CFTC Unveils New Enforcement Advisory and Penalty Mitigation Matrix

The Commodity Futures Trading Commission’s (CFTC) Division of Enforcement has issued a new advisory outlining the specific criteria it will use to evaluate self-reporting, cooperation, and remediation when recommending enforcement actions. For the first time, the regulator is implementing a formal Mitigation Credit Matrix to calculate presumptive reductions in civil monetary penalties. The guidance is designed to establish regulatory clarity, provide fair notice, and ensure due process during CFTC investigations. Under the new matrix, presumptive mitigation credit ranges from 0% for entities that fail to self-report or cooperate, up to a 55% reduction from the initial penalty calculation for exemplary self-reporting and cooperation. The Division retains discretion to adjust credits based on the specific facts and circumstances of each matter. Acting Chairman Caroline D. Pham stated that the advisory modernizes enforcement practices in line with an Administration Executive Order and aligns CFTC standards with those of the U.S. Department of Justice and other financial regulators. Pham noted that setting clear expectations creates incentives for entities to self-report and resolve matters promptly, allowing the agency to conserve resources to focus on catching fraudsters and protecting market integrity. The advisory details a three-tier framework for assessing self-reporting: No Self-Report, Satisfactory Self-Report, and Exemplary Self-Report. To earn full credit, disclosures must be voluntary, timely, complete, and submitted directly to the Commission. The Division also created a safe harbor for good-faith self-reporting, provided that any inaccurate information is corrected promptly upon discovery. Cooperation is evaluated across four tiers: No Cooperation, Satisfactory Cooperation, Excellent Cooperation, and Exemplary Cooperation. The assessment of cooperation includes remediation efforts to prevent future violations, evaluated in coordination with other CFTC divisions. In certain circumstances, the Division may recommend compliance monitors or independent consultants to oversee required remediation. Division of Enforcement Director Brian Young noted that clear incentives for transparency and cooperation will improve regulatory efficiency and support fair enforcement outcomes.