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Financial Services Law Insights and Observations

CFTC commissioner pushes for wrongdoing admissions in settlements

Securities CFTC Enforcement Settlement


On September 19, CFTC Commissioner Christy Goldsmith Romero called on the agency to adopt her proposed Heightened Enforcement Accountability and Transparency (HEAT) Test, which would require defendants to admit wrongdoing in CFTC enforcement settlements. Expressing “deep concerns” with the CFTC’s practice of not seeking admissions of wrongdoing when settling the majority of enforcement cases (thus resulting in a majority of settlements where the defendant “neither admits nor denies” wrongdoing), Romero stressed that she does not support allowing defendants to settle without admitting their illegal conduct. Romero’s proposed HEAT Test would, among other things, (i) require defendants to acknowledge responsibility and wrongdoing to the public in cases where heightened accountability and acceptance of responsibility are in the public interest; (ii) require more defendants to admit their wrongdoing, thus maximizing public accountability, increasing transparency of a defendant’s wrongdoing, and heightening the deterrent impact of the agency’s enforcement settlements; and (iii) assist the CFTC in reviewing cases that may call for heightened scrutiny of these factors. Romero added that the CFTC should be more willing to take cases to trial when defendants are not willing to admit wrongdoing.