CFTC Restructures Enforcement Division to Focus on Fraud Prevention

Key Takeaways

• Restructuring of CFTC’s Division of Enforcement: The Commodity Futures Trading Commission (CFTC) has reorganized its Division of Enforcement to focus more on fraud prevention and market integrity, aiming to streamline operations and allocate resources more effectively.
• Creation of Two Primary Task Forces: The reorganization simplifies the previous task forces into two teams: the Complex Fraud Task Force, which will tackle complex fraud and market manipulation, and the Retail Fraud and General Enforcement Task Force, which will focus on fraud affecting retail investors and general enforcement of the Commodity Exchange Act.
• Enhanced Focus on Fraud Prevention: Acting Chairman Caroline D. Pham emphasized that the restructuring would help the CFTC focus on preventing fraud and market abuse while ensuring fair and consistent enforcement actions, reducing the practice of "regulation by enforcement."
• Adaptation to Evolving Fraud Tactics: The restructuring aims to address the evolving methods of fraudsters, with Acting Director of Enforcement Brian Young highlighting how the new task force structure will empower the CFTC to better respond to emerging fraudulent tactics and protect market participants.

Deep Dive

The Commodity Futures Trading Commission (CFTC) has announced a major reorganization of its Division of Enforcement, with a renewed focus on fraud prevention and market integrity. Acting Chairman Caroline D. Pham unveiled the restructuring on February 4, 2025, aiming to streamline operations and more effectively allocate the agency’s resources to combating fraud while reducing the practice of "regulation by enforcement."

According to Pham, the new structure would simplify the Division of Enforcement's previous task forces into two primary teams - the Complex Fraud Task Force and the Retail Fraud and General Enforcement Task Force.

• The Complex Fraud Task Force, led by Deputy Director Paul Hayeck, will handle investigations and enforcement actions related to complex fraud and market manipulation across all asset classes.
• The Retail Fraud and General Enforcement Task Force, headed by Deputy Director Charles Marvine, will focus on fraud affecting retail investors and oversee general enforcement matters involving violations of the Commodity Exchange Act.

In a statement, Pham emphasized that the restructuring would help the CFTC to be more efficient, focusing its resources on fraud prevention and market abuse while ensuring that enforcement actions are consistent and fair.

She noted, "This simplified structure will stop regulation by enforcement and is more efficient. These much-needed changes will maximize the CFTC’s resources to bring more actions against fraudsters and other bad actors, while avoiding punishment of compliant businesses."

Brian Young, Acting Director of Enforcement, stressed the importance of the changes in response to evolving fraudulent tactics, "Fraudsters are constantly evolving their methods to exploit market participants. This taskforce realignment will enhance our vigorous and energetic enforcement program by empowering our talented staff to focus their expertise on matters that secure justice for victims and uphold public confidence in the integrity of our markets."

The CFTC also stated that the restructuring aims to enhance governance and oversight, ensuring that enforcement actions are handled effectively and fairly, preventing overreach in the regulatory process. This change comes at a time when federal agencies are under increasing pressure to demonstrate both efficiency and effectiveness, with various stakeholders monitoring the CFTC's efforts closely.

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