Brian Beutler October 22, 2010, 11:37 AM

Is it possible that for nearly 20 years, one of the two administrative judges presiding over investor complaints at the Commodity Futures Trading Commission has followed through on a secret vow to rule on the side of financial firms and professionals against individual investors?

On his way out the door last month, retiring judge George Painter levied that very charge against his now-former colleague, Bruce Levine. “On Judge Levine’s first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant’s favor,” Painter wrote in an order. “A review of his rulings will confirm that he fulfilled his vow.”

(Wendy Gramm, a Republican appointee, is the wife of former Senator, and financial deregulator, Phil Gramm, neither of whom would comment for this story.)

Painter requested that the CFTC not assign his pending cases to Levine who, he wrote, “in the cynical guise of enforcing the rules, forces…complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case.”

For reasons unclear, the CFTC released Painter’s memo this month, but declined, along with other principals, to comment on the story. As a result reporters have been left thus far to contend with old news stories, and misdirection, making it difficult to assess the situation.

Nearly 10 years ago, the Wall Street Journal ran a story about Levine with a headline that bolsters Painters accusation. “If You’ve Got a Beef With a Futures Broker, This Judge Isn’t for You —- In Eight Years at the CFTC, Levine Has Never Ruled In Favor of an Investor.”

In nearly 180 cases to that point, the Journal found, Levine had never ruled in favor of an investor. The only exceptions were a small handful of cases in which a failed didn’t show up to defend itself. In its story, the Journal documented several questionable rulings and actions, and made clear that his record has raised eyebrows for some time.

But that’s not where the story ends. In what was likely no coincidence, the Wall Street Journal ran a separate piece on Painter himself yesterday. According to the story, the 83 year old Painter has been diagnosed with dementia, and, according to his wife, presided over cases while struggling with alcoholism and mental illness.

Painter’s wife, from whom he is seeking a divorce, is seeking guardianship over him, citing his health and erratic behavior. But Painter’s son and niece are interceding, claiming Painter exhibits no sign of mental problems, and citing a 30-question medical test he took earlier this year, which found him mentally competent.

On Capitol Hill, the House and Senate Agriculture oversee the CFTC. Spokespeople for those committees could not be reached for comment before publication. The CFTC is an independent agency tasked with protecting the public from fraud in futures trading. Pursuant to the recently-enacted Wall Street reform bill, the agency will soon enjoy greater regulatory power over the firms that sell the instruments that led to the financial crisis in 2008.

Read Painter’s entire notice and order here.

CFTC, Commodity Futures Trading Commission, Financial Crisis, Financial Reform, Fraud