CFTC Adopts Expansive Anti-Fraud Rule for Swaps and Commodities
The Commodity Futures Trading Commission has adopted a broad anti-fraud rule applicable to all swaps and commodity contracts subject to CFTC jurisdiction (i.e. almost all swaps other than security-based swaps subject to SEC jurisdiction). New Rule 180.1, patterned after the SEC’s Rule 10b-5, prohibits any manipulative or deceptive conduct whether intentional or reckless. The Rule applies whether or not the conduct was intended to affect the price and need not involve the defrauded party. The old rule required a showing that the respondent intended to manipulate prices and actually caused an artificial price. New Rule 180.1 was adopted as part of the Dodd-Frank rulemaking.
OUR TAKE: Just as Rule 10b-5 is a big regulatory club for the SEC, the CFTC will now have significantly greater enforcement powers with its new anti-fraud rule.