The Commodity Futures Trading Commission (CFTC) has finally come around to making close to an official statement (kinda) on the Administrative Law Judge (ALJ) controversy we first brought to your attention in October.
If you recall retiring ALJ George H. Painter went out with a bang, claiming fellow CFTC ALJ Bruce C. Levine had a 20-year old policy of never finding for a complainant. Painter requested his remaining cases be reassigned to a judge outside the Commission in order for complainants to get a fair hearing in the notice announcing his retirement.
The story then took an odd twist when the Wall Street Journal published a piece, which included claims from a civil case involving Judge Painter and his wife that questioned his mental capacity.
The CFTC ruled against Judge Painter's request, assigning his remaining cases to Judge Levine but would not comment on the underlying claim that the system was biased against complainants and had been for decades. The agency ignored it and seemed to be simply wishing it away.
Well is was picked up by the Washington Post on Nov. 21, perhaps prompting CFTC Commissioner Scott O’Malia’s letter to the Post earlier this week where he references the story. If it weren’t for the link the Post provided or if you hadn’t been following the story you would not have known from O’Malia’s letter what he was talking about.
In it he opines, “If the CFTC's reparations program has lost its value, the commission should consider other options, including eliminating the program.”
Perhaps he is is correct but if he is, it is probably the result of what most people acknowledge has been a stacked deck, which still reflects poorly on the Commission and the fact that they have not been forthright on the issue. We have expressed empathy for the commission in that this controversy sprung up while they are busy with writing rules for Dodd-Frank but it is not the type of charge — especially given the judicial track record that supports it — that can simply be ignored.
From reader comments to numerous discussions with lawyers and insiders familiar with these proceedings it has become clear that the CFTC reparations program has been broken for some time and that people in the know have simply avoided it. Hell there is ample evidence that the CFTC enforcement team itself has avoided bringing cases before its ALJ’s, choosing other venues where they stood a better chance to bring enforcement cases to. But what of those folks who didn’t get the memo. The retail traders who brought reparation cases before to the CFTC expecting a fair hearing. Don’t they deserve a more detailed response than what was in O’Malia’s letter?