The Commodity Futures Trading Commission issued a summary of its 2014 enforcement program. Among other things, the Commission said that, in 2014, it obtained over US $3.25 billion in sanctions, including over US $1.8 billion in fines and over $1.2 billion in disgorgement. Among other violations sanctioned by the Commission in 2014 were cases alleging manipulation, attempted manipulation and false reporting of market information; spoofing; undercapitalization, under-segregation of customer funds, and failure to supervise; pre-arranged trading; speculative position limit violations; and failure to file required reports (e.g., large trader reports). The Commission suggested in a footnote to its highlights that there might be a difference between the amount of it sanctions and the amount of its collections “because the wrongdoers may not have sufficient funds or assets.”
Compliance Weeds: As I wrote just a few weeks ago, “[a]lthough it is easy to view a regulator’s report of its enforcement accomplishments with a bit of cynicism, such reports are very useful summaries of a regulator’s priorities and should be used as checklists to help registrants double check their policies and procedures to ensure they are adequately addressing a regulator’s principal concerns.” (Click here to see my full commentary on this subject in the article “Priorities Emerge in SEC Enforcement’s Look Back at 2014 Activities,” in the October 13 to 17 and 20, 2014 edition of Bridging the Week.) Also, in order to save expense and time for both the industry and itself, the CFTC should consider enacting a formal policy to offer potential respondents an opportunity to settle enforcement matters related to certain types of offenses for a nominal fine in an expedited process where no customer has been harmed and the potential respondent (1) promptly self reports the offense (excluding offenses involving fraud or manipulation); (2) promptly corrects the offense; (3) voluntarily retains the assistance of a third-party consultant to make recommendations to avoid future, similar violations; and (4) agrees materially to implement such consultant’s recommendations on a timely basis. The CFTC’s Division of Enforcement could institute this policy by revising its Enforcement Advisory “Cooperation Factors in Enforcement Division Sanction Recommendations,” that have not been updated since 2007 (click here to access).