Self-Reporting and Cooperation 3.0: CFTC Enforcement Division’s New Policy Offers a Clearer Path to Declination

Building on recent public statements by Commodity Futures Trading Commission (CFTC or Commission) Enforcement Director David Miller,[1] the CFTC’s Division of Enforcement (the Division) issued an advisory on May 19 outlining its new policy for evaluating cooperation when considering declinations or making enforcement recommendations (the Advisory).[2] The Advisory replaces the Division’s February 25, 2025, self-reporting and cooperation advisory, supersedes prior statements in the Division’s Enforcement Manual, and includes several notable changes from the CFTC's previous approach to cooperation.[3]

Most notably, the Advisory removes several deterrents to self-reporting and lays out a clear path to a declination if a party self-reports, fully cooperates, timely remediates, provides restitution or disgorgement, where applicable and does not fall within the specified aggravating circumstances.[4]

What Is New

The Advisory provides a safe harbor for good-faith inaccuracies in self-reports. If a report otherwise meets the requirements, the Division will not recommend charges under specified Commodity Exchange Act (CEA) provisions for later-discovered inaccuracies, provided the party promptly supplements and corrects the information. This addresses one of the biggest practical deterrents to early self-reporting: the fear that an incomplete initial disclosure could itself become the basis for additional charges.

The Advisory also expands the circumstances under which a self-report can qualify as voluntary, potentially simplifying decisions about whether self-reporting will yield tangible benefits. In particular, a report may still count even if the CFTC already has independent knowledge of the misconduct, so long as the report is otherwise made in good faith and satisfies the remaining requirements. That change matters because it reduces the risk that a company will lose credit simply because the Commission has already heard about the issue. This change does not eliminate the CFTC's longstanding focus on proactive early disclosure.

The Advisory makes clear that registrants must “report misconduct at the earliest possible opportunity, and ... not defer disclosure until a routine or periodic reporting date.”[5] A disclosure first appearing in a CCO annual report or held until another scheduled filing is unlikely to satisfy the policy’s timing requirements.

The Advisory also makes declination a concrete enforcement outcome rather than an abstract possibility. If a party meets the five stated conditions and no aggravating circumstances apply, the Division will not recommend that the Commission bring an enforcement action. The Advisory identifies four categories of aggravating circumstances: 

1. pervasive intentional or reckless misconduct by owners or senior management; 

2. intentional or reckless misconduct over an extended period; 

3. repeat intentional or reckless misconduct; and 

4. misconduct causing particularly egregious aggregate harm. 

These factors do not automatically bar a declination — the Division retains discretion to weigh their severity against the party’s self-report, cooperation, remediation, and restitution. Even where aggravating circumstances preclude a full declination, a party may still receive cooperation credit of at least 25 percent off the Division’s calculated penalty, with potential reductions of up to 75 percent, if it otherwise satisfies the policy’s requirements. The Division may also grant a declination determination before remediation or restitution is fully completed, another meaningful practical shift.

The Advisory’s treatment of aggravating factors leaves key terms undefined. For example, the policy does not specify what qualifies as an “extended period” of misconduct, nor does it clarify whether “repeat” misconduct requires multiple instances of the same violation type or simply multiple appearances before the Division for unrelated matters. These ambiguities, particularly around recidivism, will likely be resolved only as the Division applies the policy in future enforcement actions. Market participants should monitor how the Division interprets these factors, as they may significantly affect whether a matter qualifies for a declination.

The Advisory is also more detailed and operational than the old framework. It separately defines “Full Cooperation,” “Timely and Appropriate Remediation,” and “Full Restitution and/or Disgorgement,” spelling out expectations that include deconfliction of internal investigative steps, rolling updates on internal investigations, overseas document production, foreign-language translations, and witness availability for interviews. Notably, the Advisory places the burden on the party to establish the applicability of any foreign laws prohibiting the production of evidence. It also expressly addresses record-retention controls for personal devices, messaging applications, and ephemeral messaging platforms, reflecting a more modern enforcement posture.[6]

What Is Gone

The Advisory’s biggest change is eliminating the prior tiered matrix structure. The February 2025 advisory used a three-tier self-reporting scale, a four-tier cooperation/remediation scale, and a mitigation credit matrix ranging from 0 percent to 55 percent. That framework is gone. The new policy replaces it with a more structured declination-and-credit model that provides specific percentage-based penalty reductions: at least 50 percent where a good-faith self-report did not qualify as a Voluntary Self-Report, and at least 25 percent in matters involving aggravating factors, with a maximum penalty reduction of 75 percent in either case.[7]

The old framework also folded remediation into a broader cooperation analysis. The new Advisory treats remediation as a distinct category, with specific expectations around root-cause analysis, compliance-program enhancements, discipline and record retention. This makes remediation more central to the analysis and less like a background factor in a broader mitigation calculation.[8]

The Advisory also narrows the practical role of partial cooperation. Under the old framework, parties could think in terms of incremental movement up the matrix. Under the new policy, full cooperation is the threshold for meaningful credit, while lesser cooperation generally leads to more limited reductions. The Division’s shift to a binary cooperation standard means a party either fully cooperates or it does not; there is no partial credit. For market participants accustomed to negotiating the degree of their cooperation credit, this binary framework fundamentally changes the calculus.[9]

What This Means for Market Participants

The Advisory changes the enforcement calculus in a few important ways. First, it increases the value of rapid internal escalation and early fact development, because a prompt good-faith self-report may now position a company for a declination even if the CFTC already has some awareness of the issue. Second, it raises the cost of half-measures: firms that want the benefit of the new policy will need to think in terms of full cooperation, full remediation, and full restitution rather than trying to optimize around a percentage discount.

Third, the policy suggests that compliance infrastructure now matters not just for prevention, but for enforcement strategy. The Division’s express focus on internal investigations, overseas evidence, foreign-law issues, and modern messaging tools means that a firm’s ability to preserve evidence and respond quickly may materially affect how the CFTC treats the matter. In practice, this means that market participants should now revisit escalation protocols, document-preservation procedures and self-reporting decision trees, rather than wait until a problem arises.

Practical Takeaways

For market participants, the Advisory is both more generous and more demanding than the old framework. It is more generous because it creates a genuine declination pathway and recognizes good-faith self-reports even where the CFTC may already know of the misconduct. It is more demanding because the party seeking credit must bring a complete package: full cooperation, meaningful remediation, and restitution or disgorgement where applicable.

The bottom line is that the CFTC has moved away from a flexible mitigation matrix and toward a more disciplined enforcement framework that is easier to explain but harder to satisfy. Firms should read the Advisory as a reason to sharpen internal reporting channels, strengthen investigative capabilities, and reassess when a matter should be elevated for voluntary self-reporting.

Katten on CFTC Enforcement

Katten is continually monitoring the latest developments regarding CFTC enforcement activity. For more information about trends in CFTC enforcement and how this may impact regulatory compliance and enforcement going forward, please contact one of the authors of this article or your primary Katten attorney.