Following the declaration of a global pandemic due to the widespread transmission of the coronavirus (COVID-19), the issuance of shutdown and/or stay-at-home directives cascaded from commercial enterprises and state and local governments across the United States. During this period of extreme disruption to daily routine, the continuity and integrity of energy operations were necessary to ensure that the massive shift to home-based life could exist with minimal business disruption. Front- and back-office personnel engaged in trading energy commodities quickly transitioned to a work-from-home (WFH) posture, ensuring that their firms could preserve market access for production or output while also consummating the transactions needed to procure an adequate fuel source, managing price exposure to highly volatile commodity prices, or executing preexisting trading strategies.
The Commodity Futures Trading Commission (CFTC) recently released its Annual Report on the Whistleblower Program and Customer Education Initiatives for fiscal year (FY) 2019. The report, which details the operation of the whistleblower program and the CFTC’s initiatives to educate consumers about fraud or other violations of the Commodity Exchange Act (CEA), showed that during FY 2019, the CFTC awarded more than $15 million in five whistleblower awards. These whistleblowers had provided information that prompted the CFTC to open an investigation and/or provided substantial assistance to the CFTC during the course of the investigation. The report results serve as a reminder to energy companies to review and assess their compliance programs and policies to ensure that employees are encouraged to bring compliance concerns to management’s attention, and that such concerns are addressed in a timely manner.
A recent advisory published by the Commodity Futures Trading Commission’s Division of Enforcement and comments of the division director have highlighted the CFTC’s attention toward investigating potential violations of the Commodity Exchange Act (CEA) that involve foreign corrupt practices. On March 6, CFTC Director of Enforcement James M. McDonald addressed this very issue in remarks before the ABA National Institute on White Collar Crime. At the same time, the division issued an Enforcement Advisory providing guidance on how the CFTC will treat instances of self-reporting and cooperation concerning CEA violations that also involve foreign corrupt practices.
The Commodity Futures Trading Commission (CFTC) has delayed implementation of the reduction in the de minimis threshold by an additional year. Under the de minimis exception, a person is not considered to be a swap dealer unless its swap dealing activity exceeds an aggregate gross notional amount threshold. Currently, that threshold is set at $8 billion, and is subject to a phase-in period after which the threshold will be reduced to $3 billion. The phase-in period was scheduled to terminate on December 31, 2018, but on October 26, the CFTC issued an order extending the phase-in period by one year, terminating on December 31, 2019 instead of December 31, 2018. The CFTC previously extended the phase-in period by one year in October 2016, and at that time explained that the extension provides additional time for further information to become available to reassess the de minimis exception.