Executive Summary
- What’s new: The CFTC Division of Enforcement has issued a new policy for evaluating cooperation when considering declinations or making enforcement recommendations to the Commission.
- Why it matters: The policy supersedes the previous enforcement advisory on self-reporting, cooperation and remediation issued in February 2025. It provides parties with a path to declination if a self-report is in good faith, voluntary and the party provides appropriate remediation of the misconduct and restitution or disgorgement.
- What to do next: Registrants and other market participants that identify noncompliance issues should consider whether to avail themselves of the benefits, including potential declination, presented by self-reporting.
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On May 19, 2026, the Commodity Futures Trading Commission’s (CFTC’s or Commission’s) Division of Enforcement (Division) issued a new policy for evaluating cooperation when considering declinations or making enforcement recommendations to the Commission.
The policy rescinded the Division’s previous enforcement advisory issued in February 2025, including the cooperation tiers and mitigation credit matrix.
Declinations
Under the new policy, the Division will not recommend to the Commission that an enforcement action be instituted for violations of the Commodity Exchange Act (CEA) and CFTC regulations when all of the following five factors are met:
- Voluntary self-reporting: The self-report must have been made within a reasonably prompt time after discovering the misconduct and include all material nonprivileged information in the party’s possession. A self-report is not eligible for credit if disclosure of the misconduct should have been reasonably anticipated by the entity because of its awareness of a whistleblower or imminent threat of an investigation by a government regulator, exchange or self-regulatory organization. On the other hand, the mere fact that the CFTC already has independent knowledge of the misconduct does not disqualify an entity from self-reporting credit. The policy provides a safe harbor for inaccurate information self-reported in good faith, if the inaccuracy is promptly corrected.
- Full cooperation: The party must disclose all nonprivileged information concerning the misconduct (even when not specifically requested by the Division). It must also preserve, collect and produce relevant documents, and make officers and employees available for interviews.
- Remediation: The entity must conduct a root-cause analysis of the misconduct and promptly implement remediation measures, implement an effective compliance and ethics program and, if appropriate, discipline employees who engaged in misconduct and supervisors who failed in their oversight.
- Restitution and disgorgement: If another person was harmed, or ill-gotten gains obtained, the entity must put in place a plan to provide full restitution and make disgorgement.
- No preclusive aggravating circumstances: Aggravating circumstances may, but do not necessarily, preclude a declination. Such circumstances include pervasive intentional or reckless misconduct by owners or senior management, misconduct occurring over a long period of time, recidivism and harm that is egregious in the aggregate.
Partial Credit
The policy provides for credit in the form of a reduced penalty for matters that fail to qualify for a declination. For matters with insufficient voluntary self-reporting, the Division will recommend a penalty reduction of between 50% and 75% of the otherwise applicable penalty.
For matters where aggravating factors preclude a declination, the Division will recommend a penalty reduction of between 25% and 75%. The Division retains discretion to award partial cooperation credit in matters by reducing the otherwise applicable penalty by a maximum of 25% as long as the party has remediated and provided restitution and/or disgorgement, if applicable.
Differences From Prior Cooperation Policy
The CFTC’s new policy contains a number of notable differences from the previous policy issued in February 2025, which has now been rescinded.
- Under the previous policy, cooperation was evaluated on a four-tier scale and self-reporting on a three-tier scale. A mitigation credit matrix combined these scales to determine the specific percentage reduction to the initial penalty calculation. Under the new policy, these scales and mitigation credit matrix have been eliminated, and self-reporting is all or nothing, although the Division retains the ability to reduce penalties even where there was no self-reporting or where cooperation was not complete.
- The prior policy seemed to give a grace period to determine whether a violation occurred. Now, self-reports are expected to be made at the earliest possible opportunity, with no explicit grace period.
- The prior policy gave self-reporting credit for information that was required to be reported in an annual report, which reversed a prior CFTC policy denying such credit. The new policy does not directly address whether credit will be given for information disclosed in an annual report.
- The prior policy gave the operating division rather than the enforcement division the ability to determine whether a compliance monitor is appropriate. The new cooperation policy does not address in what circumstances, if ever, a compliance monitor or outside consultant might be imposed as a condition to an order to ensure that remedial undertakings are completed.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.