§ 13. — Violations generally; punishment; costs of prosecution.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC13]
TITLE 7--AGRICULTURE
CHAPTER 1--COMMODITY EXCHANGES
Sec. 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 $500,000 in the case of a person who is an individual) or
imprisonment for not more than five 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 person's use or to
the use of another, any money, securities, or property having a
value in excess 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 entity, or to corner or
attempt to corner any such commodity or knowingly to deliver or
cause to be delivered for transmission through the mails or
interstate commerce by telegraph, telephone, wireless, or other
means of communication false or misleading or knowingly inaccurate
reports concerning crop or market information or conditions 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 section 23 of this title.
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\1\ So in original. Probably should be ``section''.
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(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 thereunder or any
undertaking contained in a registration statement required under
this chapter, or by any registered entity or registered futures
association in connection with an application for membership or
participation therein or to become associated with a member thereof,
which statement was false or misleading with respect to any material
fact, or knowingly to omit any material fact required 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, fictitious, or fraudulent statement or entry to a registered
entity, board of trade, or futures association designated or
registered under this chapter acting in furtherance of its official
duties under this chapter.
(5) Any person willfully to violate any other provision of this
chapter, or any rule or regulation 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 regulation.
(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
registration or reregistration for five years or such longer period as
the Commission may 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 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 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, 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 transaction of the character
of or which is commonly known to the trade as an ``option'',
``privilege'', ``indemnity'', ``bid'', ``offer'', ``put'', ``call'',
``advance 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 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 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 commodity if
nonpublic information is used in the investment transaction, if the
investment transaction 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 contrary
to the public interest or otherwise inconsistent 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 intent to assist another person,
directly or indirectly, to participate in any transaction in commodity
futures, any transaction in an actual commodity, or in any transaction
of the character of or which is commonly known to the trade as an
``option'', ``privilege'', ``indemnity'', ``bid'', ``offer'', ``put'',
``call'', ``advance guaranty'', or ``decline guaranty'', or in any
transaction for the delivery of any commodity 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 determines
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; and (2) for any person to acquire 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 transaction in an actual commodity, or in any
transaction of the character of or which is commonly known to the trade
as an ``option'', ``privilege'', ``indemnity'', ``bid'', ``offer'',
``put'', ``call'', ``advance guaranty'', or ``decline guaranty'', or in
any transaction for the delivery of any commodity 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 determines
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) Redesignated (d)
(f) Insider trading prohibited
It shall be a felony for any person--
(1) who is an employee, member of the governing board, or member
of any committee of a board of trade, registered entity, or
registered futures association, in violation of a regulation issued
by the Commission, willfully and knowingly to trade for such
person's own account, or for or on behalf of any other account, in
contracts for future delivery or options thereon on the basis of, or
willfully and knowingly to disclose for any purpose inconsistent
with the performance of such person's official duties as an employee
or member, any material nonpublic information obtained through
special access related to the performance of such duties.\2\
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\2\ So in original. The period probably should be ``; or''.
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(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 delivery or options thereon on the basis of any material
nonpublic information that such person knows was obtained in
violation of paragraph (1) from an employee, member of the governing
board, or member of any committee of a board of trade, registered
entity, or registered futures association.
Such felony shall be punishable by a fine of not more than $500,000,
plus the amount of any profits realized from such trading or disclosure
made in violation of this subsection, or imprisonment for not more than
five years, or both, together with the costs of prosecution.
(Sept. 21, 1922, ch. 369, Sec. 9, 42 Stat. 1003; June 15, 1936, ch. 545,
Secs. 2, 11, 49 Stat. 1491, 1501; Pub. L. 90-258, Sec. 25, Feb. 19,
1968, 82 Stat. 33; Pub. L. 93-463, title II, Sec. 212(d), title IV,
Secs. 401, 409, Oct. 23, 1974, 88 Stat. 1404, 1412, 1414; Pub. L. 95-
405, Sec. 19, Sept. 30, 1978, 92 Stat. 875; Pub. L. 97-444, title II,
Sec. 227, Jan. 11, 1983, 96 Stat. 2316; Pub. L. 99-641, title I,
Secs. 105, 110(3), (4), Nov. 10, 1986, 100 Stat. 3558, 3561; Pub. L.
102-546, title II, Secs. 212(a), 214(a), Oct. 28, 1992, 106 Stat. 3608,
3610; Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 123(a)(22)], Dec. 21,
2000, 114 Stat. 2763, 2763A-410.)
