CFTC Enforcement Director Defends Process for Awarding Credit for Self-Reporting

CFTC Director of the Division of Enforcement Ian McGinley encouraged self-reporting when a market participant subject to CFTC jurisdiction discovers misconduct and defended the agency's process for awarding self-reporting credit.

In remarks before the New York City Bar Association Futures and Derivatives Committee Conference, Mr. McGinley explained the benefits to the government of self-reporting which can, he said, "supercharge and enable" the CFTC's ability to enforce the law. He said the agency rewards self-reporting because it (i) furthers the CFTC's mission by revealing information about misconduct that the CFTC may not have otherwise discovered and (ii) generates significant efficiencies by uncovering and helping to resolve misconduct that may have otherwise required more resources.

He acknowledged questions from defense attorneys on the process, saying "there is no one formula at the CFTC for awarding self-reporting credit." He said that "neither the Commission nor the Division has a policy along the lines of 'if you voluntarily self-report, you’ll get a 50% discount on the applicable Civil Monetary Penalty.'" He argued, however, that extensive CFTC Enforcement guidance on self-reporting, credit cooperation and remediation serves to provide sufficient basis to make informed decisions.

Mr. McGinley also cited to various orders in which the CFTC recognized a respondent’s self-reporting, cooperation, and remediation, and imposed a substantially reduced penalty as a result. Mr. McGinley noted that the CFTC issued numerous additional case resolutions that did not award self-reporting credit, offering practitioners a basis to compare outcomes.