80 FR 55098 - Public Alert-Registration Deficient List
COMMODITY FUTURES TRADING COMMISSION Federal Register Volume 80, Issue 177 (September 14, 2015)
Federal Register Volume 80, Issue 177 (September 14, 2015)
| Page Range | 55098-55099 | |
| FR Document | 2015-23040 |
[Federal Register Volume 80, Number 177 (Monday, September 14, 2015)] [Notices] [Pages 55098-55099] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-23040] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION Public Alert--Registration Deficient List AGENCY: Commodity Futures Trading Commission. ACTION: Notice; request for comment. ----------------------------------------------------------------------- SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or ``Commission'') is announcing a new program, the Registration Deficient List (``RED List''), that will post on the Commission's Web site and distribute to the public certain factual information about foreign entities that are soliciting or accepting funds from U.S. residents and are acting in a manner that requires registration but are not appropriately registered with the CFTC. DATES: Comments must be received on or before October 14, 2015. ADDRESSES: You may submit comments, identified by ``Registration Deficient List,'' by any of the following methods:The agency's Web site, at http://comments.cftc.gov. Follow the instructions for submitting comments through the Web site. Mail: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. Hand Delivery/Courier: Same as Mail above. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to www.cftc.gov. You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in Sec. 145.9 of the Commission's regulations.\1\ --------------------------------------------------------------------------- \1\ 17 CFR 145.9 (2014). --------------------------------------------------------------------------- The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the Freedom of Information Act. FOR FURTHER INFORMATION CONTACT: Rick Glaser, Deputy Director, Division of Enforcement, Commodity Futures Trading Commission, Three Lafayette Centre, 1151 21st Street NW., Washington, DC 20581, phone: (202) 418- 5358, email: [email protected]. SUPPLEMENTARY INFORMATION: The CFTC today is announcing a new program, effective immediately, for informing the public about unregistered foreign entities engaged in the solicitation or acceptance of funds from U.S. residents at a retail level. These entities solicit and/or accept funds for investments in, among other things, foreign currency (``forex'') and binary options. Through this new program, the Registration Deficient List (``RED List''), the Commission will publish on its Web site the names of unregistered foreign entities that the Commission has reason to believe may be required to register with the CFTC but are not, in fact, registered. Publication does not represent final Commission disposition or a final Commission order. By making this information publicly available, the Commission expects investors to make more informed decisions whether to trade with or through such an entity. The more U.S. investors trade with and through registered entities, the more likely that their funds have a better chance of being protected. I. Background The Commission often receives investigative leads relating to foreign entities that solicit and/or accept funds from U.S. residents at a retail level. For example, the CFTC's Division of Enforcement (``Enforcement'') has investigated approximately 60 such cases in the past twenty-four months. These cases involve unregistered foreign entities that engage in, among other things, forex in a capacity similar to Retail Foreign Exchange Dealers, Introducing Brokers, Commodity Trading Advisors or Commodity Pool Operators and binary options.\2\ Almost all, if not all, of these foreign entities are acting in a capacity that requires them to be registered with the Commission. --------------------------------------------------------------------------- \2\ The Commission uses forex and binary options merely as illustrative examples. Any entity that meets the criteria set forth below is a candidate for inclusion on the RED list. --------------------------------------------------------------------------- In many cases, there are obstacles to bringing an effective enforcement action against these types of entities. For example, the Commission spends considerable resources investigating these matters. Even if Enforcement is able to develop a legal case against one of these entities, international service of process is cumbersome, often takes a very long time to effectuate and is not always successful. Even if service of process is successful, many of these entities are judgment proof. The Commission believes that a consumer protection approach has a better chance of success than continuing to spend resources on Enforcement investigations and litigations that have a limited chance of success. The proposed RED List would disseminate information about certain foreign entities into the marketplace so that U.S. residents would be able to make more informed choices about how they trade their money. This approach is used by other regulators, including the Securities and Exchange Commission.\3\ --------------------------------------------------------------------------- \3\ There are approximately 47 countries that issue, or have issued, lists, warning letters, or public statements, including Belgium, Brazil, British Virgin Islands, Canada (Ontario, British Columbia and the Quebec provincial regulators), Croatia, Denmark, Hong Kong, Ireland, Malaysia, Panama, Poland, Cyprus, Singapore, Spain, Sweden, Switzerland, Thailand, The Netherlands, the United Kingdom and the U.S. The International Organization of Securities Commissions (``IOSCO'') has established an investor Alert Portal on its Web site to receive and publish alerts and warnings from its members about firms which are not authorized to provide investment services in the jurisdiction that issued the alert or warning. --------------------------------------------------------------------------- [[Page 55099]] II. The RED List In light of the challenges associated with taking enforcement action against such entities, the Commission believes it useful to educate and empower prospective investors. The goal of the RED List is to provide prospective investors with information regarding unregistered soliciting entities before they invest. For a foreign entity to be listed on the CFTC's RED List, reasonable grounds must exist to believe that the entity meets the following six criteria: 1. The entity is foreign; 2. The foreign entity has no or limited presence in the United States; \4\ --------------------------------------------------------------------------- \4\ Merely registering a Web site with a U.S. based domain name registrar does not constitute physical presence. --------------------------------------------------------------------------- 3. The foreign entity is soliciting and/or accepting funds from U.S. residents; 4. The foreign entity is offering a product within the Commission's jurisdiction (e.g. ``forex''); 5. The foreign entity is required to be registered; and 6. The foreign entity is not registered.\5\ --------------------------------------------------------------------------- \5\ If the foreign entity offers binary options there is one additional criterion: Whether the entity is a foreign board of trade. If it is a foreign board of trade, then the entity would not be eligible for the RED list. --------------------------------------------------------------------------- If the foreign entity meets these criteria, Enforcement will propose that it be included on a publicly disclosed list stating that the foreign entity is acting in a capacity that appears to require registration but is not registered with the Commission. This list will then be publicized by the Commission's Office of Consumer Outreach by a variety of different methods and media. The RED List process contains three separate levels of review before a recommendation is made to the Commission for inclusion on the RED List. First the Intake Officer reviews the complaint and makes an initial determination of whether a foreign entity should potentially be included in the RED List. This initial determination is passed to a Triage Officer who will conduct a limited investigation and then make a recommendation to an Enforcement Deputy Director. The Deputy Director will, based on the information before him/her, make a decision as to whether to recommend to the Commission that it include a foreign entity on the RED List. These levels of review are to ensure that only those foreign entities that should be included on the RED List are included on the RED List. The CFTC is committed to providing accurate information to investors using the RED List. Before listing an entity on the RED List, Commission staff will notify the entity by Notice Letter of the Commission's intent to list the entity. The entity will have the opportunity to respond to the Commission and provide relevant documentation. If the foreign entity does not respond to the notice letter or provides an unsatisfactory response, Enforcement will recommend to the Commission that a foreign entity should be included on the RED List. To implement the RED List, the Commission will post on its public Web sites, http://www.SmartCheck.gov/REDList, the names, and only the names, of unregistered soliciting foreign entities that have been subject of complaints received by the CFTC. The RED list will contain the following information: RED (Registration Deficient) LIST List of Foreign Entities That Have Been Identified as Acting in a Capacity That Appears To Require Registration but Are Not Appropriately Registered With the Commission The Commodity Futures Trading Commission (``CFTC'') frequently receives investigative leads and questions from the public about foreign entities that solicit and/or accept funds from U.S. residents at a retail level. For example these leads and questions can relate to, among things, foreign entities that engage in foreign currency (``Forex'') in a capacity similar to Retail Foreign Exchange Dealers (``RFEDs''), Introducing Brokers, Commodity Trading Advisors or Commodity Pool Operators http://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/ForeignCurrencyTrading/index.htm; and binary options http://www.cftc.gov/PressRoom/PressReleases/fraudadv_binaryoptions. Many of these foreign entities are acting in a capacity that requires them to be registered with the CFTC. If a foreign entity is registered with the CFTC, then it is subject to CFTC regulations and oversight that apply to registrants. Generally, foreign entities that solicit you to trade are required to register with the CFTC. For this reason, it is important for you to consider whether the foreign entity that solicits you is, in fact, registered with the CFTC. In certain cases, a preliminary review by the CFTC reveals that foreign entities that solicit and/or accept funds from U.S. residents at a retail level have no or limited U.S. presence, and act in a capacity that requires registration, but are not in fact registered. In an effort to warn the public about these entities, the CFTC is publishing the names of those foreign entities. The goal of this list is to provide information to U.S. consumers about foreign entities that are acting in an unregistered capacity and to help them make more informed decisions about whether to trade with or through such an entity. The more that U.S. consumers trade with and through registered entities, the more likely that their funds will have a greater chance of being protected. The named foreign entities currently appear to be acting in a capacity that requires registration with the CFTC but are NOT registered with the CFTC. [Inserted will be a list of all of the foreign entities that have met the criteria, as approved by the Commission.] The inclusion of an entity's name on the RED list does not mean that the CFTC or a Court has concluded that a violation of any provision of the Commodity Exchange Act or the Commission's Regulations has occurred. III. Review of RED List Twice annually, on or about June 30 and December 31, the Triage Officer will review the RED List and, if it appears that a minimum of 12 months have elapsed during which no complaints have been received regarding the a foreign entity and the foreign entity's Web site is either inactive or taken down, Enforcement will submit a recommendation for Commission consideration to move the foreign entity from the active portion of the RED List homepage to the archival portion of such page. Issued in Washington, DC, on September 9, 2015, by the Commission. Robert N. Sidman, Deputy Secretary of the Commission. [FR Doc. 2015-23040 Filed 9-11-15; 8:45 am] BILLING CODE 6351-01-P
![55098 Federal Register / Vol. 80, No. 177 / Monday, September 14, 2015 / Notices
Estimated Total Annual Cost to Commodity Futures Trading or a final Commission order. By making
Public: $0 in recordkeeping/reporting Commission, Three Lafayette Centre, this information publicly available, the
costs. 1155 21st Street NW., Washington, DC Commission expects investors to make
20581. more informed decisions whether to
IV. Request for Comments
• Hand Delivery/Courier: Same as trade with or through such an entity.
Comments are invited on: (a) Whether Mail above. The more U.S. investors trade with and
the proposed collection of information • Federal eRulemaking Portal: http:// through registered entities, the more
is necessary for the proper performance www.regulations.gov. Follow the likely that their funds have a better
of the functions of the agency, including instructions for submitting comments. chance of being protected.
whether the information shall have Please submit your comments using
I. Background
practical utility; (b) the accuracy of the only one method.
agency’s estimate of the burden All comments must be submitted in The Commission often receives
(including hours and cost) of the English, or if not, accompanied by an investigative leads relating to foreign
proposed collection of information; (c) English translation. Comments will be entities that solicit and/or accept funds
ways to enhance the quality, utility, and posted as received to www.cftc.gov. You from U.S. residents at a retail level. For
clarity of the information to be should submit only information that example, the CFTC’s Division of
collected; and (d) ways to minimize the you wish to make available publicly. If Enforcement (‘‘Enforcement’’) has
burden of the collection of information you wish the Commission to consider investigated approximately 60 such
on respondents, including through the information that you believe is exempt cases in the past twenty-four months.
use of automated collection techniques from disclosure under the Freedom of These cases involve unregistered foreign
or other forms of information Information Act, a petition for entities that engage in, among other
technology. confidential treatment of the exempt things, forex in a capacity similar to
Comments submitted in response to information may be submitted according Retail Foreign Exchange Dealers,
this notice will be summarized and/or to the procedures established in § 145.9 Introducing Brokers, Commodity
included in the request for OMB of the Commission’s regulations.1 Trading Advisors or Commodity Pool
approval of this information collection; The Commission reserves the right, Operators and binary options.2 Almost
they also will become a matter of public but shall have no obligation, to review, all, if not all, of these foreign entities are
record. pre-screen, filter, redact, refuse or acting in a capacity that requires them
remove any or all of your submission to be registered with the Commission.
Dated: September 8, 2015. In many cases, there are obstacles to
Sarah Brabson, from www.cftc.gov that it may deem to
be inappropriate for publication, such as bringing an effective enforcement action
NOAA PRA Clearance Officer. against these types of entities. For
obscene language. All submissions that
[FR Doc. 2015–22991 Filed 9–11–15; 8:45 am]
have been redacted or removed that example, the Commission spends
BILLING CODE 3510–22–P considerable resources investigating
contain comments on the merits of the
these matters. Even if Enforcement is
rulemaking will be retained in the
able to develop a legal case against one
public comment file and will be
COMMODITY FUTURES TRADING of these entities, international service of
considered as required under the
COMMISSION process is cumbersome, often takes a
Administrative Procedure Act and other
very long time to effectuate and is not
applicable laws, and may be accessible
Public Alert—Registration Deficient always successful. Even if service of
under the Freedom of Information Act.
List process is successful, many of these
FOR FURTHER INFORMATION CONTACT: Rick entities are judgment proof.
AGENCY: Commodity Futures Trading Glaser, Deputy Director, Division of The Commission believes that a
Commission. Enforcement, Commodity Futures consumer protection approach has a
ACTION: Notice; request for comment. Trading Commission, Three Lafayette better chance of success than continuing
Centre, 1151 21st Street NW., to spend resources on Enforcement
SUMMARY: The Commodity Futures Washington, DC 20581, phone: (202) investigations and litigations that have a
Trading Commission (‘‘CFTC’’ or 418–5358, email: rglaser@cftc.gov. limited chance of success. The proposed
‘‘Commission’’) is announcing a new SUPPLEMENTARY INFORMATION: The CFTC RED List would disseminate
program, the Registration Deficient List today is announcing a new program, information about certain foreign
(‘‘RED List’’), that will post on the effective immediately, for informing the entities into the marketplace so that U.S.
