Wednesday, December 9, 2020
On December 1, 2020, the U.S. Commodity Futures Buying and selling Fee (“CFTC”) Division of Enforcement launched its Annual Report, which particulars a “record-breaking” fiscal 12 months 2020 (“FY 2020”), regardless of the challenges introduced by the COVID-19 pandemic.
Notably, the CFTC filed a historic 113 enforcement actions—up from 69 filed in FY 2019, 83 filed in FY 2018, and a rise over the earlier excessive of 102 filed in FY 2012. The chart under exhibits the breakdown of enforcement actions by class, and Appendix B of the Annual Report gives particular person case citations.
CFTC Enforcement defined that “roughly 65% of the issues filed in FY 2020 concerned commodity fraud, manipulative conduct, false reporting, or spoofing”—“a few of the most pernicious types of market misconduct.”
Central to the rise in enforcement exercise in FY 2020 had been the 56 retail fraud actions, essentially the most introduced by the CFTC in a fiscal 12 months. Of these 56, a report seven concerned digital property, an space that CFTC Enforcement “continued to aggressively prosecute” and that CFTC Chairman Heath Tarbert has famous as an enforcement precedence.
One other 16 of the enforcement actions concerned spoofing and manipulative conduct. Penalties and fines related to these 16 actions accounted for over 75% of the $1.Three billion in complete financial reduction ordered in FY 2020. Nevertheless, whereas this $1.Three billion complete was the fourth largest in CFTC historical past, it was solely a $7 million improve from FY 2019 and was markedly lower than the report $3.2 billion in reduction ordered in FY 2014.
In keeping with its said prioritization of cooperative enforcement over the previous three years, CFTC Enforcement reported its parallel efforts with legal authorities and regulatory companies in FY 2020, which had been defined as “vital to deterring violators, punishing misconduct, preserving market integrity, and defending market individuals.” As in FY 2019, the CFTC introduced 16 enforcement actions with parallel legal filings. Moreover, the report highlighted the most important joint enforcement motion filed within the CFTC’s historical past, involving 30 state monetary regulators and alleging a $185 million elder fraud scheme. The report said that “[t]he division appears ahead to continued cooperation and coordination with enforcement counterparts on issues of mutual curiosity.”
CFTC Enforcement additionally reported that its whistleblower program “continued to expertise vital development” in FY 2020, throughout which it granted 16 functions for whistleblower awards totaling roughly $20 million. CFTC Enforcement famous that it expects this system to proceed to develop and that between 30% and 40% of ongoing investigations now contain a whistleblower part.
Along with emphasizing sure quantitative outcomes obtained in FY 2020, the report acknowledged qualitative efforts to offer extra detailed steering to market individuals by way of the Enforcement Guide, which was launched in FY 2019. Particularly, CFTC Enforcement issued its first steering since 1994 outlining its consideration components for civil financial penalties as nicely its first publicly distributed steering detailing consideration used when evaluating company compliance packages in reference to enforcement issues. Each steering paperwork had been issued in furtherance of the company’s “devoted method to elevated transparency.”
CFTC Enforcement said that it’s going to proceed to focus enforcement efforts on 4 priorities: “(1) preserving market integrity; (2) defending prospects; (3) selling particular person accountability; and (4) coordinating with different regulators and legal authorities on parallel issues.”
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