7 U.S.C. § 13 — Violations generally; punishment; costs of prosecution

submitted 104 years ago by ch. 369 to r/title-7-AGRICULTURE · 1,538 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section lists federal felonies under commodities law. It's a felony to steal customer funds, manipulate commodity prices, or lie in required filings. It's also a felony for Commission staff to trade commodities themselves or leak nonpublic market information. A felony conviction brings an automatic five-year ban from registration and trading.

This section defines several federal crimes connected to commodities trading, and sets the punishments. (a) Felonies generally. It is a felony, punishable by a fine up to $1,000,000, up to ten years in prison, or both, plus the costs of prosecution, for: (1) a person registered or required to be registered under this chapter, or their employee or agent, to embezzle, steal, or with criminal intent convert to their own use money, securities, or property worth more than $100 that was given to margin, guarantee, or secure a customer's trades, or that came from a customer's, client's, or pool participant's business with them. "Value" here means face, par, market, or cost price, wholesale or retail, whichever is greater. (2) anyone to manipulate or try to manipulate a commodity's price in interstate commerce or in futures or swaps, to corner or try to corner a commodity, to knowingly send false or misleading crop or market reports that affect commodity prices, or to knowingly violate specific listed sections of this chapter (including sections 6, 6b, parts of 6c, 6h, 6o(1), and 23). (3) anyone to knowingly make, or cause to be made, a false or misleading statement about a material fact — or knowingly leave out a needed material fact — in an application, report, or document this chapter requires, or in a registration statement or application for exchange membership. (4) anyone to willfully hide or falsify a material fact by trick or scheme, make false statements, or use a document known to be false, when dealing with a registered entity, board of trade, swap data repository, or futures association acting in its official duties. (5) anyone to willfully violate any other provision of this chapter, or its rules, that this chapter makes unlawful or requires — except no one can go to prison under this paragraph for violating a rule if they prove they did not know about it. (6) anyone to abuse the end-user clearing exemption under section 2(h)(4), as the Commission determines. (b) Suspension after a felony conviction. Anyone convicted of a felony under this section is automatically suspended from registration, denied registration or re-registration for five years (or longer, if the Commission decides), and barred from any Commission-regulated market for five years (or longer), on terms the Commission sets — unless the Commission decides that suspension, denial, or bar is not needed to protect the public interest. The Commission can later shorten that period for good cause, on petition. (c) Commissioners' and employees' own trading is banned. It is a felony, punishable by a fine up to $500,000, up to five years in prison, or both, plus prosecution costs, for a Commissioner or Commission employee or agent to take part, directly or indirectly, in a commodity futures transaction, an option-type transaction (an "option," "privilege," "indemnity," "bid," "offer," "put," "call," or similar), a standardized margin or leverage delivery contract, or an actual-commodity transaction using nonpublic information, one barred by Commission rule, or one made through a Commission-regulated instrument. This ban does not apply to transactions the Commission decides, by rule, are not against the public interest. (d) Sharing or using inside information is banned. It is a felony, with the same penalties as (c), for (1) a Commissioner or Commission employee or agent who learns, because of their job, information that may affect commodity prices and has not been made public, to share it intending to help someone else trade based on it; and (2) for anyone who gets that information from a Commissioner or employee and uses it to trade. (e) Insider trading by exchange insiders is banned. It is a felony for (1) an employee, board member, or committee member of a board of trade, registered entity, swap data repository, or futures association, in violation of a Commission rule, to willfully and knowingly trade — for themselves or someone else — based on material nonpublic information they got through their official duties, or to willfully and knowingly share that information for a purpose outside those duties; or (2) for anyone to willfully and knowingly trade based on material nonpublic information they know came, in violation of (1), from such an insider. This felony is punishable by a fine up to $500,000 plus any profit made, or up to five years in prison, or both, plus prosecution costs.

the actual law source: uscode.house.gov ↗public domain

(a) Felonies generally

It shall be a felony punishable by a fine of not more than $1,000,000 or imprisonment for not more than 10 years, or both, together with the costs of prosecution, for:

