Lost liquidity may be the least of CFTC's worries

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Whenever proposals to change regulatory rules surface, they're almost guaranteed to meet the same reaction from both sides of the argument. Go too far, and you run the risk of driving driving away market liquidity. Don't go far enough, and fraud and manipulation will run rampant.

But these concerns hardly stack up to the warnings of one Michael Manley, who wrote the Commodity Futures Trading Commission during its recent comment period on energy position limits.

Without delving into reasons other than "'Capital' and its mandated affects [sic] upon this nation," Manley predicted a one-in-three "population reduction" within the next five to 15 years.

Any agency can expect to get letters like this among the stacks of serious, lawyerly comments; maybe it's a good thing, a reminder that the world keeps turning out there.

"In June 20008, I wrote a brutal letter to the CFTC about their complacency by allowing fraud-manipulation in the futures markets," Manley wrote in a letter tucked away in 631 pages of comments on public record. "As expected this letter was ignored; so now, since you are still untouched with their corruption, I will now hand you its horrible highlights."

CFTC's actions (For good? For bad?) "will directly trigger" another wave, reducing the nation's population by two out of three people, with a 20% probability, he predicted.

"In your [acceptance] speech you committed yourself to stop corruption, fraud, and manipulation in the commodity markets," Manley wrote, addressing Chairman Gary Gensler. "I hope you succeed so I may applaud you. But if you fail through bad action or inaction, this letter will give you ghastly glimpses of how much destruction will be inflicted upon the population of this country."

Manley's firm or affiliation -- along with some choice "ghastly glimpses" -- were not revealed.

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This page entry was written by Jessica Marron and was published on August 28, 2009 4:51 PM ET.

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