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For first time in over 25 years, CFTC updates guidance on civil monetary penalties
For first time in over 25 years, CFTC updates guidance on civil monetary penalties
19 June 2020
Series
Blogs
19 June 2020
The U.S. Commodity Futures Trading Commission (“CFTC”) Division of Enforcement (“Division”) recently issued new guidance on factors it will consider when recommending civil monetary penalties in CFTC enforcement actions. Under the new guidance, the Division will take a three-pronged approach to its evaluation of civil monetary penalties by looking at (i) the gravity of the violation, (ii) mitigating and aggravating circumstances, and (iii) other considerations, such as the total mix of remedies and monetary relief, among others. Following a long hiatus from its 1994 guidance, the CFTC’s new guidance tracks its goal of affording market participants greater transparency in its approach to assessing civil monetary penalties in enforcement actions.
The CFTC primarily considers the gravity of the violation at issue in determining an appropriate penalty. In weighing the gravity of the violation, Division staff may look to the following factors, which are illustrative of the analysis in most cases:
In weighing mitigating and aggravating circumstances when determining the appropriate civil monetary penalty, the CFTC will look at:
Finally, the Division may take other considerations in making its recommendation of an appropriate civil monetary penalty, which may include:
While not a significant shift in the CFTC’s approach to assessing penalties, the new guidance does provide some transparency and clarity to the market on how the CFTC’s analysis will be framed in future enforcement actions. Companies and their counsel can also look to these factors when advocating for the imposition of an appropriate remedy in their negotiations with the CFTC.