(1)

Any person registered or required to be registered under this chapter, or any employee or agent thereof, to embezzle, steal, purloin, or with criminal intent convert to such person’s use or to the use of another, any money, securities, or property having a value in excess of $100, which was received by such person or any employee or agent thereof to margin, guarantee, or secure the trades or contracts of any customer or accruing to such customer as a result of such trades or contracts or which otherwise was received from any customer, client, or pool participant in connection with the business of such person. The word “value” as used in this paragraph means face, par, or market value, or cost price, either wholesale or retail, whichever is greater.

(2)

Any person to manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity, or of any swap, or to corner or attempt to corner any such commodity or knowingly to deliver or cause to be delivered for transmission through the mails or interstate commerce by telegraph, telephone, wireless, or other means of communication false or misleading or knowingly inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of any commodity in interstate commerce, or knowingly to violate the provisions of section 6, section 6b, subsections (a) through (e) of subsection 1 6c, section 6h, section 6o(1), or section 23 of this title.

(3)

Any person knowingly to make, or cause to be made, any statement in any application, report, or document required to be filed under this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement required under this chapter, or by any registered entity or registered futures association in connection with an application for membership or participation therein or to become associated with a member thereof, which statement was false or misleading with respect to any material fact, or knowingly to omit any material fact required to be stated therein or necessary to make the statements therein not misleading.

(4)

Any person willfully to falsify, conceal, or cover up by any trick, scheme, or artifice a material fact, make any false, fictitious, or fraudulent statements or representations, or make or use any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry to a registered entity, board of trade, swap data repository, or futures association designated or registered under this chapter acting in furtherance of its official duties under this chapter.

(5)

Any person willfully to violate any other provision of this chapter, or any rule or regulation thereunder, the violation of which is made unlawful or the observance of which is required under the terms of this chapter, but no person shall be subject to imprisonment under this paragraph for the violation of any rule or regulation if such person proves that he had no knowledge of such rule or regulation.

(6)

Any person to abuse the end user clearing exemption under section 2(h)(4) of this title, as determined by the Commission.

(b) Suspension of convicted felons

Any person convicted of a felony under this section shall be suspended from registration under this chapter and shall be denied registration or reregistration for five years or such longer period as the Commission may determine, and barred from using, or participating in any manner in, any market regulated by the Commission for five years or such longer period as the Commission shall determine, on such terms and conditions as the Commission may prescribe, unless the Commission determines that the imposition of such suspension, denial of registration or reregistration, or market bar is not required to protect the public interest. The Commission may upon petition later review such disqualification and market bar and for good cause shown reduce the period thereof.

It shall be a felony punishable by a fine of not more than $500,000 or imprisonment for not more than five years, or both, together with the costs of prosecution, for any Commissioner of the Commission or any employee or agent thereof, to participate, directly or indirectly, in any transaction in commodity futures or any transaction of the character of or which is commonly known to the trade as an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, or any transaction for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract, or for any such person to participate, directly or indirectly, in any investment transaction in an actual commodity if nonpublic information is used in the investment transaction, if the investment transaction is prohibited by rule or regulation of the Commission, or if the investment transaction is effected by means of any instrument regulated by the Commission. The foregoing prohibitions shall not apply to any transaction or class of transactions that the Commission, by rule or regulation, has determined would not be contrary to the public interest or otherwise inconsistent with the purposes of this subsection.

(d) Use of information by Commissioners and Commission employees prohibited

It shall be a felony punishable by a fine of not more than $500,000 or imprisonment for not more than five years, or both, together with the costs of prosecution—(1) for any Commissioner of the Commission or any employee or agent thereof who, by virtue of his employment or position, acquires information which may affect or tend to affect the price of any commodity futures or commodity and which information has not been made public to impart such information with intent to assist another person, directly or indirectly, to participate in any transaction in commodity futures, any transaction in an actual commodity, or in any transaction of the character of or which is commonly known to the trade as an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, or in any transaction for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract; and (2) for any person to acquire such information from any Commissioner of the Commission or any employee or agent thereof and to use such information in any transaction in commodity futures, any transaction in an actual commodity, or in any transaction of the character of or which is commonly known to the trade as an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, or in any transaction for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract.

