On May 19, the CFTC’s Division of Enforcement issued a new cooperation policy that, effective immediately, supersedes all prior guidance on the subject. Under the policy, the division will not recommend an enforcement action where a party voluntarily self-reports, fully cooperates, remediates the misconduct, provides full restitution and/or disgorgement, and no aggravating circumstances are present. To qualify as a voluntary self-report under the policy, a party must disclose the misconduct within a reasonably prompt time after discovering it. The policy explains that the division expects registrants to report misconduct “at the earliest possible opportunity” — before any known or reasonably anticipated imminent threat of disclosure or investigation.

The policy statement identifies four categories of “aggravating circumstances” that may preclude eligibility for a declination despite a voluntary self-report: (i) pervasive intentional or reckless misconduct at the ownership or senior management level; (ii) intentional or reckless misconduct over an extended period; (iii) recidivism; and (iv) misconduct causing particularly egregious aggregate harm. Where a party is ineligible for a declination but otherwise cooperates and remediates in good faith, the division may recommend the incorporation of cooperation credit by recommending civil monetary penalty reductions of at least 50 percent (where the self-report did not qualify as voluntary) or reduction of at least 25 percent (where aggravating factors are present), capped at a maximum reduction of 75 percent in any circumstance. The division may also recommend up to a 25 percent reduction for partial cooperation where the party has remediated and provided restitution, even if the party did not self-report the violation or fully cooperate with the investigation. The policy applies to both entities and individuals, and all resolutions under the policy must be approved by the director of the division.

The policy also defines what constitutes “full cooperation” under the policy and explains that full cooperation includes timely disclosure of all non-privileged relevant information, proactive identification of individuals involved in or responsible for the misconduct, timely preservation, collection, and production of documents (including overseas records), and making officers and employees available for interviews. To qualify for remediation credit, a party must conduct a root-cause analysis, implement an effective compliance program calibrated to the organization’s size and risk profile, discipline responsible employees including supervisors, and adopt appropriate record-retention measures — including controls over personal devices and “ephemeral” messaging platforms. The policy also includes a safe harbor for good-faith self-reports that are later found inaccurate, provided the party promptly supplements and corrects the information after discovery. Notably, the division retains discretion to forgo recommending an enforcement action even where aggravating circumstances are present, balancing the severity of the circumstances against the party’s self-reporting and cooperation efforts.