249 18 263 18 16 110 122 62 25.0 Other Services: Storage households goods... 2. 250 23 50 10 16 52 134 94 3 6 20 30 125 472 84 275 10 30 32 2 275 24 48 100 33 103 191 112 4 100 25 32 149 18 52 22 194 495 300 125 210 81 701 45 32 34 FY 1986 STAFFING REQUEST TO OMB Mr. WHITTEN. We note in your original request to OMB you requested 50-plus additional spaces. Please provide the job title, grade level, geographic location, and brief position description for each new position you requested. Ms. PHILLIPS. I will be happy to provide that information for the record. [The information follows: INCREASED STAFFING REQUEST ENFORCEMENT (30 STAFF-YEARS) Eleven of the new staff requested would be futures trading investigators. Four of these would be located in Washington D.C., three in Chicago, two in New York and two in Los Angeles. It is anticipated that the grades would be as follows: two 7s, two 9s, two 11s, two 12s and three 13s. Generally, futures trading investigators plan and conduct investigations of alleged violations of the Commodity Exchange Act. They evaluate the original request, complaint or allegation; identify issues and recommend the scope of the investigation; obtain facts and develop evidence; and prepare comprehensive analyses of the findings. Additionally, they may testify in administrative or court proceedings and provide assistance to other law enforcement agencies. Eleven of the requested staff would be attorneys. Six would be located in Washington, D.C., two in Chicago, two in New York and one in Los Angeles. Their grades would be as follows: three 1ls, two 12s, two 13s, two 14s, and two 15s. Their duties would include: litigation against illegal leverage firms, CPO/CTA fraud and illegal trade practices. They would provide education and assistance to state law enforcement personnel primarily in the area of commodity fraud. Moreover, they would enforce compliance with Commission and court orders to protect the public from commodity law violators and to protect the integrity of the futures markets. Six of the staff would be clerk-typists at the GS-4/5 level. They would be located in Washington, D.C. (3), Chicago (1), New York (1) and Los Angeles (1). Their duties would include: typing a variety of correspondence and technical material such as complaints, memoranda of points and authorities, proposed orders, affidavits and pleadings; answering the telephone and receiving visitors; and distributing correspondence and making appointments. Two of the requested staff would be an administrative officer, grade 12, an assistant administrative officer, grade 9, both located in Washington, D.C. These individuals would serve as the focal point for all administrative actions in the Division of Enforcement; e.g., budget, travel, personnel, procurement, etc. REGISTRATION, AUDITS AND CONTRACT MARKETS (3 STAFF-YEARS) One of the staff requested would be a futures trading specalist, grade 12, located in Chicago. The duties of this individual would primarily be to conduct trade practice investigations and rule enforcement reviews. Two of the additional staff would be auditors, grade 5 and 12, located in Washington, D.C. and Chicago. Their duties would include sales practice reviews of LTMs, CPOs and CTAs and investigation audits of firms with financial emergencies. MARKET SURVEILLANCE, ANALYSIS AND RESEARCH (4 STAFF-YEARS) All four of the requested staff would be economists located in Washington, D.C. at the following grade levels: two 7s, one 12 and one 13. The duties of these economists would include: surveillance of futures and options contracts to detect the possibility of manipulation, congestion, supply disruptions, etc.; review of futures and options contract designation applications and proposed rule changes; and review of existing futures contracts with the objective of improving their economic performance and avoiding market disruptions. LEGAL COUNSEL (3 STAFF-YEARS) Two of the staff requested would be attorneys, grades 11 and 14, assigned to the Office of General Counsel in Washington, D.C. Their duties would include: review of appeals of reparation and enforcement cases and litigation of Commission matters before the District Court and the Court of Appeals. The other staff would be a secretary, grade 6, located in Washington, D.C. to provide legal secretarial support for the Office. PROCEEDINGS (2 STAFF-YEARS). These two individuals would be legal interns, grade 7, assigned to the Office of Proceedings in Washington, D.C. These interns would provide legal support for the administrative law judges with the primary duties of legal research and the preparation of drafts of decisions. CENTRALIZED ADMINISTRATION (6 STAFF-YEARS) One of the staff requested would be a budget analyst, grade 5, assigned to the Operations and Budget Section in Washington, D.C. The addition of this person would raise the budget analysis staff to a total of three. He/she would be used to track and analyze critical expense areas. One of the requested staff would be a grade 14 data base administrator located in the Washington, D.C. ADP Section. This individual would define the integrated information needs of the Commission's program and administrative offices. From this information, he/she would structure a CFTC data base, define the rules for its up dating and access, and develop the necessary information retrieval tools for access by the program/administrative offices. Two of the staff would be computer systems programmers, grades 11 and 13, located in Chicago. Their duties would include the generation, maintenance and optimization of the CFTC's IBM MVS operating system software and related program products. Two of the additional staff would be computer operators, grades 4 or 5, located in Chicago. These staff would operate the AS-5000 and its peripheral equipment so that the present single shift operation could be expanded to two shifts. AGENCY DIRECTION (3 STAFF-YEARS) The three additional staff requested for this program would be attorney-advisors, grade 15, located in the offices of the Commissioners in Washington, D.C. They would provide legal assistance to the Commissioners primarily in the areas of Commission orders and legal issues involving reauthorization. With the addition of these attorneys, each Commissioner would have a total support staff of three. ENFORCEMENT RESOURCES DEVOTED TO LEVERAGE LITIGATION Mr. WHITTEN. How many total staff years has the Commission devoted to litigation involving the firms that comprise the leverage industry? Ms. Phillips. During FY 1984, the Enforcement Division devoted approximately one staff-year to leverage litigation. This does not include the time spent by other divisions supplying expert testimony in these cases, Division Directors' or Commissioners' review of these cases or the time of the Administrative Law Judges. STATUTORY TIME CONSTRAINTS Mr. WHITTEN. In