Skip to content

Enforcement Highlights

  • About Us
  • Contact
  • Cookie Policy
Enforcement
Highlights

Covering SEC, CFTC, FINRA, PCAOB, States, Exchanges, & FCA Enforcement Activities

CFTC Releases New Guidance Regarding Civil Monetary Penalties

Yesterday, the CFTC’s Division of Enforcement formally issued new guidance regarding the Division’s decisions to recommend the imposition of civil monetary penalties. According to the CFTC, “[t]he guidance memorializes the existing practice within the Division,” but “has now been incorporated into the Division’s Enforcement Manual.” CFTC, CFTC Division of Enforcement Issues Civil Monetary Guidance.

The announcement continues the CFTC’s commitment to providing market participants with greater transparency, as recently articulated by Commissioner Tarbert at the Commission’s December 10, 2019 open meeting. Last year, with the stated goal of providing transparency and clarity to the market around the Commission’s enforcement process, the CFTC made public for the first time its Enforcement Manual. The newly issued guidance, now included in the Enforcement Manual, supplements the guidelines previously released in 1994, and focuses on the following: (1) the gravity of the violation; (2) mitigating and aggravating circumstances; and (3) “other considerations.” CFTC Enforcement Manual at 30. The Division’s Manual provides that of these, the gravity of the violation “is the primary consideration,” and is determined by factors such as the amount and duration of violations, the respondent’s role in violations, harm caused by violations, whether the respondent acted intentionally or willfully, whether respondent benefitted from the violations, and the violations’ “impact on market integrity, customer protection, or the mission and priorities of the Commission.” Id. at 30-31.

Similarly, factors considered as part of mitigating and aggravating circumstances include any relevant post-violation conduct, respondent’s cooperation, whether a company had an effective compliance program, respondent’s prior misconduct, and any disciplinary action taken by a company. Finally, “other considerations” include “[t]he total mix of remedies and monetary relief to be imposed on the [r]espondent,” remedies and relief imposed in analogous cases, and “[c]onservation of Commission resources, including timely settlement.” Id. at 31.

While the publication of the guidance serves to further promote transparency, it does not provide particular detail into the Commission’s deliberation process in ultimately determining fines. Market participants have more visibility into the factors the Commission reviews in assessing fines; however, details around their weighting and importance are thin. It is clear the Commission remains committed to aggressively pursuing market participants that violate regulations. Just this month the Commission filed charges in a $20 million binary options and digital asset fraud scheme. In November 2019, the Commission settled charges with a market participant accused of manipulative trading activity for a record amount. The settlement order, citing the firm’s cooperation and remediation during the investigative process, required the firm to pay a total of $67.4 million.

Subscribe and Receive Alerts to New Articles

SUBSCRIBE
May 21, 2020
Written by: Nicholas J. Wendland and Victoria L. Andrews
Category: Futures and Derivatives
Tags: CFTC

Post navigation

Previous Previous post: SEC Enforcement Expanding Efforts Regarding Coronavirus Impacts
Next Next post: The SEC Sees a Significant Uptick in Tips, Complaints, and Referrals

Subscribe to Email Alerts

Categories

  • Compliance and Supervision
  • Futures and Derivatives
  • Hedge Funds and Private Equity
  • Insider and Manipulative Trading
  • Investment Advisers and Broker Dealers
  • Municipal Bond Offerings
  • Public Companies, Accounting, and Auditing

©2023 Faegre Drinker Biddle & Reath LLP. All Rights Reserved. Lawyer Advertising.

  • About Us
  • Contact
  • Cookie Policy
We use cookies to improve your experience with our website. By browsing our site, you are agreeing to the use of cookies. For more information about how we use cookies, please review our privacy policy and cookie policy. OK
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT