WASHINGTON (Reuters) - The new enforcement chief at the futures regulator’s said on Thursday he will aggressively use his “bigger arsenal of weapons” to crack down on fraud and manipulation in the marketplace.
David Meister, the Commodity Futures Trading Commission’s director of enforcement, said he’s adopted an “aggressive, quick, and efficient” stance toward illegal activity in the futures and swaps markets.
The division will keep cracking down on schemes that prey on retail investors -- until recently the hallmark of the agency’s enforcement division -- but now will also focus the spotlight on investigating broader industry and over-the-counter fraud and manipulative schemes.
Once the CFTC finalizes rules governing the swaps market, its oversight landscape will expand significantly.
“The Dodd-Frank act has broadened our horizons substantially. We have a bigger arsenal of weapons, enforcement weapons, to use on a very wide jurisdictional landscape,” Meister said at a Futures Industry Association conference.
“I think we should be investigating more cutting edge, high-impact cases,” he said.
Meister, who has more than 25 years of experience in investigations, litigation and trials involving fraud and other complex schemes in financial markets, said the CFTC already is flexing its enforcement muscles.
The CFTC has already filed 57 enforcement cases in the fiscal year that began in October, after filing the same number in the entire fiscal 2010 timeframe.
“You can’t judge the division based on that metric alone but I think it’s a relevant metric,” said Meister, who was appointed to the position last November.
The futures regulatory body had previously focused mostly on smaller retail foreign exchange fraud and Ponzi rackets because regulations made it hard to prove market manipulation, according to officials who follow the agency.
The CFTC will now only have to show a trader acted in a manner that had the potential to disrupt the market, making it easier to prove a case. The new powers from the Dodd-Frank bill put the CFTC on a similar legal footing as the Securities and Exchange Commission and Federal Energy Regulatory Commission.
In the past, CFTC had to prove an individual intended to manipulate prices -- evidence that was often difficult to find through e-mails or phone calls. It also had to show the person had the market power to move the price of a commodity and that the trader caused a price in the market that otherwise would not have occurred.
Meister said he will make the most of the agency’s expertise in manipulative and disruptive trading practices, and increase its understanding of the swaps market. He also vowed his division would take a position, stick to it, and communicate to the public and the industry why it believes that way.
“It’s very important to me that the public knows what we’re doing and why,” he said.
Editing by David Gregorio