Annual Adjustment of Civil Monetary Penalties To Reflect Inflation-2025

<RULE> COMMODITY FUTURES TRADING COMMISSION <CFR>17 CFR Part 143</CFR> <RIN>RIN 3038-AF41</RIN> <SUBJECT>Annual Adjustment of Civil Monetary Penalties To Reflect Inflation—2025</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Commodity Futures Trading Commission. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Commodity Futures Trading Commission (Commission) is amending its rule that governs the maximum amount of civil monetary penalties imposed under the Commodity Exchange Act (CEA), to adjust for inflation. This rule sets forth the maximum, inflation-adjusted dollar amount for civil monetary penalties (CMPs) assessable for violations of the CEA and Commission rules, regulations and orders thereunder. The rule, as amended, implements the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on January 24, 2025 and is applicable to penalties assessed after January 15, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Edward J. Riccobene, Associate Chief Counsel, Division of Enforcement, at (202) 418-5327 or <E T="03">ericcobene@cftc.gov,</E> Commodity Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA)  <SU>1</SU> <FTREF/> requires the head of each Federal agency to periodically adjust for inflation the minimum and maximum amount of CMPs provided by law within the jurisdiction of that agency. <SU>2</SU> <FTREF/> A 2015 amendment to the FCPIAA  <SU>3</SU> <FTREF/> required agencies to make an initial “catch-up” adjustment to its civil monetary penalties effective no later than August 1, 2016. <SU>4</SU> <FTREF/> For every year thereafter effective not later than January 15th, the FCPIAA, as amended, requires agencies to make annual adjustments for inflation, with guidance from the Director of the Office of Management and Budget. <SU>5</SU> <FTREF/> <FTNT> <SU>1</SU>  The FCPIAA, Public Law 101-410 (1990), as amended, is codified at 28 U.S.C. 2461 note. The FCPIAA states the purpose of the FCPIAA is to establish a mechanism that shall (1) allow for regular adjustment for inflation of civil monetary penalties; (2) maintain the deterrent effect of civil monetary penalties and promote compliance with the law; and (3) improve the collection by the Federal Government of civil monetary penalties. </FTNT> <FTNT> <SU>2</SU>  For the relevant CMPs within the Commission's jurisdiction, the Act provides only for maximum amounts that can be assessed for each violation of the Act or the rules, regulations and orders promulgated thereunder; the Act does not set forth any minimum penalties. Therefore, the remainder of this release will refer only to CMP maximums. </FTNT> <FTNT> <SU>3</SU>  Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74, 129 Stat. 584 (2015) (2015 Act), title VII, Section 701. </FTNT> <FTNT> <SU>4</SU>  FCPIAA Sections 4 and 5. See also, Adjustment of Civil Monetary Penalties for Inflation, 81 FR 41435 (June 27, 2016). </FTNT> <FTNT> <SU>5</SU>  FCPIAA Sections 4 and 5. See also, Executive Office of the President, Office of Management and Budget Memorandum, M-25-02, Implementation of Penalty Inflation Adjustments for 2025 (Dec. 17, 2024) (2024 OMB Guidance) ( <E T="03">https://www.whitehouse.gov/wp-content/uploads/2024/12/M-25-02.pdf</E> ). </FTNT> <HD SOURCE="HD1">II. Commodity Exchange Act Civil Monetary Penalties</HD> The following sections of the CEA provide for CMPs that meet the FCPIAA definition  <SU>6</SU> <FTREF/> and these CMPs are, therefore, subject to the inflation adjustment: Sections 6(c), 6(d), 6b, and 6c of the CEA. <SU>7</SU> <FTREF/> <FTNT> <SU>6</SU>  FCPIAA Section 3(2). </FTNT> <FTNT> <SU>7</SU>  7 U.S.C. 9, 13a, 13a-1, 13b. Criminal authorities may also seek fines for criminal violations of the CEA (see 7 U.S.C. 13, 13(c), 13(d), 13(e), and 13b). The FCPIA does not affect the amounts of these criminal penalties. </FTNT> <HD SOURCE="HD1">III. Annual Inflation Adjustment for Commodity Exchange Act Civil Monetary Penalties</HD> <HD SOURCE="HD2">A. Methodology</HD> The FCPIAA annual inflation adjustment, in the context of the CFTC's CMPs, is determined by increasing the maximum penalty by a “cost-of-living adjustment”, rounded to the nearest multiple of one dollar. <SU>8</SU> <FTREF/> Annual inflation adjustments are based on the percent change between the October Consumer Price Index for all Urban Consumers (CPI-U) preceding the date of the adjustment, and the prior year's October CPI-U. <SU>9</SU> <FTREF/> In this case, the October 2024 CPI-U (315.664)/October 2023 CPI-U (307.671) = 1.02598. <SU>10</SU> <FTREF/> In order to complete the 2025 annual adjustment, the CFTC must multiply each of its most recent CMP amounts by the multiplier, 1.02598, and round to the nearest dollar. <SU>11</SU> <FTREF/> <FTNT> <SU>8</SU>  FCPIAA Sections 4 and 5. </FTNT> <FTNT> <SU>9</SU>  FCPIAA Section 5(b)(1). </FTNT> <FTNT> <SU>10</SU>  The CPI-U is published by the Department of Labor. Interested parties may find the relevant Consumer Price Index on the internet. To access this information, go to the Consumer Price Index Home Page at: <E T="03">http://www.bls.gov/cpi/.