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8 Admin. L.J. Am. U. 97 (1994-1995)
Freedom of Markets or License to Loot: Proposed Commodity Futures Trading Commission Regulation 1.35

handle is hein.journals/adminlj8 and id is 109 raw text is: FREEDOM OF MARKETS OR LICENSE TO LOOT:
PROPOSED COMMODITY FUTURES TRADING
COMMISSION REGULATION 1.35
Table of Contents
Introduction  ..  .. .. ..  ..  ..  ..  ..  .. ..  ..  .. ..  ..  ..  ..  .  ..  97
I.  C FTC  . . . ... . . . . . . .. . .. . .. . . . . .. . .. . . .. . .  100
II. The History of the Proposed Amendment .............. 103
A.   Background Concerning Account Identification ...... .103
B.   Chicago Mercantile Exchange Contract Market
Rule  536  ..............................             104
III.  CFTC  Regulation  1.35  ........................         108
A.   Elements of Proposed Amendment to
Regulation  1.35  .........................          108
B.   Proponents' Lukewarm Reception to Regulation 1.35
Amendments    ...........................            111
C.   Other Arguments for Not Using Account Identifiers . . . 113
D.   Intermarket Trading Strategy Is Never Defined ....... 115
E.   Securities and Futures Markets Are Different ........ 116
F.   No Fiduciary Duty for Exact Equivalency .......... 118
G.   The Audit Trail Will Be Severely Injured .......... 119
H.   Institutional Participants Are Not Sophisticated ....... 121
IV. Future Consequence If Regulation 1.35 Is Implemented .... 122
INTRODUCTION
On October 20, 1993, Kemper Financial Services, a high profile mu-
tual fund manager, settled charges made by the Commodity Futures
Trading Commission (CFTC or Commission) and the Securities and
Exchange Commission (SEC) that Kemper misallocated trades made in
the securities and futures markets.' In paying $9.5 million in fines and
penalties,2 Kemper neither admitted nor denied allegations that one of
its portfolio managers, Thomas Richards, delayed designating for whose
account he was trading until after the trades were concluded.3 Richards
then allegedly proceeded to allocate more favorable trades to the
1. In the Matter of Kemper Financial Servs., CFTC Docket No. 94-3, 1993
CFTC LEXIS 314, at *6-7 (Oct. 20, 1993).
2. Id. at *11.
3. Id. at *6-7.

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