CFTC to Offer Lower Fines to Offenders That Cooperate 

Companies that self-report derivatives-market misconduct could be considered for substantial discounts on fines, regulator says

The U.S. derivatives watchdog is planning to offer rewards to companies that turn themselves in, following in the footsteps of other regulators and law-enforcement agencies.

The Commodity Futures and Trading Commission is expected to release guidance Thursday spelling out how companies that self-report potential misconduct, cooperate with investigators and take steps to address underlying issues could receive a “substantially reduced” financial penalty.

The three-and-a-half page internal memo, which was shared with The Wall Street Journal, builds on a series of other short guidance documents the agency has released in recent years on everything from its standards for cooperation to its expectations on how market participants should design compliance programs to avoid infractions.

The latest guidance doesn’t make any substantive changes to prior policy, but appears merely to clarify that companies could be rewarded with lower fines if they follow the CFTC’s guidelines.

The guidance outlines a series of scenarios, from one in which a company doesn’t self-report, cooperate or remediate, to another in which it does all three. The outcomes are simple: a company could receive a discount, a substantial discount or none whatsoever.

Clarifying the rewards on offer for companies that self-report misconduct has been a message regulators and law-enforcement officials have been sending for years. But many agencies, including the CFTC, have stopped short of affirmatively guaranteeing specific discounts in exchange for specific behavior, such as self-reporting.

The CFTC guidance brings the agency into closer alignment with a Justice Department policy that spells out in even more granular detail the outcomes available to corporations if they discover employees have paid bribes to government officials, and choose to proactively engage with prosecutors.


By Dylan Tokar, October 28, 2020, published on The Wall Street Journal

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