(a) In general
(1) Prohibition
It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of a transaction described in paragraph (2) involving the purchase or sale of any commodity for future delivery (or any option on such a transaction or option on a commodity) or swap if the transaction is used or may be used to—
(A) hedge any transaction in interstate commerce in the commodity or the product or byproduct of the commodity;
(B) determine the price basis of any such transaction in interstate commerce in the commodity; or
(C) deliver any such commodity sold, shipped, or received in interstate commerce for the execution of the transaction.
(2) Transaction
A transaction referred to in paragraph (1) is a transaction that—
(A)
(i) is, of the character of, or is commonly known to the trade as, a “wash sale” or “accommodation trade”; or
(ii) is a fictitious sale; or
(B) is used to cause any price to be reported, registered, or recorded that is not a true and bona fide price.
(3) Contract of sale
It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act) who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to use the information in his personal capacity and for personal gain to enter into, or offer to enter into—
(A) a contract of sale of a commodity for future delivery (or option on such a contract);
(B) an option (other than an option executed or traded on a national securities exchange registered pursuant to
section 78f(a) of title 15); or
(4) Nonpublic information
(A) Imparting of nonpublic information
It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity and for personal gain with intent to assist another person, directly or indirectly, to use the information to enter into, or offer to enter into—
(i) a contract of sale of a commodity for future delivery (or option on such a contract);
(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to
section 78f(a) of title 15); or
(B) Knowing use
It shall be unlawful for any person who receives information imparted by any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee as described in subparagraph (A) to knowingly use such information to enter into, or offer to enter into—
(i) a contract of sale of a commodity for future delivery (or option on such a contract);
(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to
section 78f(a) of title 15); or
(C) Theft of nonpublic information
It shall be unlawful for any person to steal, convert, or misappropriate, by any means whatsoever, information held or created by any department or agency of the Federal Government or by Congress or by the judiciary that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, where such person knows, or acts in reckless disregard of the fact, that such information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and to use such information, or to impart such information with the intent to assist another person, directly or indirectly, to use such information to enter into, or offer to enter into—
(i) a contract of sale of a commodity for future delivery (or option on such a contract);
(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to
section 78f(a) of title 15); or
(iii) a swap, provided, however, that nothing in this subparagraph shall preclude a person that has provided information concerning, or generated by, the person, its operations or activities, to any employee or agent of any department or agency of the Federal Government, to Congress, any Member of Congress, any employee of Congress, any judicial officer, or any judicial employee, voluntarily or as required by law, from using such information to enter into, or offer to enter into, a contract of sale, option, or swap described in clauses (i), (ii), or (iii).
So in original. Probably should be “clause”.
(5) Disruptive practices
It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that—
(A) violates bids or offers;
(B) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or
(C) is, is of the character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution).
(6) Rulemaking authority
The Commission may make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to prohibit the trading practices described in paragraph (5) and any other trading practice that is disruptive of fair and equitable trading.
(7) Use of swaps to defraud
It shall be unlawful for any person to enter into a swap knowing, or acting in reckless disregard of the fact, that its counterparty will use the swap as part of a device, scheme, or artifice to defraud any third party.
References in Text
Section 2 of the STOCK Act, referred to in subsec. (a)(3), is section 2 of Pub. L. 112–105, which is set out as a note under section 101 of the Ethics in Government Act of 1978, Pub. L. 95–521, in the Appendix to Title 5, Government Organization and Employees.
Amendments
2012—Subsec. (a)(3). Pub. L. 112–105, § 5(1), inserted in introductory provisions “or any Member of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act)” after “any department or agency of the Federal Government”, “Member, officer,” after “position of the”, and “or by Congress or by the judiciary” after “creating the information”.
Subsec. (a)(4)(A). Pub. L. 112–105, § 5(2)(A), inserted in introductory provisions “or any Member of Congress or employee of Congress or any judicial officer or judicial employee” after “any department or agency of the Federal Government”, “Member, officer,” after “position of the”, and “or by Congress or by the judiciary” after “creating the information”.
Subsec. (a)(4)(B). Pub. L. 112–105, § 5(2)(B), inserted “or any Member of Congress or employee of Congress or any judicial officer or judicial employee” after “Federal Government” in introductory provisions.
Subsec. (a)(4)(C). Pub. L. 112–105, § 5(2)(C)(i), inserted “or by Congress or by the judiciary” in two places in introductory provisions.
Subsec. (a)(4)(C)(iii). Pub. L. 112–105, § 5(2)(C)(ii), inserted “to Congress, any Member of Congress, any employee of Congress, any judicial officer, or any judicial employee,” after “Federal Government,”.
2010—Subsec. (a)(1). Pub. L. 111–203, § 741(b)(2), inserted “or swap” before “if the transaction is used or may be used”.
Subsec. (a)(3), (4). Pub. L. 111–203, § 746, added pars. (3) and (4).
Subsec. (a)(5) to (7). Pub. L. 111–203, § 747, added pars. (5) to (7).
2000—Pub. L. 106–554, § 1(a)(5) [title I, § 109], inserted section catchline.
