New guidance from the U.S. Commodity Futures Trading Commission (CFTC) to its Division of Enforcement staff outlines factors to consider when evaluating companies’ compliance programs during enforcement investigations. The guidance reflects a principles-based approach that avoids prescribing specific guidelines for compliance program structures. The CFTC aims to encourage companies to have robust compliance programs that focus on fixing underlying problems on an ongoing basis.
“We didn’t think an overly prescriptive guidance would be consistent with our fundamental commitment as a regulator—or even that it would be possible given the breadth of our markets,” CFTC Enforcement Division Director James McDonald told The Wall Street Journal. “The more granular you get, the more it starts to look like a one-size-fits-all requirement.”
The CFTC guidance, which will be published in the agency’s Enforcement Manual, is the first of its kind issued by the Division of Enforcement. It instructs investigators to examine:
- whether ample resources were allocated to detect and avoid issues prior to an infraction,
- the independence of compliance operations,
- the capabilities of internal surveillance and monitoring programs, and
- the discipline measures for individuals who commit misconduct.
The guidance advises CFTC staff to consider lower fines if a company improves its compliance program after a violation is uncovered. Staff will examine whether the company addressed the impact of the misconduct, disciplined the individuals responsible, and corrected any deficiencies in the compliance program that led to the infraction.
“This new guidance highlights once again the CFTC’s commitment to transparency and clarity,” Chairman Heath P. Tarbert said in a press release. “The CFTC depends on good corporate citizens, acting through compliance programs—as partners in furthering the integrity and resilience of our markets. It’s in both the agency’s interest and the interest of compliance personnel that the Commission is clear about how and what we’ll evaluate.”
McDonald noted that companies should prepare for more questions about their compliance programs, and that CFTC staff members will receive additional compliance training and will be seeking additional technical compliance advice from the Commission’s policy divisions. 
Elizabeth Mullen is an editorial consultant for Internal Audit 360°.