CFTC Foreign Bribery Case Against US Commodity Trading Company


Earlier this month, the US Commodity Futures Trading Commission (CFTC) introduced what it called “historic enforcement action.” . . linked to foreign bribery ”against Vitol, Inc., a US-based commodities trading company doing business under the global umbrella of the Vitol Group. The press release accompanying the regulations also cited the CFTC’s March 6, 2019 opinion on self-reporting Commodity Exchange Act (CEA) violations “involving corrupt practices abroad”.

In the Vitol Settlement Order itself, the Commission pointed out that “Vitol’s conduct during the relevant period involved corrupt payments (for example, bribes and kickbacks) to employees and agents of certain public entities (“SOE”) in Brazil, Ecuador and Mexico. , “which were” made. . . in exchange for inappropriate preferential treatment and access to trade with state-owned enterprises.

Of all this, the reader might be forgiven for thinking that the CFTC has the power to enforce foreign corrupt practice violations, as such, in derivatives markets. But this is not the case. A close reading of the CFTC settlement order shows that Vitol has been charged with violations of the CEA’s traditional anti-fraud and anti-manipulation provisions disguised as “foreign bribery,” an allusion to the provisions of the Foreign Corrupt Practices Act (FCPA ) found in Section 30A of the Securities Exchange Act of 1934. The CFTC, however, does not have the power to enforce this law. Instead, as the US Securities and Exchange Commission website explains, “[t]The SEC and the Department of Justice are jointly responsible for enforcing the FCPA, ”not the CFTC.

So why all the references to foreign bribery in the CFTC’s Vitol Settlement Order? Because it’s an interesting read. Corruption cases often involve many of the same sordid elements found in a detective story, and therefore generate press for an agency that historically has been associated with corn, soybeans and pigs markedly. less sordid. Such cases also allow the CFTC to appear to be expanding its regulatory mandate to cover “foreign bribery” without, however, needing to first acquire new statutory or regulatory authority.

But just because Vitol wasn’t really a foreign bribery case doesn’t mean it’s not remarkable. The regulation is expected to warn the derivatives world that the CFTC will creatively use its traditional anti-fraud and manipulation authority to control conduct around the world if it has ripple effects in the US derivatives markets. – not just conduct that originated in the United States. ground. Again, the theories and statutory provisions invoked by the CFTC in this regulation are not new, but the overseas theater of operations is somewhat of a departure for the agency.

In addition, the Vitol Agreement, which is the result of a joint investigation by the CFTC and the US Department of Justice (DOJ), is important because it provides another example of cooperation between the CFTC and the DOJ in an area which historically did not fall within the regulatory scope of the CFTC. Market participants are now being made aware that, even when foreign bribery affects markets primarily regulated by the CFTC, the repercussions can go beyond the relatively benign injunctions and civil penalties that are the usual result of enforcement actions. CFTC.

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