Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman
On September 10, 2020, the Commodity Futures Trading Commission’s (“CFTC” or “the Commission”) Division of Enforcement (“the Division”) issued guidance for CFTC staff on the factors to be considered when evaluating compliance programs in connection with enforcement matters. The guidance will be inserted in the CFTC Enforcement Manual. Although not binding on the Commission or any other Division of the CFTC, the Compliance Guidance is binding on Enforcement staff.
In recent years, the Division has taken several steps to increase transparency regarding the performance of its enforcement functions. First, the Division published its Enforcement Manual, which is updated periodically and publicly available on the CFTC’s website. On May 20, 2020, the Division issued guidance to staff regarding factors to be considered in recommending a civil monetary penalty in an enforcement action. Those factors include the existence and effectiveness of an existing compliance program, as well as efforts to improve that compliance program following detection of a violation. The recently issued Compliance Guidance provides factors to be used in evaluating such compliance programs.
The Compliance Guidance focuses on whether the compliance program was reasonably designed and implemented to achieve prevention, detection, and remediation of the misconduct at issue. The Compliance Guidance acknowledges that this assessment depends upon the specific facts and circumstances involved and further states that “[a]t all points, the Division will conduct a risk-based analysis, taking into consideration a variety of factors such as the specific entity involved, the entity’s role in the market, and the potential market or customer impact of the underlying misconduct.”
The Compliance Guidance provides a number of factors for staff to consider in determining whether a compliance program was reasonably designed and implemented to achieve the three goals identified above.
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