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CFTC’s Enforcement Division Issues Guidance on Recognition of Self-Reporting, Cooperation and Remediation & Chairman Statement on Use of Staff Letters & Guidance

CFTC’s Enforcement Division Issues Guidance on Recognition of Self-Reporting, Cooperation and Remediation

On October 29, the Commodity Futures Trading Commission announced that the Division of Enforcement (Division) issued new guidance for its staff related to the recognition of a registrant’s self-reporting, cooperation or remediation in CFTC enforcement orders. The Division has not changed its existing process of how the enforcement staff will consider reductions in penalties in connection with self-reporting, cooperation or remediation; rather, the Division has clarified certain situations in which the staff will recognize a registrant’s actions in CFTC enforcement orders. Specifically, the guidance describes potential scenarios where the enforcement staff may recommend the recognition of a respondent’s action to be reflected in the CFTC enforcement order: (1) no self-reporting, cooperation or remediation; (2) no self-reporting, but cognizable cooperation and/or remediation that warrant recognition but not a recommended reduction in penalty; (3) no self-reporting, but substantial cooperation and/or recognition resulting in a reduced penalty; and (4) self-reporting, substantial cooperation and remediation resulting in a substantially reduced penalty.

The CFTC’s press release with a link to the Division’s guidance is available here.


CFTC Chairman Tarbert Issues Statement on the Use of Staff Letters and Guidance

On October 27, the Chairman of the Commodity Futures Trading Commission issued a public directive to clarify the CFTC’s use of staff letters and guidance. In his remarks, Chairman Tarbert highlighted the purpose and binding nature of no-action letters, interpretive letters, staff guidance (including advisories and FAQs) and exemptive letters. Specifically:

  • Chairman Tarbert emphasized that staff letters should be limited to those circumstances that are not suitable for general rulemaking and instructed staff to consider whether rulemaking would be a more appropriate vehicle for responding to an inquiry where a situation is encountered on a repeated basis and has industry-wide implications.

  • Chairman Tarbert clarified that a no-action letter may be relied upon only by the addressee of the letter, and that the public at large may not otherwise rely upon the letter, but rather should look to the letter as instructive of the views of the staff with respect to that particular matter.

  • With respect to interpretive letters, Chairman Tarbert clarified that this is a vehicle through which the staff can explain its interpretation of ambiguous terms in the regulation, but unlike a no-action letter, this letter may be relied upon by the public.

  • Staff guidance, advisories, and FAQs (collectively, Guidance) communicate the staff’s expectation regarding how regulated parties may comply with a particular requirement, or inform regulated parties about staff’s regulatory priorities. The CFTC’s issuance of Guidance is neither binding on the division nor the public.

  • Chairman Tarbert distinguished the above letters from exemptive letters, through which staff exercises exemptive authority that the CFTC has delegated to the staff. Similar to no-action letters, an exemptive letter may be relied upon only by the recipient, but the public may look to the letter as instructive of the views of the issuing division or office with regard to the particular matter, and as a basis for understanding the views of the CFTC.

Finally, the Chairman confirmed that the CFTC may issue staff letters in response to requests from trade associations or groups that represent similarly situated persons (i.e., persons or entities that share the same or substantially the same facts and circumstances).

Chairman Tarbert’s full statement is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 304
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About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm
Partner

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

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312-902-5372
Gregory Uffner, Financial Services Attorney, Katten Law Firm
Associate

Gregory Uffner is an associate in the Financial Services practice. 

While in law school, Gregory was an associate editor for the Moot Court Board, a member of the Fordham Urban Law Journal and served as managing editor for the Fordham Sports Law Forum.

212.940.6485
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