On March 6, 2019, CFTC Director of Enforcement James McDonald offered remarks detailing the agency’s intention to investigate “violations of the CEA carried out through foreign corrupt practices.”1 On the same day, the CFTC issued an Enforcement Advisory related to “Self Reporting and Cooperation for CEA Violations Involving Foreign Corrupt Practices.”2 In his speech, McDonald pointed out that foreign corrupt practices could also constitute violations of the Commodity Exchange Act (“CEA”), and offered examples, including that of a bribe employed to secure business in connection with CFTC-regulated activities like trading or dealing in swaps. He noted that this type of activity could impact U.S. derivatives prices, and that the agency has open investigations into similar conduct. Acknowledging the potential overlap between CEA violations and FCPA violations, he noted the CFTC’s dedication to cooperative enforcement with the DOJ and SEC.
The Enforcement Advisory indicates that it applies to persons who are not registered – and are not required to be registered – with the CFTC, who “voluntarily disclose to the Division [of Enforcement] violations of the Commodity Exchange Act involving foreign corrupt practices” and “where the voluntary disclosure is followed by full cooperation and appropriate remediation” in accordance with two 2017 CFTC enforcement advisories outlining cooperation guidelines.3 The Enforcement Advisory states that, in these circumstances, the Division of Enforcement will apply a presumption that it will not recommend a civil monetary penalty in connection with a resolution, absent aggravating circumstances. It points out that CFTC registrants, who have existing reporting obligations to the CFTC, will not be eligible for the recommendation of no civil monetary penalty, but would be eligible to receive a reduction in civil monetary penalty as explained in the 2017 enforcement advisories.
The Enforcement Advisory notes that even if the Division of Enforcement recommends a resolution without a civil monetary penalty, it would still require payment of disgorgement and restitution resulting from the misconduct. In describing the CFTC’s approach – and likely acknowledging the DOJ’s “Piling On” policy – McDonald stated that the agency will ensure that any penalties imposed by the CFTC take into account those imposed by other enforcement bodies, and that the CFTC imposition of restitution and disgorgement gives “dollar-for-dollar credit” to restitution and disgorgement payments made in connection with related actions.4 As Deputy Attorney General Rod Rosenstein mentioned today in a speech on FCPA enforcement developments, “If government agencies fail to coordinate and instead ‘pile on’ with multiple penalties for the same conduct, it deprives the company of the certainty and finality available through a settlement.”5 We expect that the new policy will yield, among other things, increased coordination and joint filings between the CFTC, SEC, and DOJ, an increase in whistleblower submissions, and an uptick in cooperation agreements.
3 See https://www.cftc.gov/PressRoom/PressReleases/pr7518-17; https://www.cftc.gov/PressRoom/SpeechesTestimony/opamcdonald092517
4 For a description of the “piling on” policy, see https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar
Recently issued guidance in interpreting self-reporting and cooperation in CFTC enforcement orders
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Time to Review Corporate Compliance Programs
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Sayonara to Sonterra - No More!
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