Amendments
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, Sec. 212(a)(1)(A), (C), added
subsec. (a) and struck out former subsec. (a) which related to penalty
for embezzlement and larcenous actions.
Subsec. (b). Pub. L. 102-546, Sec. 212(a)(1)(A), (C), added subsec.
(b) and struck out former subsec. (b) which related to penalty for price
manipulation, cornering, and fraudulent information.
Subsec. (c). Pub. L. 102-546, Sec. 212(a)(1)(A), (B), (2),
redesignated subsec. (d) as (c), substituted ``$500,000'' for
``$100,000'', and struck out former subsec. (c) which related to penalty
for misdemeanors.
Subsecs. (d) to (f). Pub. L. 102-546, Secs. 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, Sec. 110(3), substituted ``6k,''
for ``6k.''
Subsec. (d). Pub. L. 99-641, Sec. 110(4), substituted ``advance
guaranty'' for ``advance guarantee''.
Pub. L. 99-641, Sec. 105, inserted ``if nonpublic information is
used in the investment transaction, if the investment transaction 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'' after ``actual commodity'', and substituted provisions
which related to foregoing prohibitions not being applicable to
transactions determined 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 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 (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 information
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 information available to the public.''
1983--Subsec. (a). Pub. L. 97-444, Sec. 227(1), expanded
applicability 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, Sec. 227(2), inserted ``A person
convicted of a felony under this subsection shall be suspended from any
registration under this chapter, denied 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 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.''
Subsec. (c). Pub. L. 97-444, Sec. 227(3), inserted ``A person
convicted under this subsection of knowingly violating the provisions of
section 6a of this title shall be suspended from any registration under
this chapter, denied registration or reregistration for a period of two
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 two 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.''
Subsec. (d). Pub. L. 97-444, Sec. 227(4), in amending subsec. (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
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 contract,
or is marketed or managed in substantially the same manner as such a
standardized contract, and added to nonapplicability of prohibition
against any investment transaction in an actual commodity, a transaction
entered 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 information is used by such person
in such transaction.
Subsec. (e). Pub. L. 97-444, Sec. 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 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 determines
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''.
1978--Subsec. (a). Pub. L. 95-405, Sec. 19(1), substituted
``$500,000'' for ``$100,000'' and inserted provision relating to a fine
of not more than $100,000 plus costs of prosecution for a violation by a
person who is an individual.
Subsec. (b). Pub. L. 95-405, Sec. 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, Sec. 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, Sec. 19(4), (5), substituted
``$100,000'' for ``$10,000''.
1974--Subsecs. (a), (b). Pub. L. 93-463, Sec. 212(d)(1), (2),
substituted ``$100,000'' for ``$10,000''.
Subsec. (c). Pub. L. 93-463, Secs. 212(d)(3), 409, substituted
``$100,000'' for ``$10,000'' and inserted reference to sections 6k, 6m,
and 6o of this title.
Subsecs. (d), (e). Pub. L. 93-463, Sec. 401, added subsecs. (d) and
(e).
1968--Subsec. (a). Pub. L. 90-258 added subsec. (a).
Subsec. (b). Pub. L. 90-258 incorporated existing offenses 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 offenses in
provisions designated as subsec. (c), and included 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.
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
Section 214(b) of Pub. L. 102-546 provided that: ``The Commodity
Futures Trading Commission shall issue regulations to implement the
amendment made by subsection (a) [amending this section] not later than
three hundred and sixty days after the date of enactment of this Act
[Oct. 28, 1992].''
Penalties Study and Guidelines
Section 225 of Pub. L. 102-546 provided that:
``(a) Study.--The Commodity Futures Trading Commission shall 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 violated their respective
rules established under such Act.
``(b) Report.--Not later than two years after the date of enactment
of this Act [Oct. 28, 1992], the Commission shall submit to the
Committee on Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of the Senate a report
that describes the results of the study conducted under subsection (a).
The report shall--
``(1) include an analysis of whether systematic differences
exist among penalties imposed by various contract markets and
registered futures associations for similar offenses, and, if so,
the causes of such differences;
``(2) propose industry-wide guidelines or rules to make penalty
levels among contract markets and registered futures associations
consistent, including, if appropriate, minimum penalties or penalty
ranges for various offenses; and
``(3) propose guidelines or rules to make Commission penalty
levels consistent, including, if appropriate, minimum penalties or
penalty ranges for various offenses.''
Section Referred to in Other Sections
This section is referred to in sections 2, 6a, 7a-3, 7b-1, 13b of
this title.
