On October 2, 2018, Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo spoke before the Economic Club of Minnesota, giving a detailed overview of the CFTC’s enforcement program for fiscal year 2017 (Oct. 2017 – Sept. 2018), entitling his remarks “Regulatory Enforcement & Healthy Markets: Perfect Together!

The CFTC’s enforcement program filed 83 actions and imposed a total of $900 million in civil monetary penalties during this past fiscal year. Among the types of enforcement cases brought by the CFTC, there were more than 25 manipulative and spoofing cases, which is more than five times the average of similar actions brought previously.

In addition, the CFTC increased its partnership with other agencies and regulators. The CFTC filed more actions in parallel with its criminal law enforcement partners than in any previous year. Chairman Giancarlo’s speech referred to the CFTC’s continued coordination with the Securities and Exchange Commission (“SEC”) as “particularly noteworthy.” Chairman Giancarlo’s overview of the enforcement program in the past fiscal year also highlighted the following:

  • Enforcement Actions. The 83 enforcement actions filed during the last fiscal year were among the highest number of actions in the CFTC’s history filed during a single fiscal year, and represented a 25% increase from the previous year.
  • Civil Monetary Penalties. The approximately $900 million of total civil monetary penalties imposed by the CFTC during the last fiscal year is amongst the highest ever imposed. Of that $900 million, the CFTC collected about $800 million—or just under 90 percent.
  • More Large Scale Matters. During the last fiscal year, the CFTC brought more large-scale matters than in any previous year in its history. This past fiscal year, the CFTC imposed monetary judgments of more than $10 million in ten cases, a more than three-fold increase in the previous average number of large-scale matters brought in a fiscal year.
  • Manipulation. Similarly, the CFTC brought more manipulative conduct and spoofing cases than ever before. This year, the CFTC brought in excess of 25 such cases, more than five times the previous average of five such cases per year.
  • More partnering with criminal law enforcement. The CFTC also filed 14 actions in parallel with its criminal law enforcement partners, more than in any previous fiscal year. Chairman Giancarlo specifically cited the parallel actions involving spoofing and manipulative conduct the CFTC filed together with the Department of Justice (DOJ) in January 2018, which a senior Justice Department official described as “the largest futures market criminal enforcement action in Department history.”
  • More whistleblower awards. This past fiscal year, the CFTC issued five whistleblower awards totaling more than $75 million, more than any in the entire history of the program, which was established in 2011. This included the CFTC’s largest ever award of approximately $30 million. Chairman Giancarlo also indicated that the CFTC has received more whistleblower tips and complaints this past year than in any previous year.
  • Retail Fraud and Bitcoin. In line with the annual average in the past decade, more than thirty of the CFTC’s cases this fiscal year involved retail fraud, such as retail foreign exchange, precious metals, and virtual currencies. A series of recent binary options fraud filings set new precedents within the CFTC on how to aggressively identify and prosecute this type of retail fraud.
  • Coordination with Other Regulators and Self-Regulatory Organizations. Chairman Giancarlo’s remarks also highlighted the CFTC’s collaborative effort with the SEC, DOJ, and the Federal Bureau of Investigation (FBI), in which parallel actions were filed against a trading platform and its chief executive officer for unlawfully offering products margined in Bitcoin without the required anti-money laundering protections in place. The CFTC brought the action charging the portion of the activity involving derivatives, the SEC charged the portion relating to equities, and the DOJ and the FBI secured an order seizing the platform’s website and shutting it down. The CFTC also worked with self-regulatory organizations like the National Futures Association (“NFA”) and the commodities exchanges on cases of exchange trading misconduct.
  • Individual Accountability. Finally, approximately 70% of the CFTC’s actions involved charges against one or more individuals. The enforcement actions against individuals included significant numbers of individuals at financial institutions, as well as individual traders at proprietary trading firms and managed funds. The CFTC also continued to develop its program to encourage industry cooperation and self-reporting of potential wrongdoing.