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CFTC refuses to say if it has jurisdiction over manipulative futures trading by government
The commission won't say even if it knows of any futures trading by government, though such trading is public record.
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12:48p ET Tuesday, March 10, 2020
Dear Friend of GATA and Gold:
Does the U.S. Commodity Futures Trading Commission have jurisdiction over manipulative futures trading by the U.S. government, other governments, or brokers acting for them?
Is the commission aware of futures trading by governments?
In a letter to U.S. Rep. Alex Mooney, R-West Virginia, dated January 28 and released to GATA yesterday, the commission's chairman, Heath P. Tarbert, refused to say.
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GATA put those questions and others to the CFTC in 2018 but could get no response:
http://www.gata.org/node/18685
At GATA's urging, Mooney put those questions and others to the CFTC a year ago in February:
http://www.gata.org/node/18832
He too got no response but kept pressing.
Tarbert's January 28 letter to Mooney, posted here --
http://gata.org/files/CFTC-to-Mooney-01-28-2020.pdf
-- contains an attachment prepared by commission staff that acknowledges the key questions but fails to answer them.
Question 5 in the attachment, asking whether the commission's jurisdiction covers manipulative trading by the government itself, is a yes-or-no question.
But the reply says only: "The CFTC has exclusive jurisdiction over futures trading on trading facilities registered with the commission as designated contract markets."
Question 6 in the attachment, asking if the commission is aware of trading by the U.S. government or other governments, is also a yes-or-no question. Instead the commission's reply says: "The commission may not publish 'data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.'"
But the commission's admission of simple awareness of trading by governments would not disclose any transactions or market positions, and official filings and statements by CME Group, operator of the major U.S. futures exchanges, explicitly acknowledge that governments are secretly trading futures under CME Group's Central Bank Incentive Program:
http://www.gata.org/node/18925
Chairman Tarbert's reply to Representative Mooney is also misleading in at least two other respects.
First, Mooney questioned how the commission's years-long investigation of silver futures market manipulation found no actionable misconduct even though a subsequent investigation by the U.S. Justice Department, covering the same period investigated by the commission, managed to find such misconduct, prosecute it, and obtain confessions.
Instead of accounting for his commission's inability to find misconduct on its own, Tarbert's reply simply notes fines imposed by the commission following the Justice Department's investigation.
And second, responding to Representative Mooney's conveying GATA's question about the huge increase in the emergency "exchange for physicals" mechanism of settling gold futures contracts on the New York Commodities Exchange, Tarbert dismisses the increase as a function of increased trading in gold futures generally. But that doesn't explain what the EFPs are doing and are meant to accomplish. That could be explained without revealing any particular trader's positioning.
GATA long has maintained that the U.S. government construes the Gold Reserve Act of 1934, as amended, which establishes the Treasury Department's Exchange Stabilization Fund, to authorize the government to intervene secretly in and manipulate any market in the world:
https://home.treasury.gov/policy-issues/international/exchange-stabiliza...
Indeed, at a hearing in U.S. District Court in Boston in 2001 in the case of Howe vs. Bank for International Settlements et al., a lawsuit charging the BIS and U.S. government with illegally rigging the gold market, your secretary/treasurer heard an assistant U.S. attorney argue for dismissal of the suit on the grounds that the Gold Reserve Act conferred on the government the power to do exactly what the suit complained of:
So if the Commodity Futures Trading Commission cannot plainly answer whether it has jurisdiction over manipulative futures trading by or at the behest of the U.S. government -- a question of how the commission construes the law -- it may be concluded that such trading is indeed being undertaken and that markets are being manipulated by the government far more than is generally understood.
All that is needed now is some courageous financial journalism to tell the world about it. But these days courageous financial journalism is rarer than gold.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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