In two public appearances last week, Joshua Sterling, new head of the Commodity Future Trading Commission’s Division of Swap Dealer and Intermediary Oversight, indicated that “strengthening our relationship with the Division of Enforcement with a more focused approach to referrals” was among his priorities. Aiming to implement a regulatory program to strengthen markets’ “resilience and integrity,” improve the “regulatory experience” for market participants and “be tough” on lawbreakers, Mr. Sterling described components to achieve his goals. These included undertaking thematic reviews of registrants concentrating on “selected key issues”; assessing the usefulness of existing data to determine how it could be made more useful; issuing more general guidance as opposed to letters to specific parties; being more focused and programmatic in referring matters to the Division of Enforcement, and using inputs from DSIO’s examination, reporting, enforcement referral and guidance program to determine what rule amendments should be proposed (if any). Mr. Sterling also disclosed that DSIO staff is currently working with futures commission merchants to assess whether current restrictions regarding the investment of customer funds should be expanded.
Separately, James McDonald, Director of the Division of Enforcement, proclaimed his support for parallel enforcement activities before the Practising Law Institute’s White Collar Crime 2019 program. He particularly noted the “specialized expertise” that CFTC staff can bring to the Department of Justice in connection with potential violations of commodities laws. He indicated that the CFTC has express unique authorities that could supplement DOJ activity, including authority to seek emergency asset freezes and trading and registration bans. He also lauded parallel actions with other civil authorities, like the Securities and Exchange Commission, and with self-regulatory organizations. However, he indicated that the CFTC acting alone will continue to constitute the vast majority of its cases. (Click here to access a recent Katten publication “A New CFTC Captain at the Helm” focusing on the potential CFTC regulatory and enforcement agenda under new Chairman Heath Tarbert and his mostly new leadership team.)