March 17, 2015

Warren and Cummings Seek Further Information on CFTC Commissioner's Possible Conflicts of Interest

Washington, D.C. - Today, United States Senator Elizabeth Warren (D-Mass.), Ranking Member of the Subcommittee on Economic Policy, and Rep. Elijah E. Cummings (D-Md.), Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Commissioner J. Christopher Giancarlo of the Commodity Futures Trading Commission (CFTC) following up on their previous request for information related to potential conflict of interest concerns stemming from the Commissioner's prior employment with the financial services firm the GFI Group. The members noted that Commissioner Giancarlo’s response to their initial inquiry “failed to answer a number of key questions and failed to provide any of the documents we requested.”

In their initial February 20 inquiry, Warren and Cummings expressed concerns about the timing of Commissioner Giancarlo's post-confirmation divestiture of GFI stock, much of which occurred in rapid succession over three days when it was at a five-year high, deviating from the original divestiture plan.  The letter also highlights possible conflicts of interest stemming from efforts to acquire GFI by CME Group Inc. and BGC Partners Inc., firms that may have substantial business before the CFTC. These two companies engaged in a bidding war for GFI, resulting in a substantial increase in the GFI stock price before Commissioner Giancarlo sold his shares. 

The members explain in today’s letter that Commissioner Giancarlo “failed to provide us with any explanation or documents reflecting how or why a ‘mistake’ occurred in your Rule 105b-1 plan for divestiture of your GFI stock, and how your deviation from this plan resulted in your sale of much of this stock in the days immediately after it approached or reached a five-year high.” 

Warren and Cummings also state that while they “are pleased that, in response to the recent acquisition of GFI by BGC Partners, you are updating your ethics agreement so you will not participate in any particular matter involving either entity ‘unless authorized … by CFTC ethics staff,’” the Commissioner’s response “failed to provide us with any information on the terms under which CFTC ethics staff could allow you to participate in matters involving BGC, and you did not indicate whether you intend to participate in matters related to the CME Group.”

The members requested a briefing from Commissioner Giancarlo and reiterated their request that he provide copies of his Employment Agreement with GFI and his CFTC Ethics Agreement; all versions of his trading plan for GFI stock and how mistakes were identified; steps he has taken to avoid any conflict of interest; and how he will handle CFTC actions that may affect the CME Group or BGC Partners.

A copy of the letter is available here.