Futures Investor Protection Act - Establishes the Futures Investor Protection Corporation (FIPC) as a nonprofit corporation, which shall be neither an agency nor establishment of the federal government.
Declares FIPC to be a membership corporation whose members comprise all persons registered as a futures commission merchant with the Commodity Futures Trading Commission (CFTC).
Grants FIPC all powers conferred upon the Security Investors Protection Corporation (SIPC). Sets forth FIPC corporate structure.
Requires FIPC to: (1) establish, and make deposits into and payments from a FIPC fund in the same manner in which SIPC has established and is authorized to make deposits into and payments from the SIPC fund; and (2) impose upon its membership assessments subject to the same rules that apply to imposition of assessments upon SIPC members.
Amends the Commodity Exchange Act to prescribe suitability rules governing a futures commission merchant's recommendations for a customer.
Grants the CFTC enforcement powers.
Directs the CFTC to review specified guidelines governing establishing account classes and determining the basis for pro rata shares (proof of claims guidelines).
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3009 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 3009
To protect investors in futures contracts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 2, 2013
Mr. Capuano introduced the following bill; which was referred to the
Committee on Agriculture
_______________________________________________________________________
A BILL
To protect investors in futures contracts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Futures Investor Protection Act''.
SEC. 2. FUTURES INVESTORS PROTECTION FUND.
(a) Futures Investor Protection Corporation.--
(1) Creation and membership.--
(A) Creation.--There is established a nonprofit
corporation to be known as the ``Futures Investor
Protection Corporation'' (in this Act referred to as
the ``FIPC''), which shall not be an agency or
establishment of the United States Government.
(B) Membership.--
(i) Members of fipc.--The FIPC shall be a
membership corporation the members of which
shall be all persons registered under the
Commodity Exchange Act with the Commission as a
futures commission merchant, other than persons
whose principal business, in the determination
of the FIPC, taking into account business of
affiliated entities, is conducted outside the
United States and its territories and
possessions.
(ii) Commission review; additional
members.--Subparagraphs (B) and (C) of section
3(a)(2) of SIPA shall apply with respect to
determinations of the FIPC in the same way the
subparagraphs apply with respect to
determinations of the SIPC and to brokers and
dealers referred to in such subparagraph (D).
(iii) Disclosure.--Section 3(a)(2)(D) of
SIPA shall apply to futures commission
merchants in the same way the section applies
to brokers and dealers referred to in such
section.
(2) Powers.--The FIPC shall have all the powers conferred
on the SIPC.
(3) Board of directors.--
(A) Functions.--The FIPC shall have a Board of
Directors which, subject to the provisions of this Act,
shall determine the policies which shall govern the
operations of FIPC.
(B) Number and appointment.--The Board of Directors
shall consist of 7 persons as follows:
(i) 1 director shall be appointed by the
Secretary of the Treasury from among the
officers and employees of the Department of the
Treasury.
(ii) 1 director shall be appointed by the
Board of Governors of the Federal Reserve
System from among the officers and employees of
that Board.
(iii) 5 directors shall be appointed by the
President, by and with the advice and consent
of the Senate, as follows:
(I) 3 directors shall be selected
from among persons who are associated
with, and representative of different
aspects of, the futures industry, not
all of whom shall be from the same
geographical area of the United States.
(II) 2 directors shall be selected
from the general public from among
persons who are not associated with a
futures commission merchant or a
contract market, or similarly
associated with any self-regulatory
organization or other futures industry
group, and who have not had any such
association during the 2 years
preceding appointment.
(C) Chairman and vice chairman.--The President
shall designate a Chairman and Vice Chairman from among
those directors appointed under subparagraph
(B)(iii)(II).
(D) Terms.--
(i) In general.--Except as provided in
clauses (ii) and (iii), each director shall be
appointed for a term of 3 years.
(ii) Initially appointed members.--Of the
directors first appointed under subparagraph
(B)--
(I) 2 shall hold office for a term
expiring on December 31, 2014;
(II) 2 shall hold office for a term
expiring on December 31, 2015; and
(III) 3 shall hold office for a
term expiring on December 31, 2016,
as designated by the President at the time they
take office. The designation shall be made in a
manner which will assure that no 2 persons
appointed under the authority of the same
subclause of subparagraph (B)(iii) shall have
terms which expire simultaneously.
(iii) Vacancies.--A vacancy in the Board
shall be filled in the same manner as the
original appointment was made. Any director
appointed to fill a vacancy occurring prior to
the expiration of the term for which the
predecessor of the director was appointed shall
be appointed only for the remainder of the
term. A director may serve after the expiration
of the term for which appointed until the
successor of the director has taken office.
(E) Compensation.--All matters relating to
compensation of directors shall be as provided in the
bylaws of the FIPC.
(4) Meetings of board; bylaws and rules.--Subsections (d)
and (e) of section 3 of SIPA shall apply with respect to the
FIPC and the Commission in the same way the subsections apply
with respect to the SIPC and the Securities and Exchange
Commission.
(b) FIPC Fund.--
(1) In general.--The FIPC shall establish, and make
deposits into and payments from, an ``FIPC fund'' (in this Act
referred to as the ``fund'') in the same manner in which the
SIPC has established, and is authorized to make deposits into
and payments from, the SIPC fund.
