CFTC And SEC Establish Program To Enhance Coordination On Bad Actor Exemption Disqualifications

CFTC Chair Heath Tarbert and SEC Chair Jay Clayton established a one-year pilot program to enhance coordination among agency staff on CFTC enforcement actions that may trigger the "bad actor disqualification" provisions of Rule 262(a) of Regulation A and Rule 506(d)(1) of Regulation D (the "SEC Disqualification Rules"). The rules disqualify entities from certain registration exemptions for security offerings if it is determined that, among other things, they have been the subject of certain CFTC enforcement actions.

In a joint letter, the Chairs stated that the program is intended to provide a framework for instances in which the CFTC finds it appropriate to notify the SEC that an Order should not result in disqualification under the SEC Disqualification Rules. SEC and CFTC staff will put in place the following process: