7 U.S.C. § 25 — Private rights of action

Page 148 TITLE 7—AGRICULTURE § 25 1 So in original. The word ‘‘or’’ probably should not appear. (B) to support the objectives of the Federal Government, owners, and participants. (3) Conflicts of interest Each swap data repository shall— (A) establish and enforce rules to minimize conflicts of interest in the decision-making process of the swap data repository; and (B) establish a process for resolving con- flicts of interest described in subparagraph (A). (4) Additional duties developed by Commission (A) In general The Commission may develop 1 or more additional duties applicable to swap data re- positories. (B) Consideration of evolving standards In developing additional duties under sub- paragraph (A), the Commission may take into consideration any evolving standard of the United States or the international com- munity. (C) Additional duties for Commission des- ignees The Commission shall establish additional duties for any registrant described in section 1a(48) of this title in order to minimize con- flicts of interest, protect data, ensure com- pliance, and guarantee the safety and secu- rity of the swap data repository. (g) Required registration for swap data reposi- tories Any person that is required to be registered as a swap data repository under this section shall register with the Commission regardless of whether that person is also licensed as a bank or registered with the Securities and Exchange Commission as a swap data repository. (h) Rules The Commission shall adopt rules governing persons that are registered under this section. (Sept. 21, 1922, ch. 369, § 21, as added Pub. L. 111–203, title VII, § 728, July 21, 2010, 124 Stat. 1697; amended Pub. L. 114–94, div. G, title LXXXVI, § 86001(b), Dec. 4, 2015, 129 Stat. 1797.) Editorial Notes PRIOR PROVISIONS A prior section 21 of act Sept. 21, 1922, ch. 369, as added by Pub. L. 96–276, § 7, June 17, 1980, 94 Stat. 542, related to silver markets activity and was set out as a note under section 4a of this title prior to repeal by Pub. L. 102–546, title IV, § 402(13), Oct. 28, 1992, 106 Stat. 3625. AMENDMENTS 2015—Subsec. (c)(7). Pub. L. 114–94, § 86001(b)(1)(A), substituted ‘‘swap’’ for ‘‘all’’ in introductory provi- sions. Subsec. (c)(7)(E)(iv). Pub. L. 114–94, § 86001(b)(1)(B), added cl. (iv). Subsec. (d). Pub. L. 114–94, § 86001(b)(2), added subsec. (d) and struck out former subsec. (d) which related to confidentiality and indemnification agreement. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2015 AMENDMENT Amendment by Pub. L. 114–94 effective as if enacted as part of the Dodd-Frank Wall Street Reform and Con- sumer Protection Act, Pub. L. 111–203, see section 86001(d) of Pub. L. 114–94, set out as a note under sec- tion 7a–1 of this title. EFFECTIVE DATE Section effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A (§§ 711–754) of title VII of Pub. L. 111–203 requires a rule- making, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see section 754 of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under sec- tion 1a of this title. § 25. Private rights of action (a) Actual damages; actionable transactions; ex- clusive remedy (1) Any person (other than a registered entity or registered futures association) who violates this chapter or who willfully aids, abets, coun- sels, induces, or procures the commission of a violation of this chapter shall be liable for ac- tual damages resulting from one or more of the transactions referred to in subparagraphs (A) through (D) of this paragraph and caused by such violation to any other person— (A) who received trading advice from such person for a fee; (B) who made through such person any con- tract of sale of any commodity for future de- livery (or option on such contract or any com- modity) or any swap; or who deposited with or paid to such person money, securities, or prop- erty (or incurred debt in lieu thereof) in con- nection with any order to make such contract or any swap; (C) who purchased from or sold to such per- son or placed through such person an order for the purchase or sale of— (i) an option subject to section 6c of this title (other than an option purchased or sold on a registered entity or other board of trade); (ii) a contract subject to section 23 of this title; or 1 (iii) an interest or participation in a com- modity pool; or (iv) a swap; or (D) who purchased or sold a contract re- ferred to in subparagraph (B) hereof or swap if the violation constitutes— (i) the use or employment of, or an at- tempt to use or employ, in connection with a swap, or a contract of sale of a commodity, in interstate commerce, or for future deliv- ery on or subject to the rules of any reg- istered entity, any manipulative device or contrivance in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after July 21, 2010; or (ii) a manipulation of the price of any such contract or swap or the price of the com- modity underlying such contract or swap. (2) Except as provided in subsection (b), the rights of action authorized by this subsection and by sections 7(d)(13), 7a–1(c)(2)(H), and 21(b)(10) of this title shall be the exclusive rem- edies under this chapter available to any person Page 149 TITLE 7—AGRICULTURE § 25 2 So in original. Probably should be preceded by ‘‘a’’. who sustains loss as a result of any alleged vio- lation of this chapter. Nothing in this sub- section shall limit or abridge the rights of the parties to agree in advance of a dispute upon any forum for resolving claims under this sec- tion, including arbitration. (3) In any action arising from a violation in the execution of an order on the floor of a reg- istered entity, the person referred to in para- graph (1) shall be liable for— (A) actual damages proximately caused by such violation. If an award of actual damages is made against a floor broker in connection with the execution of a customer order, and the futures commission merchant which se- lected the floor broker for the execution of the customer order is held to be responsible under section 2(a)(1) of this title for the floor bro- ker’s violation, such futures commission mer- chant may be required to satisfy such award; and (B) where the violation is willful and inten- tional, punitive or exemplary damages equal to no more than two times the amount of such actual damages. If an award of punitive or ex- emplary damages is made against a floor broker in connection with the execution of a customer order, and the futures commission merchant which selected the floor broker for the execution of the customer order is held to be responsible under section 2(a)(1) of this title for the floor broker’s violation, such futures commission merchant may be required to sat- isfy such award if the floor broker fails to do so, except that such requirement shall apply to the futures commission merchant only if it willfully and intentionally selected the floor broker with the intent to assist or facilitate the floor broker’s violation. (4) CONTRACT ENFORCEMENT BETWEEN ELIGIBLE COUNTERPARTIES.— (A) IN GENERAL.—No hybrid instrument sold to any investor shall be void, voidable, or un- enforceable, and no party to a hybrid instru- ment shall be entitled to rescind, or recover any payment made with respect to, the hybrid instrument under this section or any other provision of Federal or State law, based solely on the failure of the hybrid instrument to comply with the terms or conditions of section 2(f) of this title or regulations of the Commis- sion. (B) SWAPS.—No agreement, contract, or transaction between eligible contract partici- pants or persons reasonably believed to be eli- gible contract participants shall be void, void- able, or unenforceable, and no party to such agreement, contract, or transaction shall be entitled to rescind, or recover any payment made with respect to, the agreement, con- tract, or transaction under this section or any other provision of Federal or State law, based solely on the failure of the agreement, con- tract, or transaction— (i) to meet the definition of a swap under section 1a of this title; or (ii) to be cleared in accordance with sec- tion 2(h)(1) of this title. (5) LEGAL CERTAINTY FOR LONG-TERM SWAPS EN- TERED INTO BEFORE JULY 21, 2010.— (A) EFFECT ON SWAPS.—Unless specifically reserved in the applicable swap, neither the enactment of the Wall Street Transparency and Accountability Act of 2010, nor any re- quirement under that Act or an amendment made by that Act, shall constitute a termi- nation event, force majeure, illegality, in- creased costs, regulatory change, or similar event under a swap (including any related credit support arrangement) that would per- mit a party to terminate, renegotiate, modify, amend, or supplement 1 or more transactions under the swap. (B) POSITION LIMITS.—Any position limit es- tablished under the Wall Street Transparency and Accountability Act of 2010 shall not apply to a position acquired in good faith prior to the effective date of any rule, regulation, or order under the Act that establishes the posi- tion limit; provided, however, that such posi- tions shall be attributed to the trader if the trader’s position is increased after the effec- tive date of such position limit rule, regula- tion, or order. (6) CONTRACT ENFORCEMENT FOR FOREIGN FU- TURES CONTRACTS.—A contract of sale of a com- modity for future delivery traded or executed on or through the facilities of a board of trade, ex- change, or market located outside the United States for purposes of section 6(a) of this title shall not be void, voidable, or unenforceable, and a party to such a contract shall not be enti- tled to rescind or recover any payment made with respect to the contract, based on the fail- ure of the foreign board of trade to comply with any provision of this chapter. (b) Liabilities of organizations and individuals; bad faith requirement; exclusive remedy (1)(A) A registered entity that fails to enforce any bylaw, rule, regulation, or resolution that it is required to enforce by section 7, 7a–1, 7a–2, 7b–3, or 24a of this title, (B) a licensed board of trade that fails to enforce any bylaw, rule, regu- lation, or resolution that it is required to en- force by the Commission, or (C) any registered entity that in enforcing any such bylaw, rule, regulation, or resolution violates this chapter or any Commission rule, regulation, or order, shall be liable for actual damages sustained by a per- son who engaged in any transaction on or sub- ject to the rules of such registered entity to the extent of such person’s actual losses that re- sulted from such transaction and were caused by such failure to enforce or enforcement of such bylaws, rules, regulations, or resolutions. (2) A registered futures association that fails to enforce any bylaw or rule that is required under section 21 of this title or in enforcing any such bylaw or rule violates this chapter or any Commission rule, regulation, or order shall be liable for actual damages sustained by a person that engaged in any transaction specified in sub- section (a) of this section to the extent of such person’s actual losses that resulted from such transaction and were caused by such failure to enforce or enforcement of such bylaw or rule. (3) Any individual who, in the capacity as an officer, director, governor, committee member, or employee of registered 2 entity or a registered Page 150 TITLE 7—AGRICULTURE § 25 3 So in original. Probably should be followed by a comma. futures association willfully aids, abets, coun- sels, induces, or procures any failure by any such entity to enforce (or any violation of the chapter in enforcing) any bylaw, rule, regula- tion, or resolution referred to in paragraph (1) or (2) of this subsection, shall be liable for actual damages sustained by a person who engaged in any transaction specified in subsection (a) of this section on, or subject to the rules of, such registered entity or, in the case of an officer, di- rector, governor, committee member, or em- ployee of a registered futures association, any transaction specified in subsection (a) of this section, in either case to the extent of such per- son’s actual losses that resulted from such transaction and were caused by such failure or violation. (4) A person seeking to enforce liability under this section must establish that the registered entity 3 registered futures association, officer, director, governor, committee member, or em- ployee acted in bad faith in failing to take ac- tion or in taking such action as was taken, and that such failure or action caused the loss. (5) The rights of action authorized by this sub- section shall be the exclusive remedy under this chapter available to any person who sustains a loss as a result of (A) the alleged failure by a registered entity or registered futures associa- tion or by any officer, director, governor, com- mittee member, or employee to enforce any bylaw, rule, regulation, or resolution referred to in paragraph (1) or (2) of this subsection, or (B) the taking of action in enforcing any bylaw, rule, regulation, or resolution referred to in this subsection that is alleged to have violated this chapter, or any Commission rule, regulation, or order. (c) Jurisdiction; statute of limitations; venue; process The United States district courts shall have exclusive jurisdiction of actions brought under this section. Any such action shall be brought not later than two years after the date the cause of action arises. Any action brought under sub- section (a) of this section may be brought in any judicial district wherein the defendant is found, resides, or transacts business, or in the judicial district wherein any act or transaction consti- tuting the violation occurs. Process in such ac- tion may be served in any judicial district of which the defendant is an inhabitant or wher- ever the defendant may be found. (d) Dates of application to actions The provisions of this section shall become ef- fective with respect to causes of action accruing on or after the date of enactment of the Futures Trading Act of 1982 [January 11, 1983]: Provided, That the enactment of the Futures Trading Act of 1982 shall not