ld q; Hi. 

'"'f<l 

J%l1UW!'lli&w Wl""\ #,:;\,-,bt:i i'(itJhml:lJ,s;;;J,.-";t!ilt ::2L 


:m: Q)MM()!)ITY Ftr:-'1/Q£;' TRN;.;;.;!';(fJ:.\hl ';,;, ()v,·;;;;; fK Vl!t l\-xcc. DlR., CFTCVO:.tcY: IT Rtt£SOfB€1i4l!\(li\ 


(2fEJ_)_ 


mor_;,n R..-'1"<:)RT,at w. 
 ;n. Jd, 


54 

App. 6 ~ Marw.gemtnt Rl!sponsl! 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


.. 

strrnd..molW rrtii:WDtk':fOt oc:r:,;. we·v:.)~,t!i:l lliflltt«:iate mvoth,,inftil1Dtioo 010 may !m nbi~ 

1>-:t JW<t<;id"' un lhi!c iRJ!'JB<"" 

The Drrrfl Rep-,~rt fw,..'u;'r txlhe$ dw ()!)i)t:t;tr-ii -aboJui 1ht plirsic;>i and ln:fotttlo:ttion tecl:mo!ogy 

are "S".t~tat,Jlar "''d me hebe; ;;;_cl;;i~-.,mJ ""at least in part in connec:ioo with an t)Itf 

nwil!" ofthe Commission's Fiscal Year 11} 13 feder-41 fniDt'l'l:l4tion Sl:icutify Mm~:uent Act 

755 (b)(7)(E) (b)(7)(E) 

As described it ?Mt LU1 ODT hi5 [;eg_:,_m t<! !L'Se5S uw:tx~n "" muwtwetn .._r ,,__. 


MBmj;mt..nt'; CW1Vk-W t!t;tronhW* th-f'fV h; '1 Ui;:¢,.J, fl'11' a ~rl:io :ruppt»t Offi 


('F f{' !?fM.¥4ement is m.msiUv:e to infotmr.t:ion smru"rr;X:~$-~#;!!'5-il (b) (7) (E) I(b) (7) (E) ~7.:ls':i:elso':-ln-:-:lhe=pmoo:;s:::,::::::o7f..J 

m;q~Jirifli.ln tool 10 s:rrpport amrrrrurted data lt\1\S A~P~im. Hm1Mv11r. we ttltt'.MM :tttthirt time 

i>tt.epi -lhe rtw~on to itnmedi~. /v ~ (!CtNe~ with\t'-J~ '"-9roPl~!it!ffi ~~ !J~ 

review and 1l$*"''''t\ent ott.~ ~J!CS~ r;~-f9; "\;eparate system and the potentlalsocutity r.s'ks 


e~by $l.l,Ch uysNm. To nukf- mf~id ~is$Qu, CFTCMt"'~""~"' ""!''""' <lmi.lhe 


()!(;_provide the factoot details ~:91{\-relied UJX'll ~o c-<':mdi.!d~th"'-t the a~.en;;e cfwrrt:rols for 


OCE-Ntt t'fiM suhsuu:ttlal. lf 'k~llnJ11ttJt thtc ~>tutity (:()llij¢m$ cannot aOO:rommm 


to: diiVl in a.:x: ··" th a:t ~:;gut :hat 


the Dtaft Rep¢rt k ihc rocommcnd<!tion that OCE.Nct be immediately restarted 


u:ntH the need ' 

E. • • ·no >G:f OGC f>Gr bdi'.it ~A-.mmbti<Wl ·Agg.~;,~iGI!!' -5Wtth1\mis 

rw;e!todez that l!te lac.'< ,jf ·'n:;u:re-1~\ obje<:live. and &:finite stanarde" for 

irihtt·· ·ftilf*l's·;;;· ''cll$!Urb'i~ '''Sf The OJG istorroct that, aithoog.b 

mml,cnlx fm :infonnatioo un;JJu Section li!ltave bee1: CH!t:Ucd lor v:mcus 

llhlicatioos, thett i.s r+.:J1<> sir:nl<rr f{mnU!<; by 

55 

App" 6- fvlarm~<lll<'tlt Respouse 
'* 

/­

MN_ JJ-3•L 

<!til 

at3L 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


OCE ecooomhii2 '". Whne·cvrc M~rili£ci'F:itfii 'ftClmowl;xjgcsihat 1he !aek: of a "one slze 

fi\11 ;£){" S'..andard. to identify Sootlon 8 dati in the: eCCfl(¥11'1it r-ese,;.n::h P'4-"'1tf3. iB not i.<k&, %!\!.agree 

with d-JC OlO'sassessm.ent that reviewing the 00\luomJi:lill' plll')tt'S for l.nfmmativu pn1t<l:i:red under 

