Commodity Futures Trading Commission is amending its rules to enhance the transparency of its enforcement actions.
The amendments are related to the Rules of Practice to improve the transparency of the Commission’s enforcement actions. This includes changes to ensure an accurate and complete administrative record by improving internal memoranda to the Commission when the Division of Enforcement recommends an enforcement action.
The changes are also related to the Rules Relating to Investigations to enhance due process when the Division of Enforcement notifies people who may be named in an enforcement action. It seeks to ensure that notice of potential charges and relevant facts supporting the allegations are provided.
Overall, the revisions fall into five categories:
- Revisions to Part 10 to clarify the definition of adjudicatory proceedings;
- Revisions to Part 10 removing references to regulations that are no longer effective and to communications by facsimile machine;
- Revisions to Part 10 to clarify that the Commission can accept an offer of settlement by an order;
- Revisions to Part 10 establishing certain requirements for the form of the recommendation memorandum that the Division provides to the Commission when recommending that the Commission accept an offer of settlement; and
- Revisions to Appendix A to Part 11 detailing the procedures when the Division chooses to inform people who may be named in an enforcement proceeding of the nature of the allegations pertaining to them as well as the procedure to be followed in submitting a written response. It also includes expanding the time to respond to no less than 30 days rather than 14 days as required by prior versions.
“Today, I am announcing improvements to our CFTC Rules of Practice and Rules Relating to Investigations to make much-needed reforms to our enforcement program and the Wells process,” Acting Chairman Caroline Pham said. “These reforms ensure due process, such as providing a proper Wells notice and discontinuing the practice of ‘secret’ charges, and providing a minimum of 30 days—instead of as little as 2 days in the past—to make a Wells submission that is shared with the Commission promptly. Most importantly, these reforms ensure that the Division of Enforcement’s memos to the Commission are objective, consistent with applicable rules of professional conduct, comprehensive in addressing the law and facts, and supported by citations to evidence.”
The amended rules are effective on the date of their publication in the Federal Register.