affect any right of any parties which may exist with respect to causes of action accruing prior to such date. (Sept. 21, 1922, ch. 369, § 22, as added Pub. L. 97–444, title II, § 235, Jan. 11, 1983, 96 Stat. 2322; amended Pub. L. 102–546, title II, §§ 211, 222(d), title IV, § 402(14), Oct. 28, 1992, 106 Stat. 3607, 3616, 3625; Pub. L. 106–554, § 1(a)(5) [title I, §§ 120, 123(a)(25)], Dec. 21, 2000, 114 Stat. 2763, 2763A–404, 2763A–410; Pub. L. 110–234, title XIII, §§ 13105(i), 13203(n), May 22, 2008, 122 Stat. 1435, 1441; Pub. L. 110–246, § 4(a), title XIII, §§ 13105(i), 13203(n), June 18, 2008, 122 Stat. 1664, 2197, 2203; Pub. L. 111–203, title VII, §§ 738(c), 739, 749(h), 753(c), July 21, 2010, 124 Stat. 1728, 1729, 1748, 1754.) Editorial Notes REFERENCES IN TEXT The Wall Street Transparency and Accountability Act of 2010, referred to in subsec. (a)(5), is title VII of Pub. L. 111–203, July 21, 2010, 124 Stat. 1641, which en- acted chapter 109 (§ 8301 et seq.) of Title 15, Commerce and Trade, and enacted and amended numerous other sections and notes in the Code. For complete classifica- tion of this Act to the Code, see Short Title note set out under section 8301 of Title 15 and Tables. The Futures Trading Act of 1982, referred to in sub- sec. (d), is Pub. L. 97–444, Jan. 11, 1983, 96 Stat. 2294, which is classified generally to this chapter. For com- plete classification of this Act to the Code, see Short Title of 1983 Amendment note set out under section 1 of this title and Tables. 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)(1)(B). Pub. L. 111–203, § 749(h)(1)(B), which directed insertion of ‘‘or any swap’’ after ‘‘such contract’’, was executed by making the insertion after ‘‘such contract’’ the second time appearing, to reflect the probable intent of Congress. Pub. L. 111–203, § 749(h)(1)(A), inserted ‘‘or any swap’’ after ‘‘commodity)’’. Subsec. (a)(1)(C)(iv). Pub. L. 111–203, § 749(h)(2), added cl. (iv). Subsec. (a)(1)(D). Pub. L. 111–203, § 753(c), added sub- par. (D) and struck out former subpar. (D) which read as follows: ‘‘who purchased or sold a contract referred to in subparagraph (B) hereof if the violation con- stitutes a manipulation of the price of any such con- tract or the price of the commodity underlying such contract.’’ Subsec. (a)(4), (5). Pub. L. 111–203, § 739, added pars. (4) and (5) and struck out former par. (4). Prior to amend- ment, text of par. (4) read as follows: ‘‘No agreement, contract, or transaction between eligible contract par- ticipants or persons reasonably believed to be eligible contract participants, and no hybrid instrument sold to any investor, shall be void, voidable, or unenforceable, and no such party shall be entitled to rescind, or re- cover any payment made with respect to, such an agreement, contract, transaction, or instrument under this section or any other provision of Federal or State law, based solely on the failure of the agreement, con- tract, transaction, or instrument to comply with the terms or conditions of an exemption or exclusion from any provision of this chapter or regulations of the Com- mission.’’ Subsec. (a)(6). Pub. L. 111–203, § 738(c), added par. (6). Subsec. (b)(1)(A). Pub. L. 111–203, § 749(h)(3), sub- stituted ‘‘section 7, 7a–1, 7a–2, 7b–3, or 24a of this title’’ for ‘‘section 2(h)(7) of this title or sections 7 through 7a–2 of this title’’. 2008—Subsec. (a)(2). Pub. L. 110–246, § 13105(i), sub- stituted ‘‘7a–1(c)(2)(H)’’ for ‘‘7a–1(b)(1)(E)’’. Subsec. (b)(1)(A). Pub. L. 110–246, § 13203(n), inserted ‘‘section 2(h)(7) of this title or’’ before ‘‘sections 7 through 7a–2’’. 2000—Subsec. (a)(1). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(A)(i)(I)], substituted ‘‘registered entity’’ for ‘‘contract market, clearing organization of a contract Page 151 TITLE 7—AGRICULTURE § 26 market, licensed board of trade,’’ in introductory pro- visions. Subsec. (a)(1)(C)(i). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(A)(i)(II)], substituted ‘‘registered entity’’ for ‘‘contract market’’. Subsec. (a)(2). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(A)(ii)], substituted ‘‘sections 7(d)(13), 7a–1(b)(1)(E),’’ for ‘‘sections 7a(11),’’. Subsec. (a)(3). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(A)(iii)], substituted ‘‘registered entity’’ for ‘‘contract market’’ in introductory provisions. Subsec. (a)(4). Pub. L. 106–554, § 1(a)(5) [title I, § 120], added par. (4). Subsec. (b)(1). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(B)(i)], substituted ‘‘registered entity that fails’’ for ‘‘contract market or clearing organization of a contract market that fails’’, ‘‘sections 7 through 7a–2 of this title’’ for ‘‘section 7a(8) and section 7a(9) of this title’’, ‘‘registered entity that in’’ for ‘‘contract mar- ket, clearing organization of a contract market, or li- censed board of trade that in’’, and ‘‘registered entity to the’’ for ‘‘contract market or licensed board of trade to the’’. Subsec. (b)(3). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(B)(ii)], substituted ‘‘employee of registered entity’’ for ‘‘employee of a contract market, clearing organization, licensed board of trade,’’ and ‘‘such reg- istered entity’’ for ‘‘such contract market, licensed board of trade’’. Subsec. (b)(4). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(B)(iii)], substituted ‘‘registered entity’’ for ‘‘contract market, licensed board of trade, clearing or- ganization,’’. Subsec. (b)(5). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(25)(B)(iv)], substituted ‘‘registered entity’’ for ‘‘contract market, licensed board of trade, clearing or- ganization,’’. 1992—Subsec. (a)(1). Pub. L. 102–546, § 402(14)(A), sub- stituted ‘‘subparagraphs’’ for ‘‘clauses’’ in introductory provisions and ‘‘subparagraph’’ for ‘‘clause’’ in subpar. (D). Subsec. (a)(2). Pub. L. 102–546, § 402(14)(B), made tech- nical amendment to reference to section 21(b)(10) of this title to correct reference to corresponding section of original act. Subsec. (a)(3). Pub. L. 102–546, § 222(d), added par. (3). Subsec. (c). Pub. L. 102–546, § 211, amended subsec. (c) generally. Prior to amendment, subsec. (c) read as fol- lows: ‘‘The United States district courts shall have ex- clusive jurisdiction of actions brought under this sec- tion. Any such action must be brought within two years after the date the cause of action accrued.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by sections 738(c), 739, and 749(h) of Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A (§§ 711–754) of title VII of Pub. L. 111–203 requires a rule- making, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see section 754 of Pub. L. 111–203, set out as a note under section 1a of this title. Amendment by section 753(c) of Pub. L. 111–203 effec- tive on the date on which the final rule promulgated by the Commodity Futures Trading Commission pursuant to Pub. L. 111–203 takes effect [see 76 F.R. 41398, effec- tive Aug. 15, 2011], see section 753(d) of Pub. L. 111–203, set out as a note under section 9 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, except as other- wise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. Amendment by section 13203(n) of Pub. L. 110–246 ef- fective June 18, 2008, see section 13204(a) of Pub. L. 110–246, set out as a note under section 2 of this title. 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. § 26. Commodity whistleblower incentives and protection (a) Definitions In this section: (1) Covered judicial or administrative action The term ‘‘covered judicial or administra- tive action’’ means any judicial or administra- tive action brought by the Commission under this chapter that results in monetary sanc- tions exceeding $1,000,000. (2) Fund The term ‘‘Fund’’ means the Commodity Fu- tures Trading Commission Customer Protec- tion Fund established under subsection (g). (3) Monetary sanctions The term ‘‘monetary sanctions’’, when used with respect to any judicial or administrative action means— (A) any monies, including penalties, disgorgement, restitution, and interest or- dered to be paid; and (B) any monies deposited into a disgorgement fund or other fund pursuant to section 7246(b) of title 15, as a result of such action or any settlement of such action. (4) Original information The term ‘‘original information’’ means in- formation that— (A) is derived from the independent knowl- edge or analysis of a whistleblower; (B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (C) is not exclusively derived from an alle- gation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information. (5) Related action The term ‘‘related action’’, when used with respect to any judicial or administrative ac- tion brought by the Commission under this chapter, means any judicial or administrative action brought by an entity described in sub- clauses (I) through (VI) of subsection (h)(2)(C) that is based upon the original information provided by a whistleblower pursuant to sub- section (a) that led to the successful enforce- ment of the Commission action. (6) Successful resolution The term ‘‘successful resolution’’, when used with respect to any judicial or administrative action brought by the Commission under this chapter, includes any settlement of such ac- tion. (7) Whistleblower The term ‘‘whistleblower’’ means any indi- vidual, or 2 or more individuals acting jointly, who provides information relating to a viola- tion of this chapter to the Commission, in a