In a significant shift of policy, the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement issued an Advisory defining a new approach to handling penalties, monitors and consultants, and admissions in CFTC enforcement actions on October 17, 2023.
The new policy was outlined in an Advisory released by the Division, which covers fresh guidelines for requiring admissions of wrongdoing, the inception of monitors or consultants, along with the technique for assessing penalties.
Requiring admissions of wrongdoing as part of the Division’s enforcement strategy is a marked deviation from previous policy. The new approach reflects a rising trend among regulatory entities to demand more accountability from those implicated in misconduct scenarios.
In addition, the Division’s change in stance regarding the implementation of monitors and consultants is noteworthy. Regulators appear to be placing more reliance on independent, third-party experts who can bring an impartial perspective to scrutinize business practices and suggest enhancements.
On the topic of penalty imposition, greater precision and transparency have been introduced in the assessment process. This move could bring added predictability in the enforcement actions, a factor that could be advantageous for corporations as they manage their compliance programs.
The revised policy directives by the CFTC’s enforcement division seem to be reflecting changes in the broader regulatory landscape and could significantly impact how corporations navigate their compliance responsibilities and manage litigation risk.