January 21, 2021

Volume XI, Number 21

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After a Year of Record-Breaking Enforcement Fines, the CFTC Provides Guidance on the Recognition of Cooperation

Weeks after touting its record-breaking enforcement haul, the Commodity Futures Trading Commission (“CFTC”) Enforcement Division issued a memorandum providing guidance for enforcement staff to use when recommending the recognition of cooperation, self-reporting and remediation during the enforcement process. The historic enforcement performance demonstrated that the CFTC can wield a large stick, but the latest guidance is aimed at recognizing efforts in resolving violations.

“As our historic performance during Fiscal Year 2020 demonstrates, the CFTC does not hesitate to take strong enforcement action when necessary to ensure compliance with federal law,” said Chairman Heath P. Tarbert. “The CFTC also will not hesitate to recognize publicly when a registrant or market participant engages in meaningful acts of self-reporting of misconduct, cooperates during investigations, and remediates. Ultimately, the purpose of the CFTC’s enforcement program is to foster a culture of compliance within the marketplaces we regulate. This staff guidance furthers that goal by ensuring the public understands the levels of recognition the CFTC may provide in its enforcement orders.”

The recent enforcement guidance continues the CFTC’s trend towards increased transparency into the Commission’s enforcement process. In September, the CFTC announced the issuance of new, public guidance on evaluating the adequacy of corporate compliance programs. In May, the CFTC formally issued guidance regarding the Enforcement Division’s decisions to recommend the imposition of civil monetary penalties, and last year the Enforcement Division issued its first public Enforcement Manual.

The latest guidance concentrates primarily on the language to be used in Commission settlement orders. This guidance does not change the Enforcement Division’s existing practices regarding how it will evaluate self-reporting, cooperation, or remediation, or how staff should determine reductions in penalties in connection with self-reporting, cooperation or remediation. While the stated goal of the guidance is to provide increased transparency into the enforcement process, it does not provide any detail on how cooperation, self-reporting, or remediation factor into deductions in penalties. The guidance is meant only to clarify how recognition of cooperation, self-reporting and remediation will be reflected in CFTC enforcement orders.

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© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 336
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Peter Baldwin, Securities lawyer, Drinker Biddle
Partner

Peter W. Baldwin, a former federal prosecutor, defends clients facing white-collar criminal and internal investigations, securities enforcement actions, cybersecurity issues, and other complex civil and criminal litigation matters. Prior to joining Drinker Biddle, Pete spent over eight years as an Assistant United States Attorney in the U.S. Attorney’s Offices for the Eastern District of New York and Central District of California. In this role, he supervised all aspects of criminal investigation and prosecution, first as a member of the Major Frauds Section in the Central...

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Nicholas Wendland Attorney Chicago
Counsel

Nicholas A.J. Wendland represents and advises financial institutions in navigating securities, commodities and exchange regulations. Drawing on his extensive experience at FINRA and the New York Stock Exchange (NYSE), as well as in private practice, Nicholas assists his clients in understanding and complying with securities and commodities laws, as well as regulations and rules set by self-regulatory organizations. Nicholas’ in-depth understanding of complex financial products, global regulations, and the business and operation requirements of his...

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