Commission’s Web site and distribute to public about unregistered foreign residents would be able to make more
the public certain factual information entities engaged in the solicitation or informed choices about how they trade
about foreign entities that are soliciting acceptance of funds from U.S. residents their money. This approach is used by
or accepting funds from U.S. residents at a retail level. These entities solicit other regulators, including the
and are acting in a manner that requires and/or accept funds for investments in, Securities and Exchange Commission.3
registration but are not appropriately among other things, foreign currency
registered with the CFTC. (‘‘forex’’) and binary options. Through 2 The Commission uses forex and binary options
DATES: Comments must be received on merely as illustrative examples. Any entity that
this new program, the Registration meets the criteria set forth below is a candidate for
or before October 14, 2015. Deficient List (‘‘RED List’’), the inclusion on the RED list.
ADDRESSES: You may submit comments, Commission will publish on its Web site 3 There are approximately 47 countries that issue,
identified by ‘‘Registration Deficient the names of unregistered foreign or have issued, lists, warning letters, or public
statements, including Belgium, Brazil, British
tkelley on DSK3SPTVN1PROD with NOTICES
List,’’ by any of the following methods: entities that the Commission has reason Virgin Islands, Canada (Ontario, British Columbia
• The agency’s Web site, at http:// to believe may be required to register and the Quebec provincial regulators), Croatia,
comments.cftc.gov. Follow the with the CFTC but are not, in fact, Denmark, Hong Kong, Ireland, Malaysia, Panama,
instructions for submitting comments registered. Publication does not Poland, Cyprus, Singapore, Spain, Sweden,
Switzerland, Thailand, The Netherlands, the United
through the Web site. represent final Commission disposition Kingdom and the U.S.
• Mail: Christopher Kirkpatrick, The International Organization of Securities
Secretary of the Commission, 1 17 CFR 145.9 (2014). Commissions (‘‘IOSCO’’) has established an
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![Federal Register / Vol. 80, No. 177 / Monday, September 14, 2015 / Notices 55099
II. The RED List The CFTC is committed to providing U.S. consumers trade with and through
accurate information to investors using registered entities, the more likely that their
In light of the challenges associated funds will have a greater chance of being
with taking enforcement action against the RED List. Before listing an entity on
the RED List, Commission staff will protected.
such entities, the Commission believes The named foreign entities currently
it useful to educate and empower notify the entity by Notice Letter of the appear to be acting in a capacity that
prospective investors. The goal of the Commission’s intent to list the entity. requires registration with the CFTC but are
RED List is to provide prospective The entity will have the opportunity to NOT registered with the CFTC.
investors with information regarding respond to the Commission and provide [Inserted will be a list of all of the foreign
unregistered soliciting entities before relevant documentation. If the foreign entities that have met the criteria, as
they invest. For a foreign entity to be entity does not respond to the notice approved by the Commission.]
listed on the CFTC’s RED List, letter or provides an unsatisfactory The inclusion of an entity’s name on
reasonable grounds must exist to believe response, Enforcement will recommend the RED list does not mean that the
that the entity meets the following six to the Commission that a foreign entity CFTC or a Court has concluded that a
criteria: should be included on the RED List. violation of any provision of the
1. The entity is foreign; To implement the RED List, the Commodity Exchange Act or the
2. The foreign entity has no or limited Commission will post on its public Web Commission’s Regulations has occurred.
presence in the United States; 4 sites, http://www.SmartCheck.gov/
3. The foreign entity is soliciting and/ REDList, the names, and only the names, III. Review of RED List
or accepting funds from U.S. residents; of unregistered soliciting foreign entities Twice annually, on or about June 30
4. The foreign entity is offering a that have been subject of complaints and December 31, the Triage Officer will
product within the Commission’s received by the CFTC. The RED list will review the RED List and, if it appears
jurisdiction (e.g. ‘‘forex’’); contain the following information: that a minimum of 12 months have
5. The foreign entity is required to be elapsed during which no complaints
RED (Registration Deficient) LIST
registered; and
have been received regarding the a
6. The foreign entity is not registered.5 List of Foreign Entities That Have Been
If the foreign entity meets these Identified as Acting in a Capacity That foreign entity and the foreign entity’s
criteria, Enforcement will propose that Appears To Require Registration but Are Web site is either inactive or taken
it be included on a publicly disclosed Not Appropriately Registered With the down, Enforcement will submit a
list stating that the foreign entity is Commission recommendation for Commission
acting in a capacity that appears to The Commodity Futures Trading consideration to move the foreign entity
require registration but is not registered Commission (‘‘CFTC’’) frequently receives from the active portion of the RED List
with the Commission. This list will then investigative leads and questions from the homepage to the archival portion of
be publicized by the Commission’s public about foreign entities that solicit and/ such page.
