February 20, 2015

Warren and Cummings Request Information About CFTC Commissioner's Possible Conflicts of Interest

Washington, D.C. (Feb. 20, 2015) - 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). The letter requests information related to potential conflict of interest concerns stemming from the Commissioner's prior employment with the financial services firm GFI, Inc.

Mr. Giancarlo was confirmed by the Senate in June 2014. In the letter, Warren and Cummings expressed concerns about the timing of Commissioner Giancarlo's post-confirmation divestiture of GFI stock, which occurred in rapid succession over three days when it was at a five-year high. This sale deviated from the original divestiture plan established after Commissioner Giancarlo joined the CFTC. According to press reports, Commissioner Giancarlo's office said that the sales were the result of a mistake in the design of the trading 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. The letter notes that because the GFI stock price rose rapidly after a bidding war between CME Group and BGC Partners, Commissioner Giancarlo appeared to gain over $100,000 in additional profits from his sale of GFI stock. However, the Commissioner's current ethics agreement does not require recusal from CFTC business with either firm.

Warren and Cummings explained in the letter that "(u)nder the Dodd-Frank Act, the CFTC is playing an increasingly important role in regulating over-the-counter derivatives. It is critical that the CFTC Commissioners and staff avoid conflicts of interest or the appearance of conflicts of interest."

The Members requested that Commissioner Giancarlo 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.