For the first time in its history, the Commodity Futures Trading Commission’s Division of Enforcement issued a reference guide setting forth policies and procedures of the DOE regarding the conduct of investigations, the prosecution and settlement of enforcement actions, and miscellaneous topics, such as ethics, confidentiality and records management.
Termed the “Enforcement Manual,” the CFTC’s guidance is seemingly modeled after the “Justice Manual”issued by the US Department of Justice for its staff. (Click here to access the current copy of the Justice Manual; prior to 2018, the Justice Manual was known as the “US Attorney’s Manual.”) Like DOJ’s Justice Manual, the DOE’s Enforcement Manual was intended to be shared with the public.
The Enforcement Manual does not break any new ground and, according to James McDonald, DOE Director, “creates no private rights.” It is solely designed to compile in one document the DOE’s operating procedures so that they can be “readily accessible to those affected by them.” The manual may be updated from time to time.
The principal sections of the Enforcement Manual reference leads; preliminary inquiries and investigations; litigation; self-reporting, cooperation and remediation; cooperative enforcement; privileges and confidentiality; and other miscellaneous topics including ethics, record management and document control and the CFTC’s whistleblowing program.
My View: Although there are no secrets revealed in the DOE’s Enforcement Manual, it is a handy compilation of relevant DOE policies and procedures that helps explain the intricacies of the CFTC investigations and enforcement actions. The document serves a very useful purpose in that it provides laypersons (as well as practitioners) insight into what, for many, may seem an overwhelming and obtuse process.
In addressing some topics, the Enforcement Manual is exceptionally transparent, e.g., when it discusses statute of limitations and tolling agreements (“[s]ome courts have held that [a] five-year statute of limitations … applies to certain claims brought by the CFTC”) as well as a person’s right to request closing letters when staff has decided to terminate an investigation – although the manual notes the decision to grant a letter is discretionary.
Regrettably, however the Enforcement Manual does not provide sufficient color on how it generally applies its discretionary authority, as well as factors other than cooperation it considers in recommending specific sanctions in connection with settlements, particularly the amounts of fines.
For example, no insight is provided in the Enforcement Manual regarding the circumstances where the DOE Director may formally invite a potential subject of an enforcement action to submit a “Wells Submission” to try to convince the DOE not to file a case. (A party always has the right to submit a so-called “White Party” which effectively is an unsolicited Wells Submission.) Similarly, while the Enforcement Manual notes that the DOE has discretion to commence enforcement actions in a federal court or an administrative tribunal, it does not provide insight into why one or the other forum might be chosen. Moreover, there is no practical guidance set forth in the Enforcement Manual regarding the calculus behind sanctions requested in settlements.
It would have been beneficial for the Enforcement Manual to provide at least some insight into the DOE’s discretionary decision making as well as its approach toward sanctions in settlements. Maybe this will happen in Enforcement Manual 2.0. But Enforcement Manual 1.0 provides a meritorious start.