Compliance with Dodd-Frank might not be as complicated as feared; however, companies must be vigilant in order to maintain the relevant exemptions.
Guidelines in Practice
culpability score by two ( i.e., base culpability score of 5 + 2 = 7). No order specifically directed at the corporation was violated, it didn’t obstruct justice, and it lacked an effective compliance program at the time of the violations (no adjustments). The corporation cooperated fully with the enforcement staff, settled the matter, and demonstrated an affirmative acceptance of responsibility for its misconduct, reducing its culpability score by five ( i.e., culpability score 7 – 5 = 2). The final culpability score of 2 sets the minimum and maximum multipliers at 0.40 and 0.80, respectively, and when the violation level base penalty of $6.3 million is applied, the final penalty fine range becomes $2.52 million to $5.04 million.
• $90 million to $180 million fine range for a 450-employee organization’s violation of FERC’s anti-market manipulation regulation.4 Hypothetically, the enforcement staff learned, through a call to the enforcement hotline and later data responses, that such an organization manipulated a specific market and caused a loss of $75 million to other market participants through multiple violations on each day of a three-week period. This results in a base violation level of 6 for market manipulation plus 24 levels for the $75 million pecuniary loss plus two levels for violations exceeding 10 days but less than 50 days; total violation level of 32 = $17.5 million on the violation level base penalty table, but the $75 million pecuniary loss is used for the base penalty, as it is the larger dollar amount. In culpability terms, senior management condoned the manipulative conduct in the organization of more than 200 but less than 1,000 employees, which increased its culpability score by three ( i.e., base culpability score of 5 + 3 = 8). There was no prior history of FERC violations, no order specifically directed at the organization was violated, the organization didn’t obstruct justice, and an effective compliance program wasn’t in place at the time of the violation (no adjustments). Although the organization settled, it refused to demonstrate an affirmative acceptance of responsibility for its violations, but it did cooperate fully throughout the enforcement staff’s investigation and avoided a trial-type hearing, reducing its culpability score by two ( i.e., culpability score of 8 – 2 = 6). The final culpability score of six sets the minimum and maximum multipliers at 1.2 and 2.4, respectively, and when the violation level base penalty of $75 million is applied, the final penalty fine range becomes $90 million to $180 million.– JMM
Endnotes: 1. See Endnote #5 of main article ( Penalty Predictability ), P 55; $175,000 x 0.05 = $8,750; $175,000 x 0.20 = $35,000.
2. To monitor how interstate pipeline capacity is used, FERC requires that the shipper of record and the owner of the gas must be the same throughout the course of the transportation or storage service.
3. Policy Statement , P 54; $6.3 million x 0.40 = $2.52 million; $6.3 million x 0.80 = $5.04 million. With a base violation level of 16, the guidelines also describe (P 56)