WASHINGTON (CN) – Swap dealers and major swap participants must supervise, and are liable for the actions of, people they hire to solicit swap trades on their behalf, under new rules proposed by the Commodity Futures Trading Commission.
The Dodd-Frank Wall Street Reform and Consumer Protection Act and existing CFTC rules hold dealers and other regulated entities liable for the actions of their employees who solicit trades.
The proposed rules extend to “associated persons,” who could be independent contractors or even employees of another firm, who can be associated with more than one dealer or market participant.
The rule makes the sponsors of an associated person jointly and severally liable for their actions so that in a dispute where the counterparties are both associated with the same person, neither could disclaim responsibility for their actions.
The commission will accept public comments on the proposed rule until August 14.
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