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

Page 116 TITLE 7—AGRICULTURE § 12d 1 See References in Text note below. 1 So in original. Probably should be ‘‘section’’. period of time to be determined by the Commis- sion, any individual who is found to have com- mitted any major violation from service on the governing board of any registered entity or reg- istered futures association, or on any discipli- nary committee thereof. (Sept. 21, 1922, ch. 369, § 8c, as added Pub. L. 93–463, title II, § 216, Oct. 23, 1974, 88 Stat. 1405; amended Pub. L. 95–405, § 18, Sept. 30, 1978, 92 Stat. 874; Pub. L. 102–546, title II, § 206(a)(2), Oct. 28, 1992, 106 Stat. 3602; Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(20)], Dec. 21, 2000, 114 Stat. 2763, 2763A–410.) Editorial Notes AMENDMENTS 2000—Subsec. (e). Pub. L. 106–554 substituted ‘‘reg- istered entity’’ for ‘‘contract market’’ wherever appear- ing. 1992—Pub. L. 102–546 redesignated pars. (1) to (4) as subsecs. (a) to (d), respectively, in subsec. (a) redesig- nated subpars. (A) and (B) as pars. (1) and (2), respec- tively, in subsec. (c) substituted references to sub- section (b) for references to paragraph (2), in subsec. (d) substituted reference to subsection (a) for reference to paragraph (1), and added subsec. (e). 1978—Par. (1)(B). Pub. L. 95–405 substituted ‘‘An ex- change shall make public its findings and the reasons for the exchange action in any such proceeding, includ- ing the action taken or the penalty imposed, but shall not disclose the evidence therefor, except to the person who is suspended, expelled, or disciplined or denied ac- cess, and to the Commission’’ for ‘‘Otherwise the notice and reasons shall be kept confidential’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–405 effective Oct. 1, 1978, see section 28 of Pub. L. 95–405, set out as a note under section 2 of this title. EFFECTIVE DATE For effective date of section, see section 418 of Pub. L. 93–463, set out as an Effective Date of 1968 Amend- ment note under section 2 of this title. § 12d. Commission action for noncompliance with export sales reporting requirements The Commission may, in accordance with the procedures provided for in this chapter, refuse to register, register conditionally, or suspend, place restrictions upon, or revoke the registra- tion of, any person, and may bar for any period as it deems appropriate any person from using or participating in any manner in any market regulated by the Commission, if such person is subject to a final decision or order of any court of competent jurisdiction or agency of the United States finding such person to have know- ingly violated any provision of the export sales reporting requirements of section 612c–3 1 of this title, or of any regulation issued thereunder. (Sept. 21, 1922, ch. 369, § 8d, as added Pub. L. 97–444, title II, § 226, Jan. 11, 1983, 96 Stat. 2316.) Editorial Notes REFERENCES IN TEXT Section 612c–3 of this title, referred to in text, was re- pealed by Pub. L. 101–624, title XV, § 1578, Nov. 28, 1990, 104 Stat. 3702. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Jan. 11, 1983, see section 239 of Pub. L. 97–444, set out as an Effective Date of 1983 Amend- ment note under section 2 of this title. § 12e. Repealed. Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(21)], Dec. 21, 2000, 114 Stat. 2763, 2763A–410 Section, act Sept. 21, 1922, ch. 369, § 8e, as added Pub. L. 102–546, title II, § 202(a), Oct. 28, 1992, 106 Stat. 3598, related to Commission oversight and deficiency orders. § 13. Violations generally; punishment; costs of prosecution (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 per- son’s use or to the use of another, any money, securities, or property having a value in ex- cess 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 enti- ty, or of any swap, or to corner or attempt to corner any such commodity or knowingly to deliver or cause to be delivered for trans- mission through the mails or interstate com- merce by telegraph, telephone, wireless, or other means of communication false or mis- leading or knowingly inaccurate reports con- cerning crop or market information or condi- tions 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 sec- tion 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 there- under or any undertaking contained in a reg- istration statement required under this chap- ter, or by any registered entity or registered futures association in connection with an ap- plication for membership or participation therein or to become associated with a mem- ber thereof, which statement was false or mis- leading with respect to any material fact, or knowingly to omit any material fact required Page 117 TITLE 7—AGRICULTURE § 13 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, ficti- tious, or fraudulent statement or entry to a registered entity, board of trade, swap data re- pository, or futures association designated or registered under this chapter acting in fur- therance of its official duties under this chap- ter. (5) Any