CFTC issues an enforcement advisory on self-reporting, cooperation, and remediation

On February 25, 2025, the Commodity Futures Trading Commission (CFTC or Commission) Division of Enforcement (Division) issued an Advisory on how to evaluate a firm’s self-reporting, cooperation, and remediation (referred to as a Mitigation Credit) when recommending enforcement actions to the Commission.¹ The Advisory is intended to (a) encourage firms to self-report potential violations of the Commodity Exchange Act and CFTC regulations and (b) provide regulatory consistency, transparency, and clarity with respect to how firms can earn Mitigation Credit. 

The Advisory sets forth a rubric that dictates how much credit firms can receive for cooperating with the Commission (referred to as the Mitigation Credit Matrix or “Matrix”). The Matrix, copied below, is a four-by-three chart where one side denotes credit for self-reporting while the other covers cooperation, which includes remediation factors. 

	Tier 1: No Cooperation	Tier 2: Satisfactory Cooperation	Tier 3: Excellent Cooperation	Tier 4: Exemplary Cooperation
Tier 1: No Self- Report	0%	10%	20%	35%
Tier 2: Satisfactory Self-Report	10%	20%	30%	45%
Tier 3: Exemplary Self Report	20%	30%	40%	55%

Based on the Matrix, the Division’s evaluation translates to a presumptive credit that qualifies as a percentage of the initial calculation of the civil monetary penalty with the maximum credit a firm can receive being 55%. Sanctions like disgorgement and restitution, however, are not eligible for any mitigation credit, and the Division retains the right to deviate from the Matrix given the facts and circumstances of a particular case.  

The Division will assess self-reporting based on whether the disclosure was voluntary, directed to the CFTC, timely, and complete. There is also a safe harbor for circumstances where the firm self-reported but the report was later found to be inaccurate and the firm supplemented or corrected its report after learning the information was inaccurate. Self-reporting is split into three possible marks, outlined below. 

1. Tier 1: No Self-Report. Firms will not receive any credit if they do not self-report or the self-report was not reasonably related to the violation.
2. Tier 2: Satisfactory Self-Report. Firms earn 10% credit if they notify the Commission of the potential violation but do not include all material information that was known at the time of the self-report.
3. Tier 3: Exemplary Self-Report. Firms earn 20% credit if they provide all material information related to the potential violation and assist the CFTC with conserving resources in the related investigation. To earn this designation, the quality of the information provided is an important factor. At the same time, the Division recognizes that a firm may not know all relevant facts at the time of disclosure, so the Division will still recommend full credit if the firm made best efforts. 

The Division will assess cooperation based on, among other things, whether the firm provided material assistance to the investigation, the nature and timeliness of cooperation (i.e., whether the firm was first to offer cooperation and whether it was truthful, complete, and credible), and the adequacy of the resources provided to the Commission. As part of the evaluation of cooperation, the Division will consider remediation and whether the firm took immediate steps to address the violation, performed a gap analysis to identify other potential violations, and how the firm implemented appropriate changes to prevent future violations.  

Cooperation is assessed on a four-tier scale, outlined below: 

1. Tier 1: No Cooperation. Firms will not receive any credit if they do not provide substantial assistance beyond required legal obligations.
2. Tier 2: Satisfactory Cooperation. Firms earn 10% credit if they provide substantial assistance, arranged voluntary witness interviews, and gave basic presentations on legal and factual issues of the violation.
3. Tier 3: Excellent Cooperation. Firms earn 20% credit if they meet the expectations of the preceding tier but, in addition, conduct internal investigations, provide thorough analysis of the potential violation, and use internal or external expert resources and consultants as appropriate.
4. Tier 4: Exemplary Cooperation. Firms earn 35% credit if they meet the expectations of Excellent Cooperation but, in addition, consistently provide material assistance, significantly complete remediation, and use accountability measures. 

The self-reporting and cooperation scales are independent, so a firm can receive no self-report credit but still receive cooperation credit and vice versa. Even in cases where firms show cooperation by the factors outlined above, there are behaviors that can disqualify firms from receiving any credit, such as engaging in bad faith conduct that impedes the Division’s investigation, untimely subpoena compliance, or willful blindness to warning signs of violations. 

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If you have any questions about this legal briefing, please feel free to contact any of the attorneys listed under 'Related People/Contributors' or the Eversheds Sutherland attorney with whom you regularly work.

_{1 Commodity Futures Trading Commission, Division of Enforcement, Advisory on Self-Reporting, Cooperation, and Remediation (Feb. 25, 2025), accessible at https://www.cftc.gov/PressRoom/PressReleases/9054-25.}