Subsec. (a). Pub. L. 106–554, § 1(a)(5) [title I, § 109], added subsec. (a) and struck out former subsec. (a) which read as follows: “It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of, any transaction involving any commodity, which is or may be used for (1) hedging any transaction in interstate commerce in such commodity or the products or byproducts thereof, or (2) determining the price basis of any such transaction in interstate commerce in such commodity, or (3) delivering any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof—
“(A) if such transaction is, is of the character of, or is commonly known to the trade as, a ‘wash sale,’ ‘cross trade,’ or ‘accommodation trade,’ or is a fictitious sale; or
“(B) if such transaction is used to cause any price to be reported, registered, or recorded which is not a true and bona fide price.
Nothing in this section shall be construed to prevent the exchange of futures in connection with cash commodity transactions or of futures for cash commodities, or of transfer trades or office trades if made in accordance with board of trade rules applying to such transactions and such rules shall have been approved by the Commission.”
Subsec. (g). Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(6)], inserted “or derivatives transaction execution facility” after “contract market” in two places.
1992—Subsec. (d)(2). Pub. L. 102–546, § 402(4), made technical amendments to references to section 78c(a)(12) of title 15 in subpar. (A)(iv) and to section 2(a) of this title in concluding provisions.
Subsec. (g). Pub. L. 102–546, § 203(a), added subsec. (g).
1986—Subsec. (c). Pub. L. 99–641, amended subsec. (c) generally, substituting provisions relating to regulations to eliminate pilot status of program for commodity option transactions for provisions relating to commodity option transactions, pilot program and permanent authorization, conditions ending prohibition, and excepted persons.
1983—Subsec. (a)(B), (C). Pub. L. 97–444, § 206(1), redesignated par. (C) as (B). Former par. (B), relating to transactions involving any commodity specifically set forth in section 2(a) of this title, prior to October 23, 1974, if such transactions were of the character of, or were commonly known to the trade as, an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, was struck out.
Subsec. (b). Pub. L. 97–444, § 206(2), in revising section generally, struck out references to any transaction subject to provisions of subsection (a) of this section and to any commodity not specifically set forth in section 2(a) of this title, prior to October 23, 1974, and struck out “within one year after the effective date of the Commodity Futures Trading Commission Act of 1974 unless the Commission determines and notifies the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture that it is unable to prescribe such terms and conditions within such period of time:” after “such terms and conditions as the Commission shall prescribe”.
Subsec. (c). Pub. L. 97–444, § 206(3), inserted “With respect to any commodity regulated under this chapter and specifically set forth in section 2(a) of this title prior to October 23, 1974, the Commission may, pursuant to the procedures set forth in this subsection, establish a pilot program for a period not to exceed three years to permit such commodity option transactions. The Commission may authorize commodity option transactions during the pilot program in as many commodities as will provide an adequate test of the trading of such option transactions. After completion of the pilot program, the Commission may authorize commodity option transactions without regard to the restrictions in the pilot program after the Commission transmits to the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry the documentation required under clause (1) of the first sentence of this subsection and the expiration of thirty calendar days of continuous session of Congress after the date of such transmittal.”
Subsec. (d)(1). Pub. L. 97–444, § 206(4)(A), inserted “, other than a commodity specifically set forth in section 2(a) of this title prior to October 23, 1974,” after “physical commodity”.
Subsec. (d)(2). Pub. L. 97–444, § 206(4)(B), inserted “, other than a commodity specifically set forth in section 2(a) of this title prior to October 23, 1974,” after “subsection (b) of this section” in provisions preceding subpar. (A).
Pub. L. 97–444, § 206(4)(C), inserted “, other than options on a commodity specifically set forth in section 2(a) of this title prior to October 23, 1974,” after “The Commission may permit persons not domiciled in the United States to grant options under this subsection” in provisions following par. (2).
Subsec. (f). Pub. L. 97–444, § 102, added subsec. (f).
1978—Subsec. (a). Pub. L. 95–405, § 3(1), in provisions following par. (C) substituted “have been approved” for “not have been disapproved”.
Subsec. (b). Pub. L. 95–405, § 3(2), substituted “Senate Committee on Agriculture, Nutrition, and Forestry” for “Senate Committee on Agriculture and Forestry”.
Subsecs. (c) to (e). Pub. L. 95–405, § 3(3), added subsecs. (c) to (e).
1974—Subsec. (a). Pub. L. 93–463, §§ 103(a), 402(a), (b), (d), designated existing provisions as subsec. (a), in par. (B) of subsec. (a) as so designated inserted “if such transaction involves any commodity specifically set forth in section 2(a) of this title, prior to the enactment of the Commodity Futures Trading Commission Act of 1974, and” and “option”, and in provisions following par. (C), struck out provisions prohibiting a construction of this section or section 6b of this title which would impair any State law applicable to any transaction enumerated or described in this section or section 6b of this title and substituted “Commission” for “Secretary of Agriculture”.
Subsec. (b). Pub. L. 93–463, § 402(c), added subsec. (b).
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 provision 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 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.
Effective Date of 1992 Amendment
Pub. L. 102–546, title II, § 203(b), Oct. 28, 1992, 106 Stat. 3600, provided that:
“The Commission shall adopt the rules required by the amendment made under subsection (a) [amending this section] within two hundred and seventy days after the date of enactment of this Act [Oct. 28, 1992].”
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
For effective date of section, see section 13 of act June 15, 1936, set out as an Effective Date of 1936 Amendment note under section 1 of this title.