,i #aacth ,,congress #ast ,session ,h4 ,r4 #cjji ,,in ,,the ,,house ,,of ,,representatives ,august #b1 #bjac ,mr4 ,capuano introduced the following bill2 which was referred to the ,committee on ,agriculture ,a ,,bill ,to protect investors in futures contracts4 #a4 ,short title ,this ,act may be cited as the ,futures ,investor ,protection ,act4 #b4 ,futures investors protection fund 7a7 ,futures investor protection corporation 7#a7 ,creation and membership 7,a7 ,creation ,there is established a nonprofit corporation to be known as the ,futures ,investor ,protection ,corporation 7in this ,act referred to as the ,,fipc71 which shall not be an agency or establishment of the ,united ,states ,government4 7,b7 ,membership 7i7 ,members of fipc ,the ,,fipc shall be a membership corporation the members of which shall be all persons registered under the ,commodity ,exchange ,act with the ,commission as a futures commission merchant1 other than persons whose principal business1 in the determination of the ,,fipc1 taking into account business of affiliated entities1 is conducted outside the ,united ,states and its territories and possessions4 7ii7 ,commission review2 additional members ,subparagraphs 7,b7 and 7,c7 of section #c7;a77#b7 of ,,sipa shall apply with respect to determinations of the ,,fipc in the same way the subparagraphs apply with respect to determinations of the ,,sipc and to brokers and dealers referred to in such subparagraph 7,d74 7iii7 ,disclosure ,section #c7;a77#b77;,d7 of ,,sipa shall apply to futures commission merchants in the same way the section applies to brokers and dealers referred to in such section4 7#b7 ,powers ,the ,,fipc shall have all the powers conferred on the ,,sipc4 7#c7 ,board of directors 7,a7 ,functions ,the ,,fipc shall have a ,board of ,directors which1 subject to the provisions of this ,act1 shall determine the policies which shall govern the operations of ,,fipc4 7,b7 ,number and appointment ,the ,board of ,directors shall consist of #g persons as follows3 7i7 #a director shall be appointed by the ,secretary of the ,treasury from among the officers and employees of the ,department of the ,treasury4 7ii7 #a director shall be appointed by the ,board of ,governors of the ,federal ,reserve ,system from among the officers and employees of that ,board4 7iii7 #e directors shall be appointed by the ,president1 by and with the advice and consent of the ,senate1 as follows3 7,i7 #c directors shall be selected from among persons who are associated with1 and representative of different aspects of1 the futures industry1 not all of whom shall be from the same geographical area of the ,united ,states4 7,,ii7 #b directors shall be selected from the general public from among persons who are not associated with a futures commission merchant or a contract market1 or similarly associated with any self-regulatory organization or other futures industry group1 and who have not had any such association during the #b years preceding appointment4 7,c7 ,chairman and vice chairman ,the ,president shall designate a ,chairman and ,vice ,chairman from among those directors appointed under subparagraph 7,b77iii77,,ii74 7,d7 ,terms 7i7 ,in general ,except as provided in clauses 7ii7 and 7iii71 each director shall be appointed for a term of #c years4 7ii7 ,initially appointed members ,of the directors first appointed under subparagraph 7,b7-- 7,i7 #b shall hold office for a term expiring on ,december #ca1 #bjad2 7,,ii7 #b shall hold office for a term expiring on ,december #ca1 #bjae2 and 7,,iii7 #c shall hold office for a term expiring on ,december #ca1 #bjaf1 as designated by the ,president at the time they take office4 ,the designation shall be made in a manner which will assure that no #b persons appointed under the authority of the same subclause of subparagraph 7,b77iii7 shall have terms which expire simultaneously4 7iii7 ,vacancies ,a vacancy in the ,board shall be filled in the same manner as the original appointment was made4 ,any director appointed to fill a vacancy occurring prior to the expiration of the term for which the predecessor of the director was appointed shall be appointed only for the remainder of the term4 ,a director may serve after the expiration of the term for which appointed until the successor of the director has taken office4 7,e7 ,compensation ,all matters relating to compensation of directors shall be as provided in the bylaws of the ,,fipc4 7#d7 ,meetings of board2 bylaws and rules ,subsections 7d7 and 7e7 of section #c of ,,sipa shall apply with respect to the ,,fipc and the ,commission in the same way the subsections apply with respect to the ,,sipc and the ,securities and ,exchange ,commission4 7b7 ,,fipc fund 7#a7 ,in general ,the ,,fipc shall establish1 and make deposits into and payments from1 an ,,fipc fund 7in this ,act referred to as the fund7 in the same manner in which the ,,sipc has established1 and is authorized to make deposits into and payments from1 the ,,sipc fund4 7#b7 ,assessments ,the ,,fipc shall impose on its members assessments subject to the same rules that apply to the imposition by the ,,sipc of assessments on the members of the ,,sipc4 7c7 ,other provisions ,sections #e through #af of the ,,sipa shall apply with respect to the ,,fipc and the members1 directors1 officers1 and employees of the ,,fipc1 the ,commission1 the ,,fipc fund1 futures commission merchants and their affiliates1 futures contracts1 futures transactions1 customers1 and debtors in the same way the sections apply with respect to the ,,sipc and the members1 directors1 officers1 and employees of the ,,sipc1 the ,securities and ,exchange ,commission1 the ,,sipc fund1 persons registered as brokers or dealers 7as defined in section #af7ab7 of the ,,sipa7 and their affiliates1 securities1 securities transactions1 customers 7as defined in section #af7b7 of the ,,sipa71 and debtors 7as defined in section #af7e7 of the ,,sipa71 respectively4 7d7 ,definitions ,in this section3 7#a7 ,commission ,the term ,commission means the ,commodity ,futures ,trading ,commission4 7#b7 ,contract market ,the term contract market means a board of trade designated as a contract market under the ,commodity ,exchange ,act4 7#c7 ,futures contract ,the term futures contract means a contract of sale of a commodity for future delivery1 within the meaning of the ,commodity ,exchange ,act4 7#d7 ,futures commission merchant ,the term futures commission merchant has the meaning given the term in section #a;a7#bh7 of the ,commodity ,exchange ,act4 7#e7 ,,sipa ,the term ,,sipa means the ,security ,investors ,protection ,act of #aigj4 7#f7 ,,sipc ,the term ,,sipc means the ,security ,investors ,protection ,corporation4 7#g7 ,,sipc fund ,the term ,,sipc fund means the fund established under section #d7;a77#a7 of the ,,sipa4 #c4 ,suitability rules 7a7 ,in general ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 is amended by inserting after section #dt the following3 #du4 ,suitability rules 7a7 ,in general 7#a7 ,recommendations must be suitable for the customer ,a futures commission merchant shall not recommend a transaction or investment strategy involving a contract of sale of a commodity for future delivery1 unless the futures commission merchant has a reasonable basis to believe that the transaction or investment strategy is suitable for the customer1 based on the information obtained through the reasonable diligence of the futures commission merchant to ascertain the customer's investment profile4 ,a customer's investment profile includes1 but is not limited to1 the customer's age1 other investments1 financial situation and needs1 tax status1 investment objectives1 investment experience1 investment time horizon1 liquidity needs1 risk tolerance1 and any other information the customer may disclose to the futures commission merchant in connection with the recommendation4 7#b7 ,safe harbor in certain cases ,a futures commission merchant is deemed to comply with paragraph 7#a7 in the case of a customer with an institutional account1 if-- 7,a7 the futures commission merchant has a reasonable basis to believe that the customer is capable of evaluating investment risks independently1 both in general and with regard to particular transactions and investment strategies involving a contract of sale of a commodity for future delivery2 and 7,b7 the customer affirmatively indicates that it is exercising independent judgment in evaluating the recommendations of the futures commission merchant4 7b7 ,applicability with respect to certain agents ,if a customer with an institutional account has delegated decisionmaking authority to an agent1 subsection 7a7 shall be applied with respect to the agent4 7c7 ,institutional account defined ,in this section1 the term institutional account means the account of-- 7#a7 a bank1 savings and loan association1 insurance company or registered investment company2 7#b7 an investment adviser registered with the ,securities and ,exchange ,commission under section #bjc of the ,investment ,advisers ,act or with a ,state securities commission 7or any agency or office performing like functions72 or 7#c7 any other person 7whether a natural person1 corporation1 partnership1 trust or otherwise7 with total assets of at least #ej1jjj1jjj4 7d7 ,penalties ,the ,commission may impose #a or more of the following sanctions on a person found by the ,commission to have violated this section or to have neglected or refused to comply with an order issued by the ,commission under this section3 7#a7 ,censure4 7#b7 ,a fine4 7#c7 ,expulsion of the person from1 or revocation of the membership of the person in1 a registered entity4 7#d7 ,suspension for a definite period or a period contingent on the performance of a particular act1 or revocation1 of the registration of the person under this ,act with the ,commission as a futures commission merchant4 7#e7 ,suspension or bar of the person from association with any other futures commission merchant4 7#f7 ,a temporary or permanent cease and desist order against the person4 7#g7 ,any other fitting sanction4 4 7b7 ,effective date ,within #f months after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall issue regulations for the implementation of the amendment made by subsection 7a74 #d4 ,review of proof of claims rules 7a7 ,in general ,the ,commodity ,futures ,trading ,commission shall review the guidelines for establishing account classes and determining the basis for pro rata shares under1 and the sample claim form set forth in1 part #aij of title #ag1 ,code of ,federal ,regulations1 and consider the desirability of allowing use of a set date for valuation purposes rather than the date of actual liquidation of positions4 7b7 ,report to the ,congress ,within #a year after the date of the enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall submit to the ,congress a written report that contains the findings of the ,commission with respect to the matters referred to in subsection 7a71 and includes such changes to the regulations in such part as the ,commission deems appropriate4