October 19, 2020

Volume X, Number 293

October 19, 2020

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CFTC Publishes Inaugural Enforcement Manual

On May 8, 2019, the Division of Enforcement (DOE) of the Commodity Futures Trading Commission (CFTC or Commission) released its first, publicly available Enforcement Manual (Manual). The Manual’s purpose is to set forth “general policies and procedures that guide the work of Division staff in detecting, investigating, and prosecuting violations” of the rules and regulations within the CFTC’s purview. In addition, the publication of the Manual is intended to “increase transparency, certainty, and consistency, and, more generally, to advance the rule-of-law principles that underpin all DOE and CFTC enforcement actions.”

The CFTC’s public release of the Manual puts it in step with the Securities and Exchange Commission (SEC), which first publicly released its own Enforcement Manual in 2008. Much like its SEC equivalent, the CFTC’s Manual reflects only the views of the DOE – not the CFTC or its individual commissioners – and does not “create any rights, substantive or procedural, enforceable by any party in any matter, civil or criminal.” Nevertheless, while the Manual is not binding on the Commission (nor will it likely provide many revelations to those familiar with defending CFTC investigations and enforcement actions), its issuance is an important development for companies or individuals who conduct business in the commodities markets or related markets regulated by the CFTC. Those entities and their counsel should review and familiarize themselves with the Manual, as it represents the first unified and publicly available overview from the DOE as to how it approaches its cases and investigations.

The Manual begins with a description of the origin and composition of the CFTC, including the DOE’s statutory authority and the types of prohibited conduct that may lead to enforcement actions. After providing this background, the Manual gives an overview of the Commission’s approach to pursing leads and conducting formal investigations. It outlines the various tools at the Commission’s disposal during its investigations, such as subpoenas, access to required records, customer surveys, and voluntary or compelled witness interviews. This portion of the Manual also details the Commission’s procedures as to “Wells Notices” and “White Papers,” which will certainly be of use to counsel when making formal submissions to the CFTC.

In addition, the Manual summarizes the avenues for enforcement available to the DOE if an investigation warrants further action (e.g., administrative actions, federal court proceedings, or statutory disqualification proceedings), and the DOE’s procedures for litigating and settling those actions. This section also provides guidance on the Commission’s potential use of receivers and civil sanctions to maximize recovery for injured customers.

The Manual devotes significant attention to the CFTC’s policies for self-reporting, cooperation, and remediation, as well as how the Commission may work together or share information with other enforcement bodies, both domestically and internationally. This section includes a brief summary of the Commission’s recently announced policy of presuming no monetary penalty when a non-registrant self-reports a violation of the Commodity Exchange Act that involves foreign corrupt practices, and fully cooperates with the investigation. Some of this section simply references and incorporates recent previous guidance issued by the Commission, but its unified presentation of the Commission’s overall approach to cooperation is a useful reference. The Manual further outlines the CFTC’s procedures for dealing with privileged, confidential, or private information, and how the CFTC upholds its ethical responsibilities, particularly as they apply to maintaining records, closing matters, and making public statements. The Manual concludes with an overview of the CFTC’s whistleblower program, and the protections and awards available to whistleblowers.

In sum, the Manual can be a useful reference for companies and their counsel when dealing with CFTC investigations and enforcement actions. The Manual’s public release is emblematic of the Commission’s pronounced focus on its role as an enforcer, not simply a regulator. Any institutions whose business concerns are subject to regulation or potential enforcement by the CFTC should review the Manual and consult with counsel as to how it may relate to their business and compliance policies.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume IX, Number 130


About this Author

Daniel P. Filor Criminal Lawyer Greenberg Traurig Law Firm

Daniel P. Filor, a former Assistant U.S. Attorney for the Southern District of New York, focuses his practice on government investigations, securities fraud, antitrust law and white collar criminal defense. With both civil and criminal law experience, Daniel counsels clients on a wide variety of matters ranging from criminal fraud allegations to complex commercial litigation.

With more than a decade of experience in the U.S. Attorney’s Office, Daniel knows how governmental decision-making works, and draws on his experience to advise individual and organizational clients confronting...

Jeffry Henderson, Greenberg Traurig Law Firm, Chicago, Finance and Securities Litigation Attorney

Jeffry M. Henderson focuses his practice on a wide variety of compliance, regulatory, litigation and managed fund matters. He advises broker-dealers, investment advisers, introducing brokers, futures commission merchants, forex dealer members, commodity pool operators, commodity trading advisors and hedge fund managers regarding futures, derivatives, forex and securities issues. Jeffry advises proprietary trading firms and exempt investment managers regarding disclosure, regulatory and enforcement matters. He is also routinely involved in regulatory work and defending member firms before the SEC, CFTC, NFA and FINRA.

His industry experience began on the floor at Chicago Board of Trade and subsequently as general counsel for a publicly-traded futures commission merchant.

Nathan J. Muyskens Greenberg Traurig  DC Global White Collar Criminal Defense Practice Foreign Corrupt Practices Act

Nathan J. Muyskens is Co-Chair of the Global White Collar Criminal Defense Practice and defends corporate and individual clients in criminal grand jury investigations and prosecutions, internal investigations, regulatory inquiries and enforcement matters, and related parallel civil proceedings. Nate defends companies in corruption investigations and other matters related to the Foreign Corrupt Practices Act, and has experience handling government antitrust investigations on behalf of companies in various industries, such as health care, air travel, defense, pharmaceuticals, energy,...

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Daniel E. Clarkson complex financial litigation Lawyer Greenberg Traurig Law Firm

Daniel Clarkson is a member of Greenberg Traurig's White Collar Defense and Special Investigations Group. His practice focuses on white collar criminal defense and related government and internal investigations, as well as complex financial litigation. Mr. Clarkson has defended individuals in federal criminal trials, and related SEC and CFTC enforcement actions, relating to wire fraud, securities fraud, and commodities fraud. In particular, he was a member of the trial team for two recent white collar defense trial victories - the first ever acquittal in a trial relating to alleged “...

Sarah M. Mathews Commercial Litigation Lawyer Greenberg Traurig Law Firm

Sarah M. Mathews focuses her practice on complex commercial litigation, white collar criminal matters, and regulatory investigations. She is experienced in handling government investigations, reinsurance, bankruptcy, federal antitrust and commercial arbitration. In addition to these matters, Sarah maintains an active pro bono practice.