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grantman
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Three Elements of Manipulation

- Theodore Butler - Butler Research

I can't pretend to be an expert on the workings of the CFTC and while I have sympathy for the positions advocated by Mr. Butler, I have some questions. It would seem to me some authority has some discretionary ability to unilaterally and aribtrarily change margin requirements - does this authority on margin requirements reside with the CFTC or some other agency?

If it is the CFTC with this authority to set margin requirements I am curious why they seem to have such clear authority in this area and are willing to exercise it but seem to lack equivalent authority for setting position limits for short sellers. Or do they have this authority and they are just not exercising it? If anyone can provide some additional explanation to distinguish how/why the CFTC authority may differ between margin requirements and short positions - it would be appreciated. If the CFTC has authority for both, how might they justify exercising their authority on the margin side of the equation but not on short positions? That would seem to be selective enforcement that might be challengeable. Mr. Butler's article however does seem to suggest the CFTC may NOT have unilateral authority for setting position limits as he seems to suggest the CFTC would be required to commence some kind of independent action in court or in some administrative body to prove manipulation? Without knowing more the ability to selectively penalize parties in one kind of transaction while ignoring the other side seems to be unfair.

And if the CFTC has some already established some position limits then it is curious why they can choose to exercise their authority NOT to enforce the short position limits while they will exercise authority to enforce margin requirements. Can somebody provide enlightenment as to how/why the two situations are distinguishable since changing margin limits in mid stream penalizes parties exposed to such existing positions and it seems inconsistent in my mind that if the CFTC might have authority in that instance that they would not have similar existing authority or even discretion to set, and/or change and/or enforce overall position limits for short trades.

And if the CFTC does have existing authority on position limits for short trades could any such selective enforcement expose the CFTC to some kind of damages for abuse of authority or failing to exercise it fairly or something like that?

Also I am not familiar with the nature of the existing legal actions pending before the CFTC on such matters, but would an order of "Mandamus" be available to force the CFTC to take action on any already mandated requirements on position limits? I believe Mandanus is an action at common law that can be used to require an administrative body to perform its duties but I am far from expert on the concept to know whether it might be available in the current situation - so I would raise it as something somebody else pursing an action already - might be able to look into. Thanks.

Commented 4657 days ago

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Beginning of the headline :Excerpt from the Weekly Review for subscribers of January 7 – Finally, Commissioner Bart Chilton of the CFTC gave an interview this week with JimPuplava that should interest you.http://www.financialsense.com/financial-sense-newshour/guest-expert/2012/01/06/bart-chilton/concentrated-positions-have-the-ability-to-manipulate-markets A number of subscribers asked me if I would comment on what Commissioner Chilton had to say... Read More

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