| Read Time: 4 minutes | Brokers & Advisors | Regulatory Defense |

Receiving a subpoena from the CFTC (U.S. Commodity Futures Trading Commission) is often met with panic by anybody who receives one. The recipient will usually have no advanced notice of the subpoena, other than a letter from the CFTC stating that he or she should produce documents related to a specific time period. The recipient may be scared of what will happen if they do not comply with the subpoena, but in fact there are several ways to proceed after receiving a CFTC subpoena.

The first thing to note is that all subpoenas issued by the CFTC are civil subpoenas. In other words, they are issued to an individual or business that may or may not be accused of a violation of the Commodity Exchange Act or any CFTC rules and regulations in a civil proceeding. But aware of the fact that the CFTC can share whatever documents or information it gathers with criminal prosecutors and other agencies.

IMPORTANT: The CFTC will not inform you whether you are a target, subject, or witness. In fact, the CFTC attorneys and investigators will tell you nothing about the investigation! This is why the first thing you should do if you receive a subpoena from the CFTC is contact an experienced CFTC defense attorney. A lawyer can help you decide how you are going to respond to the subpoena. Although there are several ways to proceed, a lawyer can recommend the best course of action based on your specific circumstances and reduce your chances of making a procedural misstep that will result in a more aggressive investigation by the CFTC or worse.

CFTC Enforcement Actions

If you do not produce the documents, or if you fail to comply in another way outlined by the subpoena, then you could be facing an enforcement action. The usual course of an enforcement action is for the CFTC prosecuting attorneys to file a complaint with the federal district court where your business is located. What happens next could include the filing of a complaint with the federal district court where you or your business is located. The filing will contain a proposed order for the court to enter. The order will direct you to produce specific documents and information, and inform you if you do not comply with the order you may be held in contempt of court and put in jail until you comply.

If you receive a subpoena from the CFTC, be sure to contact an experienced lawyer right away!

CFTC’s Information Gathering Process

As a general matter, it is important to know that the CFTC has very broad powers when it comes to investigating suspected violations of the Commodity Exchange Act. Specifically, the CFTC can issue subpoenas to a person or entity for any records related to its investigation. The compelled production must be made within the date stated on the subpoena.

The CFTC can be quite aggressive in investigating suspected violations of the Commodity Exchange Act. This investigation can include issuing subpoenas for documents and testimony as noted, as well as using the depositions of those who appear or testify before them in court. They may also issue subpoena duces tecum orders to require production of books, records, papers and other data that they believe might be relevant to their investigation. This means that anybody could be served with a subpoena if the CFTC believes that you have relevant information in your possession.

The CFTC has very broad powers when it comes to enforcing subpoenas issued by them. For instance, they can issue a civil investigative demand to require an individual or entity produce for inspection and copying all records relating to any transactions or activities related to any agreements, contracts, or transactions in any commodity. The CFTC can also issue an administrative subpoena to require that someone appear before them to testify under oath about the production of documents and records.

Do not assume that because you are only served with a subpoena for documents, that this is all you have to worry about. You may be subject to a deposition or some other form of testimony at some point during the investigation. It is important to know that, as an individual or entity being investigated by the CFTC , you have a right to counsel present at any hearings on enforcement matters.

Steps to Take When Receiving a CFTC Subpoena

When you receive an administrative subpoena issued by the CFTC, it is important to take certain steps that can greatly reduce your risk. These include:

  1. Preserve all documents and gather supporting evidence.
  2. All staff that need to know must be notified (in-house counsel and certain officers) and a litigation hold must be issued.
  3. Consult with an experienced CFTC defense lawyer immediately.
  4. Examine any potential legal responsibility under the relevant laws and regulations.
  5. The Formal Order of Investigation should be obtained by your attorney.
  6. If your attorney thinks it’s necessary, he or she may want to speak with the CFTC’s Staff about limiting the subpoena’s scope where appropriate.
  7. If you’re not sure whether an internal investigation is required, consult with your lawyer.
  8. Review all collected documents for responsiveness, privilege and confidentiality
  9. Consider whether any particular employee requires independent legal counsel if you are unsure. Your CFTC defense lawyer can help you with this.
  10. Determine whether there are any objections to the scope or burden of the subpoena, as well as whether to fight the subpoena (by motion to quash) or comply.
  11. If the subpoena recipient is a corporation, see if public disclosure is required.

Given the complexity and number of necessary action steps involved with responding to a CFTC subpoena, individuals and firms without experienced legal representation are often at a severe disadvantage.

Schedule a Free Initial Consultation with Attorney that Can Handle Your CFTC Issues

The Law Offices of Robert Wayne Pearce, P.A. have successfully defended clients involved in CFTC subpoenas, informal inquiries, formal investigations and enforcement actions since the mid-1980s. We have faced the CFTC in its many sweeps of Commodities Option brokerages, Off-Shore FOREX companies, Leveraged and Cash-only Precious Metals firms, Futures Commission Merchants and small Introducing Brokerage firms.

We are here to help you and your firm.

For dedicated representation from a CFTC defense attorney with substantial experience in all aspects of CFTC investigations and enforcement proceedings, contact us online or call our law firm at 800-732-2889.

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Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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