light of the rather significant personnel reductions proposed for fiscal year 1986 and the high potential to miss the statutory time constraints for processing new contract and rule amendment filings, what if anything could you do or what options do you have if you should miss the statutory time constraints? Ms. PHILLIPS. The Futures Trading Act of 1982 added statutory deadlines of one-year for Commission review of contract market designation applications and six months for Commission review of proposed amendments of exchange rules. The deadline for review of contract market applications can be tolled by the Commission if the application is materially incomplete. The statute does not specify what would happen if the Commission were unable to comply with the deadline. In contrast, the only recourse for addressing incomplete rule amendment proposals is to remit them to the exchange, or to obtain a voluntary exchange extension of the statutory time period. The deadline for approval of proposed exchange rule amendments provides that after the deadline has passed, the exchange can put the rule amendment into effect without Commission approval. If the Commission were to miss the statutory deadlines it could request voluntary extensions from the exchanges. Alternatively, the Commission could, if it were satisfied that the statutory criteria were met, grant designation based upon a more limited review of an application and conduct in-depth analysis of the contract after problems became obvious. Similarly, the Commission could permit exchange rule amendments to be put into effect due to passage of time, reviewing such rules only if problems arose. Such an approach would necessarily expose the public to greater risks of market disruptions because many potential problems with contract terms currently are discovered and corrected through the Commission's prior, in-depth review of applications for contract market designation and proposed exchange rule amendments. PILOT STAGE FOR OPTIONS Mr. WHITTEN. In your explanatory notes you state that the pilot program for options on non-agricultural futures will be out of the pilot stage by fiscal year 1986, and that the pilot programs for options on physicals and options on agricultural futures will continue in the pilot stage during fiscal year 1986. What will change between being in the pilot stage and out of the pilot stage? Ms. PHILLIPS. The main difference between the pilot and nonpilot phase of the options program is that as part of the pilot program only a limited number of options are permitted to be traded. However, the pilot program has made additional demands on staff resources in the analysis and justification of the option regulations. Once the program becomes permanent, fewer changes in regulations governing options trading are anticipated, but an increased number of applications for designation can be expected. Prior to making the program permanent, however, the Commission will review the rules for the pilot program to determine if any changes need to be made. OPTIONS ON PHYSICALS Mr. WHITTEN. Please list for us all the options on the types of physicals. Ms. PHILLIPS. I will be happy to provide that information for the record. [The information follows:] Amex Commodities Corporation options on physical gold bullion. CTA/CPO FRAUD FY 84 Mr. WHITTEN. On page 3 of your explanatory notes you state that a substantial portion of the Enforcement Division's resources were devoted to commodity pool and trading advisory fraud during fiscal year 1984. How much of the Enforcement's resources were dedicated to this effort? Ms. PHILLIPS. During fiscal year 1984, 25.2% of the total hours spent on litigation and investigation by the Division of Enforcement were devoted to commodity pool operator and commodity trading advisor fraud. Mr. WHITTEN. What deficiences have been uncovered in this particular area? Ms. Phillips. Investigations and litigation conducted by the Division of Enforcement during FY 1984 into the area of commodity pool operator and commodity trading advisor fraud included the issues of cheating and defrauding customers, embezzlement and conversion of customer funds, false or ficticious account statements showing profitable trading, inadequate or fraudulent disclosure documents, misrepresentation of track records, fraudulent advertising, solicitation fraud, failure to issue units in commodity pools to investors, failure to operate a pool as a separate entity, commingling of pool assets, and failure to keep required books and records and denial of access to those records. CTA/CPO FRAUD FY 85 Mr. Whitten. What is your best estimate for the resources expected to be devoted to CPOs and CTAs during fiscal year 1985? Ms. PHILLIPS. I would estimate that during fiscal year 1985 the Division of Enforcement will devote approximately 20% of its time spent on litigation and investigation to the area of commodity trading advisor and commodity pool operator fraud. During the first quarter of fiscal year 1985, Enforcement devoted 17% of its total hours spent on litigation and investigation to this area. REGISTRATION TRANSFER Mr. WHITTEN. What difficulties to date have been observed in the transfer of registration applications to NFA? Ms. PHILLIPS. Since the transfer of virtually all of the Commission's registration functions to NFA on December 3, 1984, the Commission has observed problems in the areas of NFA's registration program. This is to be expected in view of the new systems and personnel being utilized. For example, the registration applications and related documents are not being processed in a timely manner. Although a certain amount of delay may be attributed to the backlog which developed during the transfer, an initial review of the program by the Commission's Division of Trading and Markets in its oversight capacity concluded that the processing delays are substantially caused by the relative inexperience of the NFA registration support staff and inefficiencies in NFA's computer software. Time and training should cure the first problem. With respect to the computer software, the Division found that it does not permit the computer to process the applications automatically as the Commission's own computer system does. Consequently, processing an application requires a greater number of manual procedures. Therefore, although the NFA registration staff of 70 is more than twice the size of the Commission's former registration staff, the staff is not able to keep pace with the volume of registration documents received. The division staff has discussed these problems with NFA and is working with NFA in making the necessary changes to its software. A second area where the Commission has noted problems in NFA's registration program is in responding to requests for documents and certifications of registration status. The Commission, in ។ |