Today, the CFTC released a summary of all the enforcement actions it brought during the 2023 Fiscal Year. Of course, all of the enforcement actions and litigation cases mentioned in the summary have already been known because they are publicly posted once a settlement agreement is reached or a court opinion is rendered. However, the aggregate summary contains certain information that is quite interesting, including the following:
- In FY2023, the CFTC filed 96 enforcement actions, compared to 82 in FY2022 and 113 in FY 2020 (the CFTC did not publish its annual enforcement results in FY2021).
- These 96 enforcement actions resulted in a shocking $4.3 billion in penalties, restitution and disgorgement. This is compared to $2.5 billion in FY2022 and $1.3 billion in FY2021. The $2.5 billion amount in FY2022 was noteworthy for its size, but nearly half of that amount resulted from a single enforcement action. The $4.3 billion in FY2023 is therefore quite notable.
- The CFTC brought 47 actions related to digital assets, compared to 18 in FY 2022 and 7 in FY2020.
- While some commentators believed the CFTC's Division of Enforcement was moving away from bringing spoofing cases, the CFTC brought 3 such actions in FY2023.
- The CFTC noted that, since FY2022, it has imposed a total $1.117 billion in civil monetary penalties on 20 financial institutions for recordkeeping failures involving unapproved communication methods (such as WhatsApp).
- The CFTC stressed the importance of its whistleblower program, noting that it has granted nearly $350 million in awards to 41 whistleblowers, and that it has imposed more than $3 billion in the total sanctions from whistleblower-related enforcement actions.
- The CFTC reiterated that it has recently created two new task forces within the Division of Enforcement: (1) the Cybersecurity and Emerging Technologies Task Force, which investigates cybersecurity and issues related to emerging technologies, and (2) the Environmental Fraud Task Force, which investigates environmental fraud and misconduct in derivatives and relevant spot markets.
The CFTC's Division of Enforcement has therefore been very active this year, and has recently doubled down by signaling that its penalties and other remedies will be more drastic going forward. Specifically, the Division of Enforcement recently issued guidelines indicating it will no longer accept “neither-admit-nor-deny” settlements in many cases; that it will increase penalties in certain cases to combat recidivism; and that it will require the use of monitors or consultants in many cases. See our client alert on that advisory at reedsmith.com.