Sectb;n Scan be ''t::<.lmph;ti":, !iX!wb:h:t& >Mt examination -of rontex:t to deten:nine v.iheiher aggt'¢gat¢.;1 

t..~ da~a in an economic reseri paper may be reverne·el'!gi:neer:e-d This· ~:ornylex 

~w1 •lm.l lvgal revie\\' is the r-eliSOn why i:t may Jt{}[ Drr. pocafblt:' fm-. tht:' .Cm:nmiliH~m.11iJ. provide 

a Stntldafd li~$Hil0lt r~!lC!f'fN liV)d¢j~ ~f~litel~, and for different t¢Vhhltfi.~eS sfl4, 

mrt.l).rnls fur using the data, such as tlmse covered In t.he ecooomic Itsem"t.h papers, 1be :'CQ!Pf~~;<;,, f~¢-intensive review being undert~ken h.y tho. ~ptT Revievfi(,; 

established by OCE and dntwn on (:;q:x:rtiMt fumughout the agency to address 

bm:allim, all 11\Jt«<. the review is faetuatly and legally e&tnp!tY~~d'~'Ml-f!{t\Ol u··'oh« &l:re fits a1t" 

in:v:o!.ved.in. a~sessini .agpegnAi1>n and Suttkm BOOte tn p;~pt;ts. 

The:· Dtai:l: ·Report ap:pem:s to fimlt OOC :fur not prnviding wrirten 

appli«<,.,ith re~w· 16 the· 1.-kiiifiicdi:Qn '6£ 1ni'Orm<i.tion pro~~d 

to be 

{lnehld:ing 

acc-epU;.ble aggregations poHcies).M1 We do not believe rhis,¥ri1ic· _, '<­ " . :,; is wamnted 

approach. The ~per Re:vie"W ComwJttiX! hvs developed afl"Qf,~!<~o"levicw papers and engttg¢ 

with !he- <mtlKJ:rS to res.ch a factiU)! conclusion ~hal there ii'u9 S'&.tion 2 ir,fol'ft;,Mivn dh}l;-losed by 

tiN rmprnL 'The Review Cnm.mitrec then ~v~~~~~~~{;.uiTL"Tirm.irrrizm. to- OGC'a:; part of 

the 11ew review ptXJc<:.:r>, OGC applies the kgn~~~!aru!Uil:lJO~ discl<WI.We to the analysis prt.rviJed 

by OCE, Additionally, as noted in Part lH., odh~;:;,.te-:1 co!lzbcrn!:iv-i7ly with OCE ~>.:nd the 

Oft/ct,;l of t\;)e-Chaimllm to help iclenilfyA~liol;;\;;..,,._k.,1to rf:v\.:w !};4f;(:rs f>ilt $.;-.eti;;nJ li 

information. This ooliahm1itiM ill ctiliebl~o-¥$swe the Agency only discloses. infonnatkm 

proptrly,. JJOO wa nppreclnte the o'tSs recg'gnl(ion of!he ecmplexlty uf tLb C~$JX'l.'ifl<; fact" 

~,~t~!l~'h;':. ~~qertaking. f[ \, "'"" "?, ; 4 

Whlte reoognh;lng tbe t:Qm tl~~j~ ~;~:·h:wing ?!,;;.; ocooomic lhe Draft ~,P-(tfj finds fault with the he papern~2m fvimtagem-rot does not 

believ-e tltis Dod!pg _ __ fa:CtS ·as set 'forth lri lhe· orart·rzepqn and in this 

met.l'lOta~ldum:q:Jb~U:~\1 trh·iaP.w err¢rs in hiring, end 

MW-dk~':llifig,~~clbas' the ''substan'l:ia1',._y,1inforri~tlOi!.' seCtlflt>; 00riri6ri$,' i-:' i~ liriP~iitive 10 

nave a t!io~u~~carefu!. review process, As d~ctlb:ld'\n: f~rt'J'.H \'j:bi)-"lii\ CF'fC Mtmagern-rot 

has tl~~-Wvt~v. pmc~s- tha~ ad.drcmC$·1h0rte coocenv;. 

·-~'-i':

C~flt\.~gement the OlG temove 1ht>. Drnft Report's cri~ici;;m t•f OGC for not 

pro~ wtlnen g<d:lwte on i>Jtgtegst!on H-¥1N.b!Ur> vlhen the Draft Report ackoowledgcs tb¢ 

l'Jfi';t !Q:I'i;:·;.. C.>,:.-mmlt:IX! ht<'llml r<>::ffi"t<l 'ttri!Wn guldnooe from OOC: (J(l the £1llfid:!rdt to. be 

f?g;'il'h(! ~(.1i(.<J;t il-). 

