The Federal Trade Commission (FTC) and Commodity Futures Trading Commission (CFTC) announced on April 12, 2011, that they have signed a Memorandum of Understanding (MOU) by which they commit to “facilitate information sharing on a case-by-case basis” in investigations into fraudbased market manipulation. The MOU provides that the FTC and CFTC will share non-public information on “issues of common regulatory interest.”
In particular, the impact of the MOU will be most significant in investigations of fraud-based manipulation of petroleum markets, where both agencies have authority to take legal action. The FTC’s petroleum market manipulation regulations took effect in November 2009 and cover crude oil, gasoline and other distillates such as jet fuel, as well as additives and blendstock such as ethanol where there is a sufficient nexus between alleged fraudulent or deceptive conduct involving such additives and a covered petroleum product. The regulations apply to conduct “in connection with” wholesale transactions (terminal rack-level and upstream), but not to retail purchases or sales of gasoline, diesel or fuel oil. The CFTC in turn exercises jurisdiction over alleged market manipulation concerning trading of petroleum products involving exchanges, clearing organizations and intermediaries in the U.S. futures industry.
FTC Chairman Jon Leibowitz declared that “with gasoline prices on the rise, we are committed to doing all we can to ensure that petroleum markets are competitive. Competition works to keep prices lower, and this MOU improves the ability of the FTC and CFTC to take action if and when we find market manipulation.” CFTC Chairman Gary Gensler stated that the CFTC looks forward to partnering with the FTC “in ensuring the integrity of the oil markets.”
The MOU states that the agencies will “take all actions reasonably necessary” to maintain the confidentiality of any non-public information shared between them as a result of the new agreement. The MOU does not waive or alter any privilege, claim of confidentiality or other protection applicable to information provided pursuant to the MOU. It also does not modify the FTC’s or the CFTC’s current abilities, responsibilities, or obligations to comply with existing laws or regulations, including the FTC’s confidentiality obligations under the premerger laws.
The MOU is effective as of April 12, 2011, and will remain in force until terminated by either the FTC or CFTC. The full text of the MOU is available at http://www.ftc.gov/os/2011/04/110412ftccftc-mou.pdf.