[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR31.5]

[Page 351-352]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 31_LEVERAGE TRANSACTIONS--Table of Contents
 
Sec.  31.5  Unlawful conduct.

    (a) On and after April 13, 1984, it shall be unlawful for any 
person:
    (1) To offer to enter into, enter into or confirm the execution of a 
leverage contract to or with a leverage customer, or to solicit or 
accept a leverage customer's order for a leverage contract, or to accept 
any leverage customer funds from a leverage customer to enter into or 
maintain a leverage contract, unless the leverage commodity which is the 
subject of the leverage contract has been registered with the Commission 
in accordance with Sec.  31.6;
    (2) Except as provided in paragraph (a)(3) of this section, to offer 
to enter into, enter into or confirm the execution of a leverage 
contract to or with a leverage customer, or to solicit or accept a 
leverage customer's order for a leverage contract, or to accept any 
leverage customer funds from a leverage customer to enter into or 
maintain a leverage contract, unless that person is registered with the 
Commission in accordance with Sec.  3.17 of this chapter and that 
registration has not expired, been suspended (and the period of 
suspension has not expired) or been revoked; or
    (3) Except as provided in paragraph (a)(2) of this section, if such 
person is a natural person, to offer to enter into, enter into or 
confirm the execution of

[[Page 352]]

a leverage contract to or with a leverage customer, or to solicit or 
accept a leverage customer's order (other than in a clerical capacity) 
for a leverage contract, or to supervise any person or persons so 
engaged, unless that person is registered with the Commission in 
accordance with Sec.  3.18 of this chapter and that registration has not 
expired, been suspended (and the period of suspension has not expired) 
or been revoked.
    (b) On and after April 13, 1984, it shall be unlawful for any 
leverage transaction merchant to permit any natural person to become or 
remain associated with it as a partner, officer or employee (or in any 
similar status or position involving similar functions) in any capacity 
which involves the offering to enter into, the entry into, or the 
confirmation of the execution of a leverage contract with a leverage 
customer, or the solicitation or acceptance of a leverage customer's 
order (other than in a clerical capacity) for a leverage contract, or 
the supervision of any person or persons so engaged, if the leverage 
transaction merchant knew or should have known that the person was not 
registered with the Commission in accordance with Sec.  3.18 of this 
chapter or that the person's registration had expired, been suspended 
(and the period of suspension had not expired) or been revoked.
    (c) On and after November 10, 1986, it shall be unlawful for any 
person to offer to enter into, enter into or confirm the execution of a 
leverage contract to or with a leverage customer, or to solicit or 
accept a leverage customer's order for a leverage contract, or to accept 
any leverage customer funds from a leverage customer to enter into or 
maintain a leverage contract, unless the leverage commodity which is the 
subject of the leverage contract has been registered with the Commission 
in accordance with Sec.  31.6 of this part and involves silver bullion, 
gold bullion, bulk silver coins, bulk gold coins, or platinum. This 
paragraph shall not affect any rights or obligations arising out of any 
leverage contract involving any other leverage commodity that was 
entered into, or the execution of which was confirmed, before November 
10, 1986.
    (d) Denial, suspension, or revocation of registration of a leverage 
commodity. The failure or refusal of any leverage transaction merchant 
to comply with any of the provisions of the Act or any of the 
Commission's rules, regulations, or orders thereunder shall be cause for 
refusing to register a leverage commodity, for suspending registration 
of a leverage commodity for a period not to exceed six months, and for 
revoking registration of such leverage commodity with respect to that 
leverage transaction merchant. Any such denial, suspension, or 
revocation proceedings shall be conducted in accordance with the 
procedures set forth in sections 6 and 6(b) of the Act.

[49 FR 5528, Feb. 13, 1984, as amended at 54 FR 41078, Oct. 5, 1989; 59 
FR 5703, Feb. 8, 1994]