CFTC Civil Monetary Penalty Guidance
June 11th | 2020
The CFTC recently issued guidance on how it calculates fines in enforcement matters. The guidance, which “will facilitate the [CFTC’s] efforts to be tough on those who break the rules while striving for fair and consistent outcomes in doing so,” also provide a framework for settlement discussions.
The guidance outlines several broad categories of factors to consider including the gravity of the violation, mitigating and aggravating circumstances, and other considerations. Regarding the gravity of a violation, for example, the guidance directs staff lawyers to consider the number, duration and degree of the infraction, among other factors. Mitigating or aggravating conduct could include whether a company or individual self-reported or took steps to prevent future infractions. CFTC staff lawyers can also consider other factors, like whether settlement would be an efficient use of the CFTC’s resources.
The guidance appears generally helpful, but some may find it less so because it is not a plug and play calculator. Instead, it is meant to mirror the efforts by other regulators to promote deterrence by providing greater clarity around how enforcement decisions are made.