ENFORCEMENT—CFTC releases enforcement advisory on penalties, monitors and consultants, and admissions - 19 October 2023

The CFTC’s Division of Enforcement released an enforcement advisory providing guidance to enforcement staff on penalties, monitors and consultants, and admissions.

The CFTC’s Division of Enforcement issued an advisory to provide guidance to enforcement staff on future enforcement resolution recommendations to the Commission. The advisory provides guidance on determining whether proposed civil monetary penalties are sufficient, when the imposition of a corporate compliance monitor or consultant is appropriate, what the duties and responsibilities of monitors and consultants should be, and whether admissions should be recommended in a particular enforcement action.

Penalties. The Division is recalibrating how it is assessing proposed civil monetary penalties (CMPs) to ensure the CMPs are at the level necessary to achieve general and specific deterrence, which may result in the Division recommending higher penalties in resolutions than may have been imposed in similar cases previously. The advisory also notes the Division will factor recidivism in determining appropriate penalties to recommend to the Commission and details several of the factors the Division will consider in determining whether a person or entity is a recidivist.

Monitors and consultants. The Division notes that in cases where it lacks confidence that an entity will remediate misconduct on its own, it will require the resolving entity to engage a third party approved by the Division to assist in remediation. This will include monitors (third parties engaged to make recommendations, test those recommendations, and report on the results of their work to the Division) and consultants (third parties to advise the entities regarding compliance enhancements). The Division anticipates recommending to the Commission that a monitor be imposed in cases involving the most significant or pervasive compliance and control failures reflecting a lack of sufficient commitment to effective compliance, and a consultant will be recommended in serious but less severe cases.

Admissions. According to the advisory, companies and individuals under investigation should no longer assume no-admit, no-deny resolutions are the default. In each case, the Division will discuss with respondents or defendants whether admissions are appropriate. The advisory describes various factors relevant to the determination of whether admissions are appropriate.

© 2021 CCH Incorporated and its affiliates and licensors. All rights reserved.