On May 20th the U.S. Commodities Futures Trading Commission (the “CFTC”) Division of Enforcement (the “Division”) announced new guidance for Division staff to consider when recommending civil monetary penalties in an enforcement action (the “CMP Guidance” or the “Guidance”). As a former CFTC regulator who brought dozens of cases over a 13 year career in the Division of Enforcement, Anne Termine provides an explanation of both the art and science involved in the CFTC’s decision-making process for assessing penalties in enforcement actions. Utilizing her perspective and experience as a former CFTC regulator, the alert explains the background and reason for the CMP Guidance; deciphers the Guidance factors and how they can be used when negotiating a settlement or reviewing internal systems and controls; and examines the missing piece of the equation – the quantitative component in the Division’s penalty decision-making process and how this piece can be filled in by understanding how to interpret and distinguish precedent CFTC enforcement cases.
Click here to read our Covington Alert summarizing the key features of the final rule.