stock graph on a screen

CFTC Issues its First Enforcement Manual

If your firm is subject to CFTC oversight, you now have a new tool at your disposal. In May, the CFTC’s Division of Enforcement (DOE) introduced its first public Enforcement Manual. While intended to serve as a resource for DOE staff, this new manual is a “must read” as a reference tool for financial services firms’ compliance teams – identifying the CFTC’s policies and procedures for detecting, investigating, and ultimately prosecuting rule violations.

In its press release announcing the new publication, the CFTC noted that its goals and intention in making the manual public are to “increase transparency, certainty, and consistency, and more generally, to advance the rule-of-law principles that underpin all DOE and CFTC enforcement actions.”

Increased Clarity and Transparency

The 59-page manual, similar in some respects to rulebooks and resources previously made public by other regulators including the SEC and FINRA, begins with an overview of the CFTC, the markets it regulates, and DOE’s role within and for the agency.

While not intended to be a comprehensive tool, the DOE manual includes a broad range of topics related to investigations and enforcement, including the following:

  • Leads, tips, complaints and referrals
  • Preliminary inquiries and investigations
  • Statutes of limitations
  • DOE’s general processes for obtaining information
  • Statutory protections
  • Witness interviews
  • Sworn testimony
  • Litigation holds and preservation demands
  • Procedures related to recommended enforcement actions
  • Litigation against firms and individuals
  • Self-reporting, cooperation, and remediation
  • Privileges and confidentiality
  • Ethical considerations
  • Whistleblower programs and protections

The manual also recognizes emerging and growing potential for issues related to firms that conduct business globally, including sections detailing DOE’s processes and policies around cross-border issues and cooperation with foreign governments.

Using the CFTC Manual to Strengthen Your Compliance Program

While there are few surprises in the newly-released CFTC manual, it can serve as a clear, straightforward reference for CCOs and their teams. Compliance personnel in firms engaged in the futures and swaps markets should familiarize themselves with the manual, review internal policies and procedures related to derivatives, and ensure key personnel within the firm understand the CFTC’s role and mission.

As with other regulators’ public manuals and resources, the new CFTC manual is not intended to be static. As needs dictate, the manual will be amended and updated to reflect changes on a rolling basis. Firms that find the new guide useful should ensure compliance personnel have access to the most current version.