Series 3: 7.6.3.2. CFTC Reparations Program

Taken from our Series 3 Online Guide

7.6.3.2. CFTC Reparations Program

The CFTC’s Reparations Program is designed to handle customer complaints and resolve disputes between futures customers and commodity futures trading professionals. It applies to complaints involving a registered professional that has engaged in violations of the Commodity Exchange Act or CFTC regulations. The complaint must show that damages were incurred from the described activities and that the named respondents engaged in these activities. Complaints must be filed within two years of the date the violation occurred or within two years of the date the claimant should have known about the violation.

The claim must identify the complainant and the respondents. It must state the facts supporting the claim, describe the specific violations of the CEA or CFTC regulations being alleged, and state why the respondents are liable. Violations might include:

Fraud

Breach of fiduciary duty (failure to act in the customer’s best interest)

Unauthorized trading

Misappropriation of the customer’s funds

Churning

Failure to supervise the handling of customer accounts

Nondisclosure of risks

The CFTC’s Office of Proceedings will review the complaint and, if it believes the claim has merit, will forward the complaint to the respondents. The respondents will have 25 days to answer the complaint.

The filed complaint must also declare which decisional procedure it wishes to select. Reparations proceedings may be conducted in one of three ways:

1. Voluntary proceeding

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