(e) Insider trading prohibited

It shall be a felony for any person—

(1)

who is an employee, member of the governing board, or member of any committee of a board of trade, registered entity, swap data repository, or registered futures association, in violation of a regulation issued by the Commission, willfully and knowingly to trade for such person’s own account, or for or on behalf of any other account, in contracts for future delivery or options thereon, or swaps, on the basis of, or willfully and knowingly to disclose for any purpose inconsistent with the performance of such person’s official duties as an employee or member, any material nonpublic information obtained through special access related to the performance of such duties; or

(2)

willfully and knowingly to trade for such person’s own account, or for or on behalf of any other account, in contracts for future delivery or options thereon on the basis of any material nonpublic information that such person knows was obtained in violation of paragraph (1) from an employee, member of the governing board, or member of any committee of a board of trade, registered entity, or registered futures association.

Such felony shall be punishable by a fine of not more than $500,000, plus the amount of any profits realized from such trading or disclosure made in violation of this subsection, or imprisonment for not more than five years, or both, together with the costs of prosecution.

Source credit: (Sept. 21, 1922, ch. 369, § 9, 42 Stat. 1003; June 15, 1936, ch. 545, §§ 2, 11, 49 Stat. 1491, 1501; Pub. L. 90–258, § 25, Feb. 19, 1968, 82 Stat. 33; Pub. L. 93–463, title II, § 212(d), title IV, §§ 401, 409, Oct. 23, 1974, 88 Stat. 1404, 1412, 1414; Pub. L. 95–405, § 19, Sept. 30, 1978, 92 Stat. 875; Pub. L. 97–444, title II, § 227, Jan. 11, 1983, 96 Stat. 2316; Pub. L. 99–641, title I, §§ 105, 110(3), (4), Nov. 10, 1986, 100 Stat. 3558, 3561; Pub. L. 102–546, title II, §§ 212(a), 214(a), Oct. 28, 1992, 106 Stat. 3608, 3610; Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(22)], Dec. 21, 2000, 114 Stat. 2763, 2763A–410; Pub. L. 110–234, title XIII, §§ 13103(d), 13105(h), May 22, 2008, 122 Stat. 1434, 1435; Pub. L. 110–246, § 4(a), title XIII, §§ 13103(d), 13105(h), June 18, 2008, 122 Stat. 1664, 2196, 2197; Pub. L. 111–203, title VII, § 741(b)(6), (7), July 21, 2010, 124 Stat. 1731.)

history & why it existsrecord from the source credit

1922Enacted · Act of Sept. 21, 1922, ch. 369 · 42 Stat. 1003
1936Amended · Act of June 15, 1936, ch. 545 · 49 Stat. 1491, 1501
1968Amended · Pub. L. 90-258 · 82 Stat. 33
1974Amended · Pub. L. 93-463 · 88 Stat. 1404, 1412, 1414
1978Amended · Pub. L. 95-405 · 92 Stat. 875
1983Amended · Pub. L. 97-444 · 96 Stat. 2316
1986Amended · Pub. L. 99-641 · 100 Stat. 3558, 3561
1992Amended · Pub. L. 102-546 · 106 Stat. 3608, 3610
2000Amended · Pub. L. 106-554 · 114 Stat. 2763, 2763
2008Amended · Pub. L. 110-234 · 122 Stat. 1434, 1435
2008Amended · Pub. L. 110-246 · 122 Stat. 1664, 2196, 2197
2010Amended · Pub. L. 111-203 · 124 Stat. 1731

A history note hasn’t been published yet. The record shows enactment by ch. 369 on 1922-09-21.

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