What the CFTC looks at
The CFTC is a federal civil regulator for futures, options on futures, and swaps, and its anti-fraud and anti-manipulation authority can extend to the underlying commodities, which in some contexts include certain digital assets. Common subjects include spoofing, manipulation, fraud in pooled investment schemes, and operating without required registration. The National Futures Association, a self-regulatory organization, also examines and disciplines its members. The CFTC can seek civil penalties, disgorgement, and trading bans, while criminal charges for the same conduct are brought by the Justice Department, and the two often coordinate. Enforcement priorities have shifted recently, so the agency's current focus is worth confirming.
Before you produce records or testify
CFTC investigative subpoenas typically ask for trading data, communications, and account records, and their scope can often be negotiated through counsel. Preserve all relevant messages, including chats on personal phones or apps used for trading conversations, and suspend any automatic deletion settings. Testimony is given under oath, and statements can be shared with prosecutors. If you are employed by a firm, the firm's counsel represents the firm, and you may need separate representation. Do not discuss the inquiry with other traders whose activity may also be under review.
Early strategy
We begin by identifying the scope of the inquiry, whether you are viewed as a witness or as someone whose trading is in question, and whether a criminal referral is likely. We look at the trading patterns or transactions at issue and the explanations that exist for them. CFTC staff often send a Wells notice before recommending charges, which usually gives an opportunity to respond in writing. Cooperation and self-reporting can affect how the agency approaches a case, and we discuss what those paths would involve. If the same trades touched securities markets, we check whether the SEC or another regulator is looking at them too. For registered persons, the effect on registration and employment is part of the planning.
