The Commodity Futures Trading Commission (CFTC) Division of Enforcement (DOE) recently released its first public-facing Enforcement Manual. The Manual aims to increase transparency, certainty, and consistency regarding the CFTC’s investigation and prosecution of violations under the Commodity Exchange Act (CEA) and related regulations.
So, what does the Enforcement Manual do?
The Manual provides an overview of the DOE and sets out the general policies and procedures regarding the conduct of investigations, the prosecution and settlement of enforcement actions, and miscellaneous topics – for example, ethics, confidentiality and records management. The release puts the CFTC more visibly on par with the Securities and Exchange Commission (SEC), which first publicly released its Enforcement Manual in late 2008.
What does this mean?
The DOE’s process of conducting preliminary inquiries and investigations has now been formalized and made public. The Manual enumerates the sources from which DOE may obtain information about potential regulatory violations and emphasizes the CFTC’s cooperation with foreign governmental agencies – both in receiving details about cross-border conduct and in compelling production of documents or testimony from individuals located abroad.
Why should I care?
In addition to enumerating investigative procedures and providing insight into the escalation of an enforcement matter, the Manual details the policies regarding self-reporting, company accountability, cooperation and remediation.
The CFTC’s Whistleblower Program likewise comes into focus, whereby protections and awards are available to eligible whistleblowers who provide original information about CEA violations that result in monetary sanctions over $1 million. Notably, the CFTC’s immunity procedure set out in Section 22.214.171.124 of the Manual explicitly permits a witness in an enforcement matter who is concerned about civil or criminal exposure to seek an immunity agreement with respect to the testimony or information conveyed during a proffer session.
How we can help
Bovill has extensive experience in supporting clients to make sure that regulatory aspects are properly managed in advance of an examination or regulatory inquiry. As part of our Markets and Commodity and Derivatives services, we can help you understand your firm’s regulatory exposure and any examination implications, then deliver the associated organizational change and test the resulting systems and processes. We can also carry out a health check to see whether existing practices are being managed and monitored in a way that safeguards compliance and minimizes risk.