Fraudulent trading within the commodity and futures markets is on the rise. In 2018 alone, The U.S Commodities Futures Trading Commission (CFTC) reported the filing of 83 cases with over $950 million in fines and monetary sanctions. If you suspect fraud after a commodity’s transaction, it is vital to seek commodities litigation services that may help you argue the case in court or during the arbitration.
What Is A Commodity?
Commodity refers to any goods sold in its purest form. It should not be altered or reformed to a new product. This definition may cover grains, oil, livestock, precious metals, and even natural gas. The CFTC guidelines consider an item to be a ‘commodity’ if:
- It’s still in the raw state from an agricultural perspective.
- It is usable upon delivery.
- Its price varies, making it marketable.
Commodities futures trading is an investment option that offers the buying and selling of contracts for the purchase of commodities in the future. The trading is highly unpredictable, usually recommended for the savviest, less risk-averse traders. With the high risk attached, the industry is prone to scam and fraud, necessitating many to seek commodities litigation services.
Regulation of Commodities Futures Trading
The industry is highly regulated under the federal Commodities Futures Trading Commission that helps curtail incidences of fraud. The commission operates under the statutory framework of the Commodities Exchange Act (CEA), giving it the mandate to establish regulatory guidelines within the industry.
If you suspect fraud and manipulation, a commodities attorney can help you file an official complaint to the CFTC. The attorney will also represent you as the whistleblower and can help you bring to justice the perpetrators of the scam.
Are Cryptocurrencies a Commodity?
The legal definition of cryptocurrencies brings confusion to their classification as either currency, commodity, or securities. There are over 1500 virtual currencies within the United States, with the most well-known being Bitcoin. In 2015, the CFTC classified cryptocurrencies as a commodity under the U.S Commodities Exchange Act after winning the McDonnell litigation.
Three more cases have been ruled in CFTC’s favor asserting their definition of a token as a commodity. The rulings have enhanced the scope of CFTC as the commission that investigates and combats fraud in the virtue currencies used in the futures markets.
What Do You Do If You Suspect Fraud?
The scam artists usually target less savvy investors and entrap them with promises of unrealistic return rates and minimal risk. The two components are hard to find in any market-based investment. If you find a company giving a guarantee for ‘quick money,’ it is probably best you seek commodities legal services to ensure that you don’t fall into a trap.
Besides, fraud in the precious metal and crude oil markets are increasingly common. The scammers typically invite investors to pool their money or offer a great deal upfront, two major red flags of a scam. Consulting a commodities lawyer may help you avoid solicitation by scam artists.
Even with the tight regulation of the CFTC under the Commodities Exchange Act, scams and fraud are common within the industry. Seeking commodities litigation services presents an opportunity to go after the fraudsters within the futures markets.