How the U.S. is rewriting the enforcement playbook
Self-reporting pays
In our recent Global Trends in Market Abuse and Trade Surveillance report, we predicted that US regulators would begin to shift away from purely punitive enforcement and instead adopt a more constructive, incentive-based approach - one that rewards transparency, early reporting, and investment in remediation. That shift is no longer hypothetical.
In a move that confirms our thinking, the Commodity Futures Trading Commission (CFTC) has issued a new Enforcement Advisory outlining how it will evaluate self-reporting, cooperation, and remediation when recommending enforcement actions. For the first time, the CFTC has introduced a “Mitigation Credit Matrix”, giving firms fair notice of how much they stand to benefit - up to a 55% reduction in penalties - for exemplary cooperation and disclosure.
Acting Chairman Caroline D. Pham remarked,
“By making the CFTC’s expectations for self-reporting, cooperation, and remediation more clear… this advisory creates meaningful incentives for firms to come forward and get cases resolved faster with reasonable penalties.”
What does ‘good’ self-reporting look like?
The Enforcement Advisory represents a structural reworking of enforcement culture. The CFTC outlines a tiered approach to evaluating how and when a firm self-reports potential misconduct. The best outcomes are for those who report early, provide full material information, and maintain open engagement throughout.
The framework reflects key principles that the SEC has long outlined for cooperation credit, including:
- Self-policing: Build a culture of compliance that identifies risks early.
- Early disclosure: Report violations as soon as they’re discovered - even if all the facts are not yet known.
- Swift remediation: Discipline individuals, fix control gaps, and demonstrate a commitment to prevent recurrence.
- Meaningful cooperation: Go beyond the minimum - e.g. providing internal findings or helping narrow the scope of regulatory requests.
- Consistent engagement: Keep regulators informed throughout, fostering trust and transparency.
CFTC Mitigation Credit Matrix
No Cooperation | Satisfactory Cooperation | Excellent Cooperation | Exemplary Cooperation | |
No Self-Report | 0%* | 10% | 20% | 35% |
Satisfactory Self-Report | 10% | 20% | 30% | 45% |
Exemplary Self-Report | 20% | 30% | 40% | 55% |
* Percentages indicate the percentage reduction in fine value stemming from relative quality of self-reports and cooperation.
Self-reporting discount in action
It’s not just the CFTC recognising the value of self-reporting. While the Securities and Exchange Commission (SEC) has yet to formalise its own matrix or framework, recent enforcement activity points to a clear shift in approach.
In January 2025, the SEC fined 12 firms for widespread failures to preserve electronic communications - an increasingly common theme in market abuse enforcement. The total penalties exceeded $63 million.
While guilty parties like Blackstone, Schwab and Apollo paid between $8.5 million and $12 million each, PJT Partners LP, which self-reported its violations, received a markedly different outcome: a $600,000 fine.
The SEC’s Sanjay Wadhwa was clear about why:
“While holding firms responsible for their recordkeeping failures, the Commission once more recognised and credited a registrant’s self-report, demonstrating yet again that there are tangible benefits to be gained from proactive cooperation.”
This wasn’t a soft touch. PJT’s violations were similar in nature to its peers, but the firm’s willingness to self-report, remediate, and engage proactively made a multi-million-dollar difference. Self-reporting is clearly a commercially advantageous strategy.
The role of technology and controls
For firms looking to follow this path, the ability to self-report - and do so convincingly - relies on having robust surveillance, investigation, and escalation capabilities in place.
Both the SEC and CFTC emphasise the importance of timeliness and completeness. This requires technology that enables:
- Early detection of suspicious activity or policy breaches;
- Clear audit trails of internal investigations and disciplinary steps;
- Structured workflows that escalate issues to legal and compliance functions rapidly;
- Data-driven insight to assess the root cause and propose credible remediation plans.
Controls, policies, and procedures aren’t enough if you can’t produce the evidence fast. In today’s environment, being prepared to disclose means being equipped to prove your case to regulators and internal stakeholders.
Firms that can surface misconduct early, explain it transparently, and demonstrate credible reforms stand to benefit from lighter penalties, stronger reputational standing and regulatory goodwill.
A new chapter for compliance culture
North American regulators aren’t backing away from enforcement, but they are becoming more discerning. They’re looking for signs of maturity, transparency, and a genuine compliance mindset. This new enforcement philosophy offers an opportunity for firms to shift from reactive defensiveness to proactive engagement.
We’re moving into a regulatory era where accountability is incentivised, not just expected. Firms that invest in the right culture, controls, and communication channels will not only avoid the worst outcomes - they may help shape the next chapter of fair, efficient, and principles-based enforcement.
