Anthony Candido is a partner in the New York office of Clifford Chance LLP. This post is based on a Clifford Chance publication by Mr. Candido, David Yeres, Robert Houck, and Benjamin Berringer; the complete publication, including footnotes, is available here.
The CFTC is taking a position in enforcement litigation that would lower the bar for proving unlawful price manipulation. By abandoning the requirement of proving that the accused had a specific intent to create an artificial price and replacing it with an intent to influence price, the CFTC would materially ease its burden of proof. While doubtlessly motivated by the desire to enhance price integrity, the CFTC’s position is being strongly questioned from a legal and a policy point of view by the futures industry. A group representing the major futures industry institutions and trade associations is seeking to oppose the CFTC in an amicus brief on grounds that the CFTC’s position deviates from decades of precedent and would blur the line between legitimate trading and manipulation to create inappropriate legal uncertainty, which would act to the detriment of well-functioning markets.