CFTC Anti-Fraud and Manipulation Enforcement Authority: Commodity Futures Trading Commission Implements Expanded Anti-manipulation Authority to Prohibit Fraudulent and Manipulative Behavior

Sullivan & Cromwell LLP - July 14, 2011

On July 7, 2011, by a vote of 5-0 the Commodity Futures Trading Commission adopted and issued its final rules prohibiting the employment, or attempted employment, of manipulative or deceptive conduct. Rules 180.1 and 180.2 were adopted pursuant to Section 753 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to implement amended Sections 6(c)(1) and 6(c)(3) of the Commodity Exchange Act, respectively. Rule 180.1 was modeled after Section 10(b) and Rule 10b-5 of the Securities and Exchange Act of 1934. The rule broadly prohibits fraud and fraud-based manipulations, including any such attempts. Rule 180.2 codifies Section 6(c)(3) and makes it unlawful for any person directly or indirectly to manipulate or attempt to manipulate the price of any swap or commodity in interstate commerce. The final rules take effect 30 days after today’s publication in the Federal Register.