56 

App. 6 ~Management Rl!sponsl! 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


!.nquiry li "'cot';~l:X,'t'etjUkH'g *1 ,e);fii:}'iii;ntk:t~ 'Ofi::OtlteXtto cletermill!e Vf'ltether ilfl:§tCWlte4'lm.di: 

-6.nt;o.ln -W:I !;!CO nomic re::.earcll paper l\..""¥8f&e (!':lljl;~neer-y,! • • _,,u;o CFTC Mw.u~m.znt 

t<}qw;-st> tl-1!11 tbc 010 reii¢et jn ihe: D.roft Riefl')rl'!f11!4 4nC011i.nina ""~"'-• .;hrm. Ia- ~ftk-!o::irtly 

.aggregated to &void disclosures P,."(l.lribitcd by &:ctioo 8 is a fa,;;t-in1e:n.siw !nqui1y that req_ulm 

l!if.M·by.J:.!A'M s(atistieal: at~d atmlytltu1 re.t~hll.iljl.lt.'\1 .by. i:«d;\'1.-i.«JJ#.l% 'I.Vlt~ dJWr 

t:tptlo'it>!, m~d theCEA the legal tianrlard lh!tt ~t:lidt.">. $11¢}!_ '(i!:'V1et'i 

'i to n..-mra!n Srnct\u1 &datiL The agency 

the d11ta in ttJ.e papa \\'aS simulated daUJ, Jld btU the{;hic:f 

paper from the website. • AJdilk•r,1:!ly, L~ slgni.ficaru:e 

"'"*~~"'""'· lly lr!i:lucling thit; fut:r> thm Lirai\ Rtqlort 

C.omm\ssion &boold have .ancmpttd 

CFTC Matl:litlhtnt !tnt1wlez!g&J_ H0we. 

~;:'~'""(;)(~'):1~(j)('~ (b)(6) (b)(7)(C) m• 

Commlsllion !l;t\'iffi Ji fJ-IJ.~ _ .T_,,_,_. JYVt'l !!J \\fl\ ptVP*f «f'!1fl.¥, 

Ux: t.Qnt!octed 1<. NA'htiild,;? en.s&:s:-#' S®ction 8 cr oth<1 confidert1ial or ~pu'bEn 

iiJ:fWTI!i!tici.-1 \¥as relea-IJed, CFTC ~!n¢lrt roqoot;:& 'lhilt L'-.e 0-TG amend tm Drnft P,eycrt ro 

Mtl¢~t;t i'he·cu:ons m:«ic th~;:1.1gt.ij¥-y__$'wvll as IM:i~ Wlt¢l.h¢t tl:ltl oro (trCtJCVJ!$ me 

bus any .adttitkmz:l O!:!l~g,nqsm~:nfl.:i<:~-irre~Uty implied. (.) '';,'~=~~ G. Fm<lo~~~,,~;1(b)(6)(b)(7)(C) I•P':" 

:Fa 	 SoftOOt5 ·~ -~"'"~_.f. at- •(JC·st\%~;<;:rmbu2{)J2revwwret~that~ 

(b)(6),(b)(7)(C) 	 b 6 ' b 6). an 

(b) ( 6) ' (b) 

;, DMO. ' Thc"mrs:l""""'""''"<riwt>rlrnq '""C1li<l """'"'""'' 00~

Jkv<c.!Hnmf:.tn:Je. ThF. ()(j(~ ~mber 20l2- review found tlmt tbc ~ 

57 

App. 6- fvlarm~nllln'tlt Respouse 
U _s_ Commodity futur.;;s Trading Commission REDACTED 


Office ofthe lusp~tor Geuerai byCFIC 


Tim Draft 

58 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


I. Dis~ nf Cuetracts· an:d Rurromlbiittla {If the Pnx:uremeet Office 

1k i~tl ~:ttotes that "deficieocies, .. loclud«l tWigned contracls~16 and "tbr one OCE 

oontmctor1 OED stEff d~tetrnirwd that fr& ¢{Yf!tra;;:t \WIS at a!t"m CF!C Mtmt~ge.tt"A!'rt 

"'*il«i~lily reque;;u tiu;;t t.!1t. OK1}Y:vvide ~be ;il:a;u.:ments and information relied upon to ;ijjptlfJrl: 

these statements so that CFTC Management can W\evi and tUllY ;espilllli 'tO' if><> liti!U:rocnts inthe 

Dtufi ltepv1t. 

