On September 10, 2020, the Director of Enforcement for the CFTC issued guidance to the CFTC staff regarding the evaluation of compliance programs in connection with its enforcement actions. While not specifically tailored to the precious metals retail industry, it should be noted that the week before the issuance, a CFTC representative stated at a conference that the metals industry was still one of its top enforcement priorities for the foreseeable future. The broad factors the Director set forth in his memo tracked the guidance Cosgrove Law Group has been espousing for over a decade now.
The Director’s factors are broken in to three primary categories of consideration: prevention, detection, and remediation. Cosgrove Law Group can tailor systems and procedures for specific entities for each category. The only thing Cosgrove Law Group cannot provide is the necessary commitment to an effective consistent compliance program—that must come from the client. While we can provide the teeth, the entity must be willing to bite, particularly when it comes to remediation. Equally important is a willingness to finance a neutral monitoring program that is free from sales pressure while detecting compliance violations. Those companies whom we have helped implement these strategies have a much better handle on the sales pitches being delivered by their staff and therefore the molding of that message to be compliant. Food for thought.