(2) Assessments.--The FIPC shall impose on its members
assessments subject to the same rules that apply to the
imposition by the SIPC of assessments on the members of the
SIPC.
(c) Other Provisions.--Sections 5 through 16 of the SIPA shall
apply with respect to the FIPC and the members, directors, officers,
and employees of the FIPC, the Commission, the FIPC fund, futures
commission merchants and their affiliates, futures contracts, futures
transactions, customers, and debtors in the same way the sections apply
with respect to the SIPC and the members, directors, officers, and
employees of the SIPC, the Securities and Exchange Commission, the SIPC
fund, persons registered as brokers or dealers (as defined in section
16(12) of the SIPA) and their affiliates, securities, securities
transactions, customers (as defined in section 16(2) of the SIPA), and
debtors (as defined in section 16(5) of the SIPA), respectively.
(d) Definitions.--In this section:
(1) Commission.--The term ``Commission'' means the
Commodity Futures Trading Commission.
(2) Contract market.--The term ``contract market'' means a
board of trade designated as a contract market under the
Commodity Exchange Act.
(3) Futures contract.--The term ``futures contract'' means
a contract of sale of a commodity for future delivery, within
the meaning of the Commodity Exchange Act.
(4) Futures commission merchant.--The term ``futures
commission merchant'' has the meaning given the term in section
1a(28) of the Commodity Exchange Act.
(5) SIPA.--The term ``SIPA'' means the Security Investors
Protection Act of 1970.
(6) SIPC.--The term ``SIPC'' means the Security Investors
Protection Corporation.
(7) SIPC fund.--The term ``SIPC fund'' means the fund
established under section 4(a)(1) of the SIPA.
SEC. 3. SUITABILITY RULES.
(a) In General.--The Commodity Exchange Act (7 U.S.C. 1 et seq.) is
amended by inserting after section 4t the following:
``SEC. 4U. SUITABILITY RULES.
``(a) In General.--
``(1) Recommendations must be suitable for the customer.--A
futures commission merchant shall not recommend a transaction
or investment strategy involving a contract of sale of a
commodity for future delivery, unless the futures commission
merchant has a reasonable basis to believe that the transaction
or investment strategy is suitable for the customer, based on
the information obtained through the reasonable diligence of
the futures commission merchant to ascertain the customer's
investment profile. A customer's investment profile includes,
but is not limited to, the customer's age, other investments,
financial situation and needs, tax status, investment
objectives, investment experience, investment time horizon,
liquidity needs, risk tolerance, and any other information the
customer may disclose to the futures commission merchant in
connection with the recommendation.
``(2) Safe harbor in certain cases.--A futures commission
merchant is deemed to comply with paragraph (1) in the case of
a customer with an institutional account, if--
``(A) the futures commission merchant has a
reasonable basis to believe that the customer is
capable of evaluating investment risks independently,
both in general and with regard to particular
transactions and investment strategies involving a
contract of sale of a commodity for future delivery;
and
``(B) the customer affirmatively indicates that it
is exercising independent judgment in evaluating the
recommendations of the futures commission merchant.
``(b) Applicability With Respect to Certain Agents.--If a customer
with an institutional account has delegated decisionmaking authority to
an agent, subsection (a) shall be applied with respect to the agent.
``(c) Institutional Account Defined.--In this section, the term
`institutional account' means the account of--
``(1) a bank, savings and loan association, insurance
company or registered investment company;
``(2) an investment adviser registered with the Securities
and Exchange Commission under section 203 of the Investment
Advisers Act or with a State securities commission (or any
agency or office performing like functions); or
``(3) any other person (whether a natural person,
corporation, partnership, trust or otherwise) with total assets
of at least $50,000,000.
``(d) Penalties.--The Commission may impose 1 or more of the
following sanctions on a person found by the Commission to have
violated this section or to have neglected or refused to comply with an
order issued by the Commission under this section:
``(1) Censure.
``(2) A fine.
``(3) Expulsion of the person from, or revocation of the
membership of the person in, a registered entity.
``(4) Suspension for a definite period or a period
contingent on the performance of a particular act, or
revocation, of the registration of the person under this Act
with the Commission as a futures commission merchant.
``(5) Suspension or bar of the person from association with
any other futures commission merchant.
``(6) A temporary or permanent cease and desist order
against the person.
``(7) Any other fitting sanction.''.
(b) Effective Date.--Within 6 months after the date of the
enactment of this Act, the Commodity Futures Trading Commission shall
issue regulations for the implementation of the amendment made by
subsection (a).
SEC. 4. REVIEW OF PROOF OF CLAIMS RULES.
(a) In General.--The Commodity Futures Trading Commission shall
review the guidelines for establishing account classes and determining
the basis for pro rata shares under, and the sample claim form set
forth in, part 190 of title 17, Code of Federal Regulations, and
consider the desirability of allowing use of a set date for valuation
purposes rather than the date of actual liquidation of positions.
(b) Report to the Congress.--Within 1 year after the date of the
enactment of this Act, the Commodity Futures Trading Commission shall
submit to the Congress a written report that contains the findings of
the Commission with respect to the matters referred to in subsection
(a), and includes such changes to the regulations in such part as the
Commission deems appropriate.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Agriculture.
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