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U.S. CFTC aims to get more cooperation from the targets of probes

By Sarah N. Lynch

WASHINGTON (Reuters) - U.S. derivatives regulators took steps on Thursday to entice companies and individuals to better cooperate during investigations, saying it could help defendants dodge charges or face less severe sanctions.

The twin pair of memos released by the Commodity Futures Trading Commission's enforcement division lay out a series of factors that the regulator said it would consider when weighing possible civil charges.

They also drew the line on what kinds of behavior would be unacceptable, such as failing to preserve records, slow-walking the response to a subpoena, and other efforts to obstruct the probe.

"Credit will be given where the cooperation is foremost sincere, robust, and indicative of willingness to accept responsibility for misconduct, where appropriate,” said Aitan Goelman, the CFTC's enforcement director.

The CFTC's memos reflect part of a broader trend by both criminal and civil federal prosecutors, both to encourage companies to self-report violations and also to hold individuals more accountable for their actions.

Last year, for instance, the U.S. Justice Department launched a new pilot program that allows companies to get up to a 50 percent reduction in penalties if they agree to report violations of the Foreign Corrupt Practices Act (FCPA).

The Securities and Exchange Commission, which brings civil FCPA cases, also issued similar guidance, saying companies that self-report the violations can become eligible for deferred or non-prosecution agreements.

In 2015, the Justice Department also embarked on a renewed effort to hold individuals more accountable with the release of the "Yates Memo," penned by Deputy Attorney General Sally Quillian Yates.

The memo stated that companies would not receive any cooperation from the government if they did not fully disclose the facts about employees who were culpable for potential crimes.

Some of those sentiments were echoed in the CFTC's memo to companies on Thursday, with the CFTC saying it expected companies to provide it with "all relevant facts relating to individuals responsible for the misconduct" and the identities of those people.

While the CFTC has previously issued guidance on company cooperation, this marks the first time it has crafted a memo just geared toward enticing individuals to cooperate, a spokesman said.

The memos were released at the same time that Goelman, a former federal prosecutor, announced he would depart the agency on February 3.

CFTC Chairman Timothy Massad, meanwhile, will step down Friday. President-elect Donald Trump has not yet named a replacement.

(Reporting by Sarah N. Lynch; Editing by Diane Craft)