Wednesday, October 27, 2010

New Information on the CFTC Administrative Law Judge Mess

Michael Hiltzik has a column in the Los Angeles Times about CFTC Administrative Law Judge Painter, which advances the CFTC ALJ story.

Hiltzik says he has spoken with Painter and found him “perfectly lucid.” He also writes that “Douglas Painter, a Los Angeles attorney [and Judge Painter's son], contends that Ritter overmedicated his father in preparation for the Alzheimer's tests and tried to isolate him from his friends and family, and that no one else has reported seeing the symptoms in his father that Ritter [his wife] reports.”

While Hiltzik effectively admits to being an admirer of Painter because of his actions in the past, he also presents Elizabeth Ritter’s side of the story. “She [Ritter] says Painter's son, Douglas, and other relatives improperly removed him from the center, got him a lawyer to file for divorce, and have kept him on the move cross-country to keep him isolated and disoriented.” Hiltzik also quotes her lawyer, Kim Viti Fiorentino as saying, “Elizabeth just wants what's best for him to protect his well-being and his dignity.” According to the article, Painter’s lawyer said in response to that: “He's in full control of his affairs, and if he needs assistance he can make his own choices.”

From this, we can infer that Painter is probably in the Los Angeles area. Also, this family law case complicates an already messy situation at the CFTC, given Painter’s charges against the other CFTC ALJ, Bruce Levine.

Some think that the CFTC will do its best to sweep this under the rug. For example, see this post at the Seeking Alpha website.

Evidence that the CFTC wants this to go away is on the agency’s website. The CFTC has issued an order transferring six of the seven reparation cases that Painter wanted assigned to an ALJ from another agency to Bruce Levine. The order states that Painter “lacks authority to make this unusual request.” (It is not clear from the document what will happen or has happened to the seventh case Painter wanted reassigned to an outside ALJ -- An Li v. Forex Capital Market, LCC, 09-R054.)

While press coverage of this issue has been spotty, it seems likely that it will not go away as quietly as some might want. At a minimum, lawyers involved in CFTC reparation cases may want to raise questions about either Levine or Painter if they believe it serves their clients' interests. In this connection, Hiltzik writes: “Steven Berk, an investor protection attorney in Washington, says, ‘It's an open secret among my brethren that if you get Levine, he's not going to rule for the investor.’”

In addition, some in Congress may want to look into this matter, and some CFTC commissioners may not be all that happy with Levine. For example,  Hiltzik notes that, in 2007, “the CFTC concluded that Levine committed ‘procedural errors’ and ‘severely prejudiced’ an investor in his $74,000 complaint against a futures broker. The commission awarded the investor more than $32,000.”

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