Once a case has been referred to the Market Regulation Enforcement team for prosecution, a respondent may seek to settle the case at any time after a Notice of Enforcement has been issued.

The settlement of an enforcement action typically involves negotiations, during which the parties arrive at an appropriate proposed sanction that Market Regulation would support before a Panel of the Business Conduct Committee (BCC). A respondent may not make a settlement offer to the BCC Panel unless Market Regulation supports the offer.

Written Offer of Settlement

After a settlement in principle is reached, the respondent submits the offer in writing for consideration by the BCC Panel. The respondent may submit a written offer of settlement without admitting or denying the rule violations or factual findings upon which the penalty is based; provided the offer includes consent to the entry of the findings by the BCC regarding the conduct, the rule violations at issue, the penalty to be imposed and the Effective Date for the sanctions.

In submitting an offer of settlement, respondents waive their rights to a contested hearing and to appeal the panel’s decision if the offer is accepted. Respondents also waive any claim of bias or prejudgment on the part of the panel. A respondent may withdraw an offer of settlement at any time prior to the start of the settlement hearing before the BCC Panel.

Once a settlement is reached and the written offer of settlement is received, the case will be scheduled for a hearing before a BCC Panel. The BCC Panel will either accept or reject the settlement offer.

Benefits of Settlement

There are advantages for a respondent who negotiates a settlement with Enforcement prior to charges being issued by the Chief Regulatory Officer.

A settlement allows a respondent the opportunity to negotiate the language used in the Findings section of a Notice of Disciplinary Action (NDA). Further, settling before the issuance of charges allows the respondent and Enforcement to come to terms as to which alleged rule violation(s) will be cited in the settlement.

If charges are approved by the Chief Regulatory Officer, Enforcement is generally confined to the charges contained in the Charging Memorandum and the language used to describe each charge. It is difficult to drop charges once the Chief Regulatory Officer has determined that the evidence supports inclusion of those charges in an enforcement action.

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ACCREDITED COURSE

In case you didn’t know, the CFA Institute allows its members to self-determine and report continuing education credits earned from external sources. CFA Institute members are encouraged to self-document such credits in their online CE tracker. CME Institute offers a variety of courses, webinars, and white papers to support your professional education.

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