CFTC Issues Interpretation Concerning Dodd-Frank Anti-Fraud Authority

On Friday, December 2, 2011, the Commodity Futures Trading Commission ("CFTC") announced an interpretation that relates to anti-fraud authority provided in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Section 742(a) of the Dodd-Frank Act amended the Commodity Exchange Act to add a new section, 2(c)(2)(D), entitled “Retail Commodity Transactions.” Section 2(c)(2)(D) broadly applies to any agreement, contract, or transaction in any commodity that is entered into with, or offered to, a non-eligible contract participant or non-eligible commercial entity on a leveraged, margined, or financed basis. The Section requires such agreements, contracts, and transactions to be conducted on a regulated exchange and subjects them to the CFTC’s anti-fraud authority. The Section does not apply, however, if “actual delivery” of the commodity is made within 28 days. The CFTC issued the interpretation to explain its view of “actual delivery” and to provide several examples of when “actual delivery” does and does not occur.

Read the CFTC press release

© 2011 Perkins Coie LLP

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