On May 19, 2026, the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement (the Division) issued a new policy setting forth the Division’s “approach to assessing self-reports, cooperation, remediation, and restitution and/or disgorgement” (the Policy).¹

The Policy rescinds the February 2025 Advisory on Self-Reporting, Cooperation, and Remediation (2025 Advisory)² and implements a new framework for awarding self-reporting and cooperation credit. The Policy establishes a presumption that, absent “aggravating factors,” the Division will issue declinations to market participants that voluntarily self-report potential violations, cooperate in the ensuing investigation, fully remediate the issue, and provide full restitution and disgorgement to impacted parties. The Policy also introduces tiered penalty reductions ranging from 25% up to 75% where declination is not available.

In announcing the Policy, Chair Michael Selig described it as aimed at “provid[ing] clarity, promot[ing] consistency and reinforc[ing] the [D]ivision’s commitment to transparency in its enforcement practices.”³ As described below, the Policy provides a clear framework for awarding declinations to many self-reports while continuing the Division’s recent practice of awarding generous credit for cooperation. It leaves open, however, questions relating to the treatment of related guidance, required disclosures, initial penalty amounts and whether declinations will be made publicly available.

Declination

Briefly, the Policy provides that a market participant may be entitled to a declination if (A) the market participant (1) voluntarily self-reports; (2) fully cooperates with the Division’s investigation; (3) timely and appropriately remediates the misconduct; and (4) where applicable, provides full restitution and/or disgorgement, and (B) no other aggravating circumstances are present.

Each element is discussed in further detail below.

Voluntary Self-Report

For a self-report to qualify as voluntary under the Policy, the market participant must self-report in good faith and prior to any known or reasonably anticipated threat of disclosure through a whistleblower, media or some other channel, or investigation of the matter by an exchange, self-regulatory organization or government entity. Self-reports must also be made within a reasonably prompt time after the market participant becomes aware of the misconduct, and the burden to show timeliness is on the reporting market participant.

Further, market participants are expected to disclose all material, non-privileged information available, irrespective of the completeness of any internal investigation. Given this requirement, the Policy also includes a safe harbor if information shared via a self-report is later shown to be inaccurate, provided that any inaccuracies are promptly disclosed to the Division.

Full Cooperation

Similarly, full cooperation under the Policy demands proactive, timely disclosure of all non-privileged, relevant information, which includes information gathered through internal investigation, identification of all individuals involved without consideration of seniority, and attribution of sources where not privileged.

To the extent an internal investigation is underway, full cooperation requires market participants to provide the Division with updates on a rolling basis. Finally, they are also expected to engage in the timely preservation, collection and production of relevant documents, as well as deconfliction of internal investigative steps with the Division’s requests (e.g., by delaying interviews if requested to do so by the Division).

Timely and Appropriate Remediation

To receive credit for timely and appropriate remediation, market participants must conduct a root-cause analysis and appropriately remediate the root causes identified. More broadly, remediation requires the implementation of an effective compliance and ethics program that is reflective of party size and resources, as well as any associated risks. The Policy provides that an effective program, at a minimum, should include (1) adequate compliance resources; (2) qualified compliance personnel; (3) independence and authority of the compliance function with meaningful access to senior leadership; (4) a risk-based program informed by a robust compliance-risk assessment; (5) compensation, review and promotion structures designed to incentivize compliance; (6) ongoing testing and evaluation; and (7) any additional steps necessary to demonstrate recognition of the seriousness of the misconduct and a commitment to reducing the risk of future misconduct.

Employees directly responsible for misconduct, those who have failed to properly exercise their oversight responsibilities and those with supervisory authority must be appropriately disciplined. The Policy notes that in assessing a market participant’s remediation, the Division will consider whether a firm has implemented appropriate record-retention measures, including controls over personal devices and messaging applications (e.g., ephemeral messaging platforms). 

The Division maintains discretion under the Policy to grant declinations before remediation measures are complete.

Full Restitution and/or Disgorgement

Full restitution and/or disgorgement require the creation and/or implementation of a plan to provide full restitution for those harmed and/or full disgorgement of ill-gotten gains, and the plan must be approved by the Division. 

As with remediation, the Policy gives the Division discretion to grant declinations before payment of any planned restitution and/or disgorgement.

Absence of Aggravating Circumstances 

The aggravating circumstances that may preclude eligibility for declination are limited to (1) pervasive intentional or reckless misconduct by ownership or senior management; (2) intentional or reckless misconduct over an extended period of time; (3) recidivist intentional or reckless misconduct; and (4) particularly egregious aggregate harm.

Cooperation Credit

Under the Policy, market participants who do not qualify for full declination may still receive cooperation credit.

Specifically, market participants who satisfy the requirements of full cooperation, timely and appropriate remediation, and full restitution and/or disgorgement may be entitled to significant penalty reductions. Where no aggravating circumstances are present, market participants who satisfy these requirements are entitled to at least a 50% reduction in penalty. Even if aggravating factors are present, market participants who satisfy these requirements are entitled to a 25% reduction in penalty. The maximum reduction in penalty can be no more than 75%.   

Cooperation credit may also be available to market participants who fail to otherwise meet the conditions above but who nonetheless engage in timely and appropriate remediation and provide full restitution and/or disgorgement. In these circumstances, the Division may offer a penalty reduction of no more than 25%.

Similar to its decision-making with respect to declination, the Division may provide cooperation credit either before or after the implementation of remediation, restitution and/or disgorgement.

Key Takeaways

The Policy is consistent with the stated goals of the CFTC to provide increased clarity and transparency with respect to its decision-making processes and to offer greater incentives for parties to self-report. However, there are several key questions that market participants should monitor as the Policy is put into place:

• While the Policy expressly revokes the 2025 Advisory, it is silent regarding certain other advisories issued under Acting Chair Caroline Pham. In particular, the Policy does not indicate whether Staff Letter 25-13 remains in effect; that letter provided that operating divisions would not refer self-reports to the Division unless they involved fraud, manipulation, “especially egregious or prolonged systematic deficiencies,” “knowing or willful misconduct by management,” or a “lack of substantial progress towards completion of a remediation plan for an unreasonably lengthy period of time.” The Policy does not indicate whether this guidance is still in effect and how, if at all, it implicates the Policy’s self-reporting and declination framework.
• Unlike the 2025 Advisory, the Policy does not expressly provide that self-reporting credit is available for a potential violation “even if it may have been required to be disclosed by a futures commission merchant, swap dealer, major swap participant, swap execution facility, or swap data repository in its annual chief compliance officer report, so long as the self-report was made in a timely manner notwithstanding the timing of the annual report.”
• The new Policy, while maintaining a high bar for full declination, provides a clear framework for both declination and tiered penalty reductions. However, it appears that the initial penalty against which the discount is applied remains within the Staff’s discretion.
• Finally, the Policy also leaves open whether declination determinations will be made public or private.