Adtti{tc.nnlly, the Repm notes that the ?rocueemeru: OffiCill is "rMpttns.lbl® fqr 

114fll\t)l;i~\i"£ onboardlng forcrmtn:u::tors:."171 As n'•tcd on CITCNet, 1lie w 

responsible fur V'f'i:r~ejng aU CFTC prQ'.;WW~n! ><iivlldes,1w Spe<l:OcnJiy, 

Qffi~::e .is.reapo:nsib!e for: {I) drafting and hnp!ementing pror:uremen1 ]Xliicy 

(:f_ll!erv1nv.. btts:tness manager with regard ttGo~;""':";;':Y,~:;:; ndmlnistering:.tJ){) {;pfY!.rni5J:liO!}'" Cl)Titf'A<Jtit lp ~ 

ia:ws and un.d ~<:;f«:y rmH1l~t"•J; and {4) !J:l$tl_$_Jting th£
 •m -{-" - ·-- "" .. , keasebold 	 oftk.es:: \. 4 ·~, ~,J · 

Actudingto the April ;w! l "l":FTC ZimrletilWS: Staff A~~~ii:rs, Mo-ves ot Cbang.es," 

dM>c \'~--l'JeSti>tg office, in this case OCE, ls responsiblf' 'tdsttat~V.!' ;mbt<rurlirlg, of 

~ntr>..c;:or!l.~ 1 Per the 201! Guideline&, l)#'Co (;ffi;;:er's·-"f~clmiol 

Representative {"COTR"}is tllli.ptmslble far ~g onboarding contrac1or st&fL 

Spoo!ficslly, the April :2tJ11 Ouidel~,~le: "~,-~" 

''Cootrnct\ng Ofllcer Te-cl:mlc.a{R~inmtivc (COTR) (fur !1Jt111 vontr111:1nrn) 

'',>.' -~,_ /il 

• COfltacts Logistics~J_~~iOns (tO) t¢ r.JX!fdinnte wmkspMe. 

+ 	 Cflt;r.F?:rnnjfJ 8: New Conir'd:!ffi' Profile fortllf': se~~!t:llon ofa 

1<¢W ei:d~~i:<tlvf,. ~U ~~<-h~<iis -it tv ~;ia:ffclmtlg.es@cfkgov. This starts the 

p;;:rsnnr:cl &i-f~lx~ p;i;-..:oe.'is. 

Fl:~:,_Fnnn. 7:9-~ New stet:' Req~l~nts tOr ;a M1V M1pioyee

'~81.ubrmrs rt to staffcNmjp!-5@Cftq{VV·vta ettWt "Ihm 

+ .. ~~k: jnttr~.i9n: w.nl!ow OED maffto set up the ne\\' \"tl~~,·<lf'f 

·~~··· \>.,, 

ftlli'CKL bl ji, 

16 

i!t Jd lit 11 

''"'See cY:rCfld, 

"' !Jcr: O:»AMODHY f\iHJRES TAAOfthl OJMM'N, O!TK:li Of fUC EXUC. Dlft, HUMAN Rt$., CFTC 0UibFUNL.'l; 

!i! M+- Atfllll \<JNS, TRlViSFSRS, MOVSS OR CHANOES (20! l}. 

~"!d. 

59 

App. 6 ~Management Rl!sponsl! 
U.S. Commodity futur.;;s Trading Commission REDACTED 


Office of the lusp~tor Geuerai byCFIC 


,,.•• , •... A.:h~i1\~~~mlly, 

J1Ar~n~view Fi'r$t 'Arilciii;linent ~s;,to tt:$entcl! the appcJntme:at ond m~hnrity ~~~~~~~~~~~J;:tf~i~~~~: ofretnXtt:1;;;~ ,;r;ent<;;tl;:>!l:> to, admliit"-~;wtb--.; cf out~de

erDJ.diJ:r~~ e!hi:s; to OC'£ a;:rmwnl51f>. 

Cf1'C !wi $;.;;~ i1s :Wm 

mtm:JonmdUUL We 

..-,.,; '"~'~!<-"-'IW't'l Lit¢ opporttJruty 

0!0 further. 

in tbl:$ 

mcl. t-> !he Dr,aft Repvrt:, nud 

~r.4 -ou.r ~ommt::l,'!.;l&;l~t;u:< v.ith the 

60 

U.S. Comm•)dity Puturcs Trading Commission REDACTED 


Office of the lnspector General by cvrc 


I 


App.6