</E> Click the heading “CPI Data” then the subheading “Databases”, and select “All Urban Consumers (Current Series)”, “Top Picks.” Then check the box for “U.S. city average, All items—CUUR0000SA0”, and click the “Retrieve data” button. </FTNT> <FTNT> <SU>11</SU>  FCPIAA Section 5(a). See also, 2024 OMB Guidance at 1. </FTNT> <HD SOURCE="HD2">B. Civil Monetary Penalty Adjustments</HD> Applying the FCPIAA annual inflation adjustment methodology results in the following amended CMPs: <GPOTABLE COLS="6" OPTS="L2,nj,tp0,p1,7/8,i1" CDEF="s50,r50,r50,14,9,14"> <TTITLE> </TTITLE> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <ROW RUL="n,n,n,s"> <ENT I="25"> </ENT> <ENT A="01"> </ENT> <ENT A="02">Violations occurring on or after 11/02/2015</ENT> </ROW> <ROW RUL="s"> <ENT I="25">U.S. Code citation</ENT> <ENT A="01">Civil monetary penalty description</ENT> <E T="02">Civil Monetary Penalty Imposed by the Commission in an Administrative Action</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">7 U.S.C. 9 (Section 6(c) of the Commodity Exchange Act)</ENT> <ENT> For any person other than a registered entity  <SU>1</SU> </ENT> <ENT>Other Than Manipulation or Attempted Manipulation</ENT> <ENT>$201,021</ENT> <ENT>1.02598</ENT> <ENT>$206,244</ENT> </ROW> <ROW> <ENT I="22"> </ENT> <ENT> For any person other than a registered entity  <SU>1</SU> </ENT> <ENT>Manipulation or Attempted Manipulation</ENT> <ENT>1,450,040</ENT> <ENT>1.02598</ENT> <ENT>1,487,712</ENT> </ROW> <ROW> <ENT I="01">7 U.S.C. 13a (Section 6b of the Commodity Exchange Act)</ENT> <ENT> For a registered entity  <SU>1</SU> or any of its directors, officers or employees </ENT> <ENT>Other Than Manipulation or Attempted Manipulation</ENT> <ENT>1,107,332</ENT> <ENT>1.02598</ENT> <ENT>1,136,100</ENT> </ROW> <ROW RUL="s"> <ENT I="22"> </ENT> <ENT> For a registered entity  <SU>1</SU> or any of its directors, officers or employees </ENT> <ENT>Manipulation or Attempted Manipulation</ENT> <ENT>1,450,040</ENT> <ENT>1.02598</ENT> <ENT>1,487,712</ENT> </ROW> <ROW EXPSTB="05" RUL="s"> <ENT I="21"> <E T="02">Civil Monetary Penalty Imposed by a Federal District Court in a Civil Injunctive Action</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">7 U.S.C. 13a-1 (Section 6c of the Commodity Exchange Act)</ENT> <ENT>Any Person</ENT> <ENT>Other Than Manipulation or Attempted Manipulation</ENT> <ENT>221,466</ENT> <ENT>1.02598</ENT> <ENT>227,220</ENT> </ROW> <ROW> <ENT I="22"> </ENT> <ENT>Any Person</ENT> <ENT>Manipulation or Attempted Manipulation</ENT> <ENT>1,450,040</ENT> <ENT>1.02598</ENT> <ENT>1,487,712</ENT> </ROW> <TNOTE> <SU>1</SU>  The term “Registered Entity” is defined in 7 U.S.C. 1a (Section 1a of the Commodity Exchange Act). </TNOTE> </GPOTABLE> The FCPIAA provides that any increase under the FCPIAA in a civil monetary penalty shall apply only to civil monetary penalties, including those whose associated violation predated such increase, which are assessed after the date the increase takes effect.”  <SU>13</SU> <FTREF/> Thus, the new CMP amounts established by this rulemaking shall apply to penalties assessed after January 15, 2025, for violations that occurred on or after November 2, 2015, the effective date of the FCPIAA amendment requiring annual adjustments, the 2015 Act. <FTNT> <SU>12</SU>  Annual Adjustment of Civil Monetary Penalties to Reflect Inflation—2024, 89 FR 4542 (Jan. 24, 2024); <E T="03">https://www.cftc.gov/sites/default/files/2024/01/2024-01341a.pdf.</E> <SU>13</SU>  FCPIAA Section 6. </FTNT> <HD SOURCE="HD1">IV. Administrative Compliance</HD> <HD SOURCE="HD2">A. Notice Requirement</HD> The FCPIAA specifically exempted from the Administrative Procedure Act (APA) the rulemakings required to implement annual inflation adjustments. <SU>14</SU> <FTREF/> “This means that the notice and comment process the APA generally requires— <E T="03">i.e.,</E> notice, an opportunity for comment, and a delay in effective date—is not required for agencies to issue regulations implementing the annual adjustment.”  <SU>15</SU> <FTREF/> The Commission further notes that the notice and comment procedures of the APA do not apply to this rul ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 18k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━