U.S. CFTC aims to get more cooperation from the targets of probes

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By Sarah N. Lynch | WASHINGTON

WASHINGTON U.S. derivatives regulators took
steps on Thursday to entice companies and individuals to better
cooperate during investigations, saying it could help defendants
dodge charges or face less severe sanctions.

The twin pair of memos released by the Commodity Futures
Trading Commission’s enforcement division lay out a series of
factors that the regulator said it would consider when weighing
possible civil charges.

They also drew the line on what kinds of behavior would be
unacceptable, such as failing to preserve records, slow-walking
the response to a subpoena, and other efforts to obstruct the
probe.

“Credit will be given where the cooperation is foremost
sincere, robust, and indicative of willingness to accept
responsibility for misconduct, where appropriate,” said Aitan
Goelman, the CFTC’s enforcement director.

The CFTC’s memos reflect part of a broader trend by both
criminal and civil federal prosecutors, both to encourage
companies to self-report violations and also to hold individuals
more accountable for their actions.

Last year, for instance, the U.S. Justice Department
launched a new pilot program that allows companies to get up to
a 50 percent reduction in penalties if they agree to report
violations of the Foreign Corrupt Practices Act (FCPA).

The Securities and Exchange Commission, which brings civil
FCPA cases, also issued similar guidance, saying companies that
self-report the violations can become eligible for deferred or
non-prosecution agreements.

In 2015, the Justice Department also embarked on a renewed
effort to hold individuals more accountable with the release of
the “Yates Memo,” penned by Deputy Attorney General Sally
Quillian Yates.

The memo stated that companies would not receive any
cooperation from the government if they did not fully disclose
the facts about employees who were culpable for potential
crimes.

Some of those sentiments were echoed in the CFTC’s memo to
companies on Thursday, with the CFTC saying it expected
companies to provide it with “all relevant facts relating to
individuals responsible for the misconduct” and the identities
of those people.

While the CFTC has previously issued guidance on company
cooperation, this marks the first time it has crafted a memo
just geared toward enticing individuals to cooperate, a
spokesman said.

The memos were released at the same time that Goelman, a
former federal prosecutor, announced he would depart the agency
on February 3.

CFTC Chairman Timothy Massad, meanwhile, will step down
Friday. President-elect Donald Trump has not yet named a
replacement.



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