CFTC Judge Allegations Should Concern Investors

“It’s an open secret among my brethren that if you get Levine, he’s not going to rule for the investor.”

–Steven Berk, an investor protection attorney in Washington

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Michael Hiltzik of the Los Angeles Times takes Judge Painter‘s CFTC accusation against his fellow judge Bruce Levine to a new level:

“It would be hard for the commission to claim it has been unaware of serious issues with Levine’s work. My search found three cases in which it overturned dismissals by Levine, sometimes with harsh words for his performance.

In 2007, for instance, the CFTC concluded that Levine committed “procedural errors” and “severely prejudiced” an investor in his $74,000 complaint against a futures broker. The commission awarded the investor more than $32,000.

In another case, the commission overruled Levine’s dismissal of an investor’s complaint twice before finally transferring the matter to Painter. He awarded the investor, a 75-year-old retiree, $47,627.

In a third case, the CFTC bounced a dismissal back to Levine with instructions to waive the procedural rule that prompted his dismissal. Levine dismissed it again, throwing in for good measure harsh words about the commission’s performance.”

In light of Judge George Painter’s contention of Levine’s vow to never to rule in an investor’s favor appears to be borne out by the record.

Indeed, as Hiltzik states, “When George H. Painter says the game is rigged against the small investor in Washington, I have reason to take him at his word.”

And Hiltzik expands:

“I first encountered Judge Painter nearly three decades ago, when he issued a number of stern rulings involving a Newport Beach investment operator I had been writing about.

The investment firm, Monex International, had been hawking illegal futures contracts, he ruled. In one case, he found that Monex had ignored a customer’s repeated pleas to cash out her deteriorating stake, and awarded her $20,000 in reparations.

When I reached Painter again last week, he didn’t seemed to have changed much. “It’s gone to hell,” he said, referring to the standing of the investor at the CFTC. “But it’s always been that way, hasn’t it? We’re not prosecuting the bad guys.” For the record: He sounded perfectly lucid . . .

Under normal circumstances, Painter’s view might be taken to heart by the bureaucratic establishment in Washington. It was regulatory agencies’ failures to look out for consumers that helped win enactment of a new consumer protection agency this year.”

The CFTC, which regulates the commodity futures markets, has very much been captured by the group it is charged with regulating. If you are an investor in commodities, you should expect rape and pillage as part of the “servicing” you get from the industry and its regulators.

I never thought I would say this, but the CFTC makes the absurd arbitration process for equities look almost fair by comparison.

Bottom line: Speculate in Futures with risk capital only, and assume that 1) you will lose most if not all of your monies; b) if you are wronged, you should not have any expectations of obtaining Justice through the CFTC judicial process.

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Source:
Retiring CFTC judge’s allegations should concern small investors
Michael Hiltzik
Los Angeles Times, October 26, 2010
http://www.latimes.com/business/la-fi-hiltzik-20101026,0,180301.column