2017 Expectations of the U.S. CFTC Enforcement Agenda

The U.S. Commodity Futures Trading Commission is undergoing a transformation with the new Trump administration while staying on course with its statutory mission of protecting US commodities and derivatives markets.  Some of CFTC’s priorities under new Republican Administration will certainly change as articulated by the new Congress, several executive orders from the White House, and the recent statements of Acting Chairman Giancarlo.  However, it is likely that we will see in 2017 a combination of both the enforcement trends that emerged after the Dodd Frank Act was implemented as well as the new trends under the new leadership.  This client alert provides insights into how the existing CFTC’s authorities will be used in 2017 in enforcement area.


Iran Missile Test Leads to New Sanctions

On February 2nd the Office of Foreign Assets Control (“OFAC”) imposed new sanctions on 13 individuals and 12 entities that were believed to be “involved in procuring technology and/or materials to support Iran’s ballistic missile program, as well as for acting for or on behalf of, or providing support to, Iran’s Islamic Revolutionary Guard Corps-Qods Force.”  According to White House Press Secretary Sean Spicer, a missile test conducted on January 29, 2017 by Iran was a driving force behind the new sanctions.  This could be just the beginning as the Trump administration promises to “aggressively target Iran’s ballistic missile program and terrorism related activities.”  To read more click here.

Overview of 2016 French Financial Regulations

The ACPR and AMF, French financial regulators, focused on anti-money laundering and anti-terrorism, internal control procedures, conflicts of interest and market abuse infringements in 2016.  While the focus may have shifted, financial sanctions made up 90% of the penalties in 2016.  In fact, financial regulators’ powers of sanction have drastically broadened over the last decade and have made sanctions a more effective deterrent.  To read more about the 2016 French financial regulation click here.

The FTC and DOJ Update the Antitrust Guidelines for the Licensing of Intellectual Property

The Federal Trade Commission and Department of Justice have made their first amendments to the Antitrust Guidelines for the Licensing of Intellectual Property since their origin in 1995.  The guidelines were updated in light of the fundamental changes in statutory and case law, agency enforcement, and policy work. The updates support innovation while incorporating the intervening changes in law that are advantageous to intellectual property owners and licensors. To read more about the updated guidelines click here.

Duke Energy Forced to Pay Large Fine in HSR Gun Jumping Settlement

Duke Energy Corporation (Duke) agreed to pay $600,000 to settle a DOJ claim that it violated the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) by failing to comply with the HSR waiting period requirement.  The complaint from the DOJ originated from Duke’s acquisition of the Osprey natural gas power plant from Calpine Corporation, which was reportable under the HSR Act.  Duke allegedly took control of the Osprey plant before filing the required HSR notification and report form and prior to the expiration of the applicable waiting period. To learn more about settlement click here.

Antitrust Update: 2017 HSR Thresholds

On January 19, 2017, the Federal Trade Commission (FTC) announced the revised thresholds for determining whether companies are required to notify federal antitrust authorities about a transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act).  The new minimum filing threshold will be $80.8 million. All of the revised thresholds are higher than the current amounts.  To read more about the adjusted HSR Thresholds please click here.

Individual Investors Pay Civil Penalties for Failing to Report Acquisitions of Voting Securities to the Federal Trade Commission

The Hart-Scott-Rodino Act (“HSR Act”) requires companies and individuals to report large transactions above certain thresholds to the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”), and then to observe a 30-day waiting period before closing their transactions. In two recent cases, investors resolved FTC allegations that they failed to observe these requirements by paying hundreds of thousands of dollars in civil penalties.

According to a complaint filed by the FTC and the DOJ in the U.S. District Court for the District of Columbia, hedge fund founder Ahmet H. Okumus failed to file with the FTC when he acquired voting securities in Web.com through his hedge fund on June 27, 2016, despite the fact that his acquisition exceeded the filing threshold. The complaint further alleges that Okumus was in violation of the HSR Act until July 14, 2016, when he sold 33,200 voting securities of Web.com, which put him below the HSR Act threshold. Okumus asserted that his HSR violation was inadvertent, but the FTC nevertheless sought penalties because Okumus had previously violated the HSR Act by failing to file upon a prior acquisition of voting securities in Web.com in 2014. To resolve the FTC’s current allegations, Okumus agreed to pay $180,000 in civil penalties.

In a separate matter, the FTC alleged that entrepreneur Michael P. Rales violated the HSR act by failing to file as required when his wife acquired voting securities above the filing threshold in Colfax. According to a complaint filed by the FTC and the DOJ in the U.S. District Court for the District of Columbia, Rales was in violation of the HSR Act from October 31, 2011, when he acquired the voting securities, through March 28, 2016, when the waiting period on a corrective filing made by Rales expired. Like Okumus, Rales contended that his HSR violation was inadvertent, but Rales had also previously violated the HSR Act; in 1991, he paid civil penalties to resolve an earlier enforcement action alleging that he failed to file as required by the HSR Act. Rales agreed to pay $720,000 to settle the FTC’s current allegations.

These agency enforcement actions demonstrate the importance of understanding and complying with the HSR Act’s requirements, particularly the filing thresholds, which are updated annually. To discuss how these requirements might impact any transactions that you or your business undertake, please contact the authors.

Drastic Changes to Sudan Sanctions with New OFAC General License

Before President Obama’s exit from The White House, he removed most of the sanctions in place against Sudan.  While President Trump and the Secretary of State ultimately have the final decision, it is believed they were consulted by the Obama administration about these changes.  The relaxed Sudan sanctions will allow U.S. persons to engage in virtually all commercial transactions with Sudan and the government of Sudan.  To learn more about the new general click here.

U.S. Antitrust Agencies Update International Enforcement Guidelines

The Department of Justice and Federal Trade Commission have revised the Antitrust Guidelines for International Enforcement and Cooperation after twenty years.  These revisions, effective on January 13th, 2017, stress the need for collaboration between competition agencies in a globalized economy.  To read more about the guidelines please click here.

How CFTC’s Aggressive Enforcement in 2016 Could Mold Compliance Efforts in 2017

U.S. Commodity Futures Trading Commission (“CFTC”) shook things up in 2016 with new theories and fresh interpretations of the law.  Along with this came hefty fines reaching up to $1.2 billion in total.  CFTC wasn’t the only regulatory group handing out large fines but the National Futures Association (“NFA”) also collected around $700,000.  Between the quick enforcement and diverse violations in 2016, it is more important than ever to be in compliance.  To read more about key takeaways of CFTC’s enforcement agenda click here.