On March 24, the Commodity Futures Trading Commission (“CFTC”) released its Final Interpretive Guidance on Actual Delivery for Digital Assets (“Final Interpretation”), addressing longstanding questions regarding which digital asset transactions could be deemed “retail commodity transactions” under the Commodity Exchange Act (“CEA”).  The Final Interpretation comes two years after the CFTC issued proposed interpretive guidance (“Proposed Interpretation”).
Continue Reading CFTC Issues Final Interpretive Guidance on Actual Delivery for Digital Assets

On May 15, 2019, the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Commodity Futures Trading Commission (“CFTC”) announced that they entered into an Enhanced Multilateral Memorandum of Understanding Concerning Consultation and the Exchange of Information (“Enhanced MMoU”) under the auspices of the International Organization of Securities Commissions (“IOSCO”), along with nine other international financial regulators.[1]  Both the SEC and CFTC are already signatories to IOSCO’s predecessor memorandum of understanding with 121 other signatories.  However, the Enhanced MMoU provides for significant enhancements in cross-border enforcement cooperation—including the ability to compel testimony outside of the United States—that, if widely adopted, could increase the signatory regulators’ abilities to undertake (and coordinate) multilateral cross-border investigations.
Continue Reading SEC and CFTC Chairs Sign Enhanced Multilateral Memorandum of Understanding Expanding Cross-Border Enforcement Cooperation

On May 8, 2019, the Division of Enforcement of the Commodity Futures Trading Commission released an Enforcement Manual – the first public document of its kind from the Division.

Though the Manual does not reveal any significant shifts in policy, it will undoubtedly serve as an important resource for individuals and entities dealing with CFTC

On May 2, 2019, the United States District Court for the Southern District of New York issued an important decision delineating the boundaries between conducting a proper internal investigation and acting as an arm of the government.

For the government, the consequences of “outsourcing” an investigation to a company and its counsel could be exclusion

On March 6, 2019, the U.S. Commodity Futures Trading Commission (“CFTC”) Enforcement Division released an advisory (the “Advisory”) on self-reporting and cooperation for violations of the Commodity Exchange Act (“CEA”) that involve foreign corrupt practices.[1]  The Advisory lays out guidelines for companies or individuals “not registered (or required to be registered) with the CFTC” to receive significant cooperation credit for voluntarily and timely disclosing CEA violations involving foreign corrupt practices.[2]  Indeed, where such disclosure is followed by “full cooperation and appropriate remediation” and other measures, the Division of Enforcement will extend a presumption that no civil monetary penalties be imposed.[3]  Moreover, while registrants—which are subject to “independent reporting obligations”—will not benefit from such a presumption, cooperation may still garner “substantial reduction in the civil monetary penalty.”[4]

The Advisory is the latest signal of the CFTC’s efforts over the last two years to more clearly define the benefits of voluntary cooperation with the Agency.[5]  This may indicate that the CFTC is taking an increased interest in corruption cases related to the commodities or swaps markets.
Continue Reading CFTC Enforcement Division Issues New Advisory on Self-Reporting and Cooperation

On March 4, 2019, the Commodity Futures Trading Commission (“CFTC”) announced a whistleblower award of over $2 million to an individual—unaffiliated with the company the CFTC charged—for providing expert analysis in conjunction with a related action instituted by another federal regulator.  While the Securities and Exchange Commission, which possesses a similar whistleblower award regime,[1] has previously issued awards to multiple claimants for both related actions[2] and to company outsiders,[3] this is the first such award to be granted by the CFTC in either respect.

The award demonstrates the CFTC’s continued commitment to the Whistleblower Program, and to using all available means in conducting enforcement actions.  This award also reflects both the CFTC’s willingness to collaborate with other federal regulators and to rely on external sources of expert data analysis and likely reflects the CFTC’s continued expansion of its Whistleblower Program, both in terms of sources of information and awards granted. 
Continue Reading CFTC Issues First Whistleblower Award Originating From Both a Related Action and a Company Outsider

Continuing its efforts to engage with FinTech innovators and market participants in the adoption of new technologies, the Commodity Futures Trading Commission (“CFTC”) and its LabCFTC[1] released a Primer on Smart Contracts (the “Primer”) on November 27. The Commission focused its Primer on (1) detailing the technical aspects of smart contract technology; (2) examining potential benefits and risks connected to their widespread adoption; and (3) the CFTC’s role in regulating the adoption of the technology within those markets under its jurisdiction.

Continue Reading The CFTC Releases Primer on Smart Contract Use in Financial Markets

On November 30, 2018, Judge Richard Sullivan issued a long-anticipated decision in favor of the defendants in Commodity Futures Trading Commission v. Wilson, No. 13 Civ. 7884, following a four-day bench trial in December 2016 before the U.S. District Court for the Southern District of New York.  The court held that the CFTC failed

On November 15, 2018, the Division of Enforcement (the “Division”) of the U.S. Commodity Futures Trading Commission (“CFTC”) released its Annual Report on the Division of Enforcement (the “Report”), highlighting the enforcement division’s recent initiatives and reinforcing its focus on cooperation and self-reporting.  The Report provides a succinct overview of the Division’s enforcement priorities over the last year, discusses its overall enforcement philosophy, sets out key metrics about the cases brought in the last year, and highlights its key initiatives for the coming year.  While the Division’s priorities—preserving market integrity, protecting customers, promoting individual accountability, and increasing coordination with other regulators and criminal authorities—do not mark a departure from prior guidance, the Report does highlight the Division’s particular focus on individual accountability and a few target areas of enforcement. 
Continue Reading Virtual Currencies, Manipulation, Cooperation, and More: CFTC Enforcement Division’s 2018 Annual Report

On September 27, 2018, the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) filed parallel actions in federal court against an internet dealer that sold “contracts for difference” (CFD) based on securities and commodities margined with bitcoin.  The actions, which were assisted by the Federal Bureau of Investigation and the Department of Justice, signal continued coordination among federal agencies to police market activity involving financial transactions in cryptocurrencies.
Continue Reading The CFTC and SEC Bring Charges Against International Securities Dealer for Bitcoin-Funded Swaps Activity