CFTC Releases Advisories on Enforcement Cooperation | Practical Law

CFTC Releases Advisories on Enforcement Cooperation | Practical Law

The CFTC has issued two new advisories on the evaluation of cooperation by individuals and companies in CFTC investigations and enforcement actions.

CFTC Releases Advisories on Enforcement Cooperation

Practical Law Legal Update w-005-5142 (Approx. 3 pages)

CFTC Releases Advisories on Enforcement Cooperation

by Practical Law Finance
Published on 26 Jan 2017 • USA (National/Federal)
The CFTC has issued two new advisories on the evaluation of cooperation by individuals and companies in CFTC investigations and enforcement actions.
On January 19, 2017, the CFTC's Enforcement Division released new advisories on cooperation by individuals and companies in CFTC investigations and enforcement actions. The guidance outlines what the Enforcement Division will, on a case-by-case basis, consider when evaluating the levels of cooperation by individuals and companies weighed against the seriousness of an alleged wrongdoing.
The purpose of the guidance is to assist individuals, companies, and their respective counsel when assessing possible settlement offers and litigation risks. The guidance states that the CFTC will generally balance the following issues as a matter of policy when deciding on the adequacy and value of cooperation by an individual or company:
  • The value and quality of the individual or company's cooperation.
  • The value of cooperation in broader law enforcement interests.
  • The balance between the levels of individual or company culpability, history of misconduct, and the acceptance of responsibility and mitigation.
Satisfactory cooperation can result in a no enforcement action recommendation by the Enforcement Division, or in reduced charges or sanctions.
In the guidance, the CFTC provides five specific areas it will take into consideration when assessing cooperation:
  • The value of the individual's or company's cooperation with the CFTC's investigation(s) or enforcement action(s). This includes the timeliness, materiality, nature, and quality of assistance provided.
  • The value of the individual's or company's cooperation with the CFTC's broader law enforcement mandates. This includes consideration given to the levels of importance of the investigation and action for the CFTC (whether it is a CFTC priority or not), the CFTC resources conserved as a result of cooperation, and the degree to which the cooperation enhanced the ability of the CFTC to detect and pursue future violations. For cooperating companies, the degree to which companies encourage "high-quality cooperation" is also a factor taken into consideration.
  • The individual's or company's culpability, company culture (in the case of an enforcement action brought against a company), or other relevant facts. This includes consideration given to the circumstances of the misconduct, prior misconduct, mitigation, remediation, and acceptance of responsibility.
  • Uncooperative Conduct. Credit may be limited in instances where the individual or company fails to respond to CFTC requests or subpoenas, misrepresents or minimizes the nature or extent of the misconduct, fails to preserve relevant information under the individual or company's control, inappropriately advises others (including employees) not to fully and openly cooperate, or engages in evasive or misleading conduct during the investigation. Uncooperative conduct has to potential to limit or outweigh the other cooperative measures discussed above.
The advisories note that none of the above factors are intended to erode the privileges and protections encompassed in the attorney-client relationship or work product doctrine.