* Whistleblowers filed complaints in August 2011
* Complaints cite management style, improper outside contact
* CFTC passed position limits on Oct. 18 by 3-2 vote
By Christopher Doering
WASHINGTON, March 6 The Commodity Futures
Trading Commission's internal watchdog found agency employees
working on its controversial position limits rule did not engage
in wrongdoing, downplaying allegations by whistleblowers of
The CFTC's Office of the Inspector General conducted a
preliminary investigation into allegations last year that the
leader of the team writing the position limits rule was
undermining the effort by removing senior employees and trying
to push an unworkable rule.
The complaints revealed internal strife at the agency that
is crafting dozens of reforms included in the 2010 Dodd-Frank
financial reform law.
The position limits rule, which curbs excessive speculation
in the commodity markets, has been among the most politicized.
Regulators are under immense pressure to try to keep down fuel
prices ahead of the November elections.
"We found no evidence to sustain a preliminary finding of
wrongdoing by any individual connected with the position limits
and large swaps trader reporting rulemakings," the inspector
general's report said.
"No witness presented evidence of corruption or violations
of law in connection with the drafting of the position limits
rule by the team lead or any other person who worked on the
The allegations, filed in August of last year, said the
agency's team leader for position limits "sneakily" got himself
appointed to the role, and soon after removed more experienced
members in order keep newer members who could be more easily
The anonymous sources also asserted the team leader engaged
in improper communications with outside sources, and crafted a
rule that would not work because it was not compatible with
another CFTC measure on large swaps trader reporting.
In its 35-page report, the inspector general's office said
it found no evidence to support these allegations. The
investigation involved interviews with CFTC officials, including
Gary Gensler, the chairman of the agency. (PDF of report: r.reuters.com/keb96s)
"Due to the uniform quality of information received from
CFTC employees and management, we did not take steps to refer
this matter for further investigation," the report found.
The CFTC's groundbreaking position limits rule, contested in
courts by the financial industry, aims to restrict the number of
contracts a trader can hold in 28 commodities including oil. The
measure was narrowly approved by the agency's five commissioners
on Oct. 18 by a vote of 3-2.
(Reporting by Christopher Doering; Editing by Lisa Shumaker)