The CFTC has said that if a company reports and
remediates any issues of its own accord, it will likely face
lower financial penalties. But the proposal’s
effects in practice remain to be seen
When a company discovers a potential regulatory problem,
whether misconduct by one of its employees or the failure of a
compliance system, the decision whether to self-report the
problem to its regulators is rarely clear cut. While regulators
tout the benefits of self-reporting, companies are often unsure
whether the potential benefit of self-reporting –
which can be uncertain and hard to quantify –
outweighs the cost of an enforcement action that might not be
brought if the company decides just to go ahead and correct the
problem without self-reporting. As a result, even companies
that want to do the right thing often decide to roll the dice
and wait to see whether the government ever
investigates....