or accept funds from U.S. residents at a retail
Office of Consumer Outreach by a Issued in Washington, DC, on September 9,
level. For example these leads and questions
variety of different methods and media. 2015, by the Commission.
can relate to, among things, foreign entities
The RED List process contains three that engage in foreign currency (‘‘Forex’’) in Robert N. Sidman,
separate levels of review before a a capacity similar to Retail Foreign Exchange Deputy Secretary of the Commission.
recommendation is made to the Dealers (‘‘RFEDs’’), Introducing Brokers, [FR Doc. 2015–23040 Filed 9–11–15; 8:45 am]
Commission for inclusion on the RED Commodity Trading Advisors or Commodity BILLING CODE 6351–01–P
List. First the Intake Officer reviews the Pool Operators http://www.cftc.gov/
complaint and makes an initial ConsumerProtection/
determination of whether a foreign FraudAwarenessPrevention/
ForeignCurrencyTrading/index.htm; and BUREAU OF CONSUMER FINANCIAL
entity should potentially be included in
binary options http://www.cftc.gov/ PROTECTION
the RED List. This initial determination
PressRoom/PressReleases/fraudadv_
is passed to a Triage Officer who will binaryoptions. Many of these foreign entities [Docket No: CFPB–2015–0038]
conduct a limited investigation and then are acting in a capacity that requires them to
make a recommendation to an be registered with the CFTC. Agency Information Collection
Enforcement Deputy Director. The If a foreign entity is registered with the Activities: Submission for OMB
Deputy Director will, based on the CFTC, then it is subject to CFTC regulations Review; Comment Request
information before him/her, make a and oversight that apply to registrants.
Generally, foreign entities that solicit you to AGENCY: Bureau of Consumer Financial
decision as to whether to recommend to Protection.
the Commission that it include a foreign trade are required to register with the CFTC.
For this reason, it is important for you to ACTION: Notice and request for comment.
entity on the RED List. These levels of
consider whether the foreign entity that
review are to ensure that only those solicits you is, in fact, registered with the SUMMARY: In accordance with the
foreign entities that should be included CFTC. Paperwork Reduction Act of 1995
on the RED List are included on the RED In certain cases, a preliminary review by (PRA), the Consumer Financial
List. the CFTC reveals that foreign entities that Protection Bureau (Bureau) is proposing
solicit and/or accept funds from U.S.
a new information collection titled,
investor Alert Portal on its Web site to receive and residents at a retail level have no or limited
publish alerts and warnings from its members about U.S. presence, and act in a capacity that
‘‘Regulation F: Fair Debt Collection
firms which are not authorized to provide requires registration, but are not in fact Practices Act, State Application for
investment services in the jurisdiction that issued registered. In an effort to warn the public Exemption (12 CFR 1006.2)’’.
the alert or warning. about these entities, the CFTC is publishing DATES: Written comments are
tkelley on DSK3SPTVN1PROD with NOTICES
4 Merely registering a Web site with a U.S. based
the names of those foreign entities. encouraged and must be received on or
domain name registrar does not constitute physical
presence.
The goal of this list is to provide before October 14, 2015 to be assured of
information to U.S. consumers about foreign
5 If the foreign entity offers binary options there consideration.
is one additional criterion: Whether the entity is a entities that are acting in an unregistered
capacity and to help them make more ADDRESSES: You may submit comments,
foreign board of trade. If it is a foreign board of
trade, then the entity would not be eligible for the informed decisions about whether to trade identified by the title of the information
RED list. with or through such an entity. The more that collection, OMB Control Number (see
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Document Created: 2018-02-26 10:15:13
Document Modified: 2018-02-26 10:15:13
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice; request for comment. | |
| Dates | Comments must be received on or before October 14, 2015. | |
| Contact | Rick Glaser, Deputy Director, Division of Enforcement, Commodity Futures Trading Commission, Three Lafayette Centre, 1151 21st Street NW., Washington, DC 20581, phone: (202) 418- 5358, email: [email protected] | |
| FR Citation | 80 FR 55098 |
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