person willfully to violate any other provision of this chapter, or any rule or regu- lation 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 regula- tion. (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 registra- tion or reregistration for five years or such longer period as the Commission may deter- mine, 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. (c) Transactions by Commissioners and Commis- sion 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, 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 trans- action of the character of or which is commonly known to the trade as an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘ad- vance 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 con- tract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission deter- mines 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 com- modity if nonpublic information is used in the investment transaction, if the investment trans- action 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 con- trary to the public interest or otherwise incon- sistent 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 in- tent to assist another person, directly or indi- rectly, to participate in any transaction in com- modity futures, any transaction in an actual commodity, or in any transaction of the char- acter of or which is commonly known to the trade as an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘advance guar- anty’’, or ‘‘decline guaranty’’, or in any trans- action for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin contract, le- verage 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 stand- ardized contract, or is marketed or managed in substantially the same manner as such a stand- ardized contract; and (2) for any person to ac- quire 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 trans- action in an actual commodity, or in any trans- action of the character of or which is commonly known to the trade as an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘ad- vance guaranty’’, or ‘‘decline guaranty’’, or in any transaction for the delivery of any com- modity 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 deter- mines 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 gov- erning 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 Com- mission, willfully and knowingly to trade for such person’s own account, or for or on behalf of any other account, in contracts for future Page 118 TITLE 7—AGRICULTURE § 13 delivery or options thereon, or swaps, on the basis of, or willfully and knowingly to disclose for any purpose inconsistent with the perform- ance of such person’s official duties as an em- ployee or member, any material nonpublic in- formation obtained through special access re- lated 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 de- livery or options thereon on the basis of any material nonpublic information that such per- son knows was obtained in violation of para- graph (1) from an employee, member of the governing board, or member of any committee of a board of trade, registered entity, or reg- istered futures association. Such felony shall be punishable by a fine of not more than $500,000, plus the amount of any prof- its realized from such trading or disclosure made in violation of this subsection, or impris- onment for not more than five years, or both, together with the costs of prosecution. (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.) Editorial Notes CODIFICATION Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. AMENDMENTS 2010—Subsec. (a)(2). Pub. L. 111–203, § 741(b)(6)(A)(i), inserted ‘‘or of any swap,’’ before ‘‘or to corner’’. Subsec. (a)(4). Pub. L. 111–203, § 741(b)(6)(A)(ii), in- serted ‘‘swap data repository,’’ before ‘‘or futures asso- ciation’’. Subsec. (a)(6). Pub. L. 111–203, § 741(b)(7), added par. (6). Subsec. (e)(1). Pub. L. 111–203, § 741(b)(6)(B), inserted ‘‘swap data repository,’’ before ‘‘or registered futures association’’ and ‘‘, or swaps,’’ before ‘‘on the basis’’. 2008—Subsec. (a). Pub. L. 110–246, § 13103(d), in intro- ductory provisions, struck out ‘‘(or $500,000 in the case of a person who is an individual)’’ after ‘‘$1,000,000’’ and substituted ‘‘10 years’’ for ‘‘five years’’. Subsecs. (e), (f). Pub. L. 110–246, § 13105(h), redesig- nated subsec. (f) as (e) and, in par. (1), substituted ‘‘; or’’ for period at end. 2000—Subsecs. (a)(2) to (4), (f)(1), (2). Pub. L. 106–554 substituted ‘‘registered entity’’ for ‘‘contract market’’. 1992—Subsec. (a). Pub. L. 102–546, § 212(a)(1)(A), (C), added subsec. (a) and struck out former subsec. (a) which related to penalty for embezzlement and lar- cenous actions. Subsec. (b). Pub. L. 102–546, § 212(a)(1)(A), (C), added subsec. (b) and struck out former subsec. (b) which re- lated to penalty for price manipulation, cornering, and fraudulent information. Subsec. (c). Pub. L. 102–546, § 212(a)(1)(A), (B), (2), re- designated subsec. (d) as (c), substituted ‘‘$500,000’’ for ‘‘$100,000’’, and struck out former subsec. (c) which re- lated to penalty for misdemeanors. Subsecs. (d) to (f). Pub. L. 102–546, §§ 212(a)(1)(B), (3), 214(a), redesignated subsec. (e) as (d), substituted ‘‘$500,000’’ for ‘‘$100,000’’, and added subsec. (f). 1986—Subsec. (c). Pub. L. 99–641, § 110(3), substituted ‘‘6k,’’ for ‘‘6k.’’ Subsec. (d). Pub. L. 99–641, § 110(4), substituted ‘‘ad- vance guaranty’’ for ‘‘advance guarantee’’. Pub. L. 99–641, § 105, inserted ‘‘if nonpublic informa- tion is used in the investment transaction, if the in- vestment transaction is prohibited by rule or regula- tion of the Commission, or if the investment trans- action is effected by means of any instrument regu- lated by the Commission’’ after ‘‘actual commodity’’, and substituted provisions which related to foregoing prohibitions not being applicable to transactions deter- mined by Commission not contrary to public interest or inconsistent with this subsection for provisions which read as follows: ‘‘Such prohibition against any investment transaction in an actual commodity shall not apply to (1) a transaction in which such person buys an agricultural commodity or livestock for use in such person’s own farming or ranching operations or sells an agricultural commodity which such person has produced in connection with such person’s own farming or ranching operations nor to any transaction in which such person sells livestock owned by such person for at least three months, (2) a transaction entered into by the trustee of a trust established by such person over which such person exercises no control if such trans- action is entered into solely to hedge against adverse price changes in connection with such farming or ranching operations or is a transaction for the lease of oil or gas or other mineral rights or interests owned by such person, or (3) a transaction in which such person buys or sells, directly or indirectly (except by means of an instrument regulated by the Commission), a United States Government security, a certificate of deposit, or a similar financial instrument if no nonpublic informa- tion is used by such person in such transaction. With respect to such excepted transactions, the Commission shall require any Commissioner of the Commission or any employee or agent thereof who participates in any such transaction to notify the Commission thereof in accordance with such regulations as the Commission shall prescribe and the Commission shall make such in- formation available to the public.’’ 1983—Subsec. (a). Pub. L. 97–444, § 227(1), expanded ap- plicability to any person registered or required to be registered under this chapter and inserted provision suspending persons convicted under this subsec. from registration and denying reregistration for five years or longer as determined by the Commission, unless such suspension or denial is not required to protect the public interest. Subsec. (b). Pub. L. 97–444, § 227(2), inserted ‘‘A person convicted of a felony under this subsection shall be sus- pended from any registration under this chapter, de- nied registration or reregistration for five years or such longer period as the Commission shall 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 de- termine on such terms and conditions as the Commis- sion may prescribe, unless the Commission determines that the imposition of such suspension, denial of reg- istration or reregistration, or market bar is not re- quired 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.’’ Subsec. (c). Pub. L. 97–444, § 227(3), inserted ‘‘A person convicted under this subsection of knowingly violating Page 119 TITLE 7—AGRICULTURE § 13–1 the provisions of section 6a of this title shall be sus- pended from any registration under this chapter, de- nied registration or reregistration for a period of two years or such longer period as the Commission shall de- termine, and barred from using or participating in any manner in any market regulated by the Commission for two years or such longer period as the Commission shall determine on such terms and conditions as the Commission may prescribe, unless the Commission de- termines that the imposition of such suspension, denial of registration or reregistration, or market bar is not required to protect the public interest. The Commis- sion may upon petition later review such disqualifica- tion and market bar and for good cause shown reduce the period thereof.’’ Subsec. (d). Pub. L. 97–444, § 227(4), in amending sub- sec. (d) generally, added to range of felonious conduct, participation in any transaction for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin con- tract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same func- tion or functions as such a standardized contract, or is marketed or managed in substantially the same man- ner as such a standardized contract, and added to non- applicability of prohibition against any investment transaction in an actual commodity, a transaction en- tered into by the trustee of a trust established by such person over which such person exercises no control if such transaction is entered into solely to hedge against adverse price changes in connection with such farming or ranching operations or is a transaction for the lease of oil or gas or other mineral rights or interests owned by such person, or a transaction in which such person buys or sells, directly or indirectly (except by means of an instrument regulated by the Commission), a United States Government security, a certificate of deposit, or a similar financial instrument if no nonpublic informa- tion is used by such person in such transaction. Subsec. (e). Pub. L. 97–444, § 227(5), inserted after words ‘‘ ‘decline guaranty’ ’’ each place they appear the following: ‘‘, or in any transaction for the delivery of any commodity under a standardized contract com- monly 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 con- tract, or is marketed or managed in substantially the same manner as such a standardized contract’’. 1978—Subsec. (a). Pub. L. 95–405, § 19(1), substituted ‘‘$500,000’’ for ‘‘$100,000’’ and inserted provision relating to a fine of not more than $100,000 plus costs of prosecu- tion for a violation by a person who is an individual. Subsec. (b). Pub. L. 95–405, § 19(2), substituted ‘‘$500,000’’ for ‘‘$100,000’’ and inserted provisions making felonies the violation of sections 6, 6b, 6c(b) to (e), 6h, 6o(1) and 23 of this title, knowingly making any false or misleading statement of material fact, or omitting such fact in any application or report, and setting the fine for such felonies at not more than $100,000 for a person who is an individual. Subsec. (c). Pub. L. 95–405, § 19(3), inserted references to subsecs. (d) and (e) of this section and substituted ‘‘sections 6a, 6c(a), 6d, 6e, 6i, 6k, 6m, 6o(2), or 12b of this title’’ for ‘‘sections 6 to 6e, 6h, 6i, 6k, 6m, 6o or 12b of this title’’. Subsecs. (d), (e). Pub. L. 95–405, § 19(4), (5), substituted ‘‘$100,000’’ for ‘‘$10,000’’. 1974—Subsecs. (a), (b). Pub. L. 93–463, § 212(d)(1), (2), substituted ‘‘$100,000’’ for ‘‘$10,000’’. Subsec. (c). Pub. L. 93–463, §§ 212(d)(3), 409, substituted ‘‘$100,000’’ for ‘‘$10,000’’ and inserted reference to sec- tions 6k, 6m, and 6o of this title. Subsecs. (d), (e). Pub. L. 93–463, § 401, added subsecs. (d) and (e). 1968—Subsec. (a). Pub. L. 90–258 added subsec. (a). Subsec. (b). Pub. L. 90–258 incorporated existing of- fenses in provisions designated as subsec. (b), changed classification thereof from misdemeanors to felonies, and increased term of imprisonment from not more than one year to not more than five years. Subsec. (c). Pub. L. 90–258 incorporated existing of- fenses in provisions designated as subsec. (c), and in- cluded penalty for violation of section 12b of this title. 1936—Act June 15, 1936, amended section generally and provided that price manipulations of commodities in interstate commerce was a violation. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provi- sion of subtitle A (§§ 711–754) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation imple- menting such provision of subtitle A, see section 754 of Pub. L. 111–203, set out as a note under section 1a of this title. EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–444 effective Jan. 11, 1983, see section 239 of Pub. L. 97–444, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–405 effective Oct. 1, 1978, see section 28 of Pub. L. 95–405, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1974 AMENDMENT For effective date of amendment by Pub. L. 93–463, see section 418 of Pub. L. 93–463, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1968 AMENDMENT Amendment by Pub. L. 90–258 effective 120 days after Feb. 19, 1968, see section 28 of Pub. L. 90–258, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1936 AMENDMENT Amendment by act June 15, 1936, effective 90 days after June 15, 1936, see section 13 of that act, set out as a note under section 1 of this title. REGULATIONS Pub. L. 102–546, title II, § 214(b), Oct. 28, 1992, 106 Stat. 3611, provided that: ‘‘The Commodity Futures Trading Commission shall issue regulations to implement the amendment made by subsection (a) [amending this sec- tion] not later than three hundred and sixty days after the date of enactment of this Act [Oct. 28, 1992].’’ PENALTIES STUDY AND GUIDELINES Pub. L. 102–546, title II, § 225, Oct. 28, 1992, 106 Stat. 3618, provided that the Commodity Futures Trading Commission should study the penalties the Commission imposes against persons found to have violated the Commodity Exchange Act (7 U.S.C. 1 et seq.) and the penalties imposed by contract markets and registered futures associations against persons found to have vio- lated their respective rules established under such Act, and, within two years after Oct. 28, 1992, submit to Con- gress a report, including proposed penalty guidelines, that describes the results of the study. § 13–1. Violations, prohibition against dealings in motion picture box office receipts or onion futures; punishment (a) No contract for the sale of motion picture box office receipts (or any index, measure, value,