The U.S. Commodity Futures Trading Commission (CFTC) is undergoing a significant reorganization of its enforcement division under the leadership of Acting Chair Caroline Pham. The aim of the reorganization is to refocus on fraud and put an end to what Pham describes as “regulation by enforcement.”
Previously, the CFTC’s Division of Enforcement, under former Chairman Rostin Behnam, had several task forces dedicated to various areas such as insider trading, cybersecurity, emerging technologies, and environmental fraud. However, the new reorganization streamlines the division by consolidating the task forces into two main groups.
The first of these new task forces is the Complex Fraud Task Force, which will be responsible for handling enforcement related to complex fraud and manipulation across all asset classes. Paul Hayeck, deputy director of the enforcement division, will serve as the acting chief of this task force. The second task force, known as the Retail Fraud and General Enforcement Task Force, will focus on retail fraud and general enforcement and will be led by Charles Marvine, another deputy director of the enforcement division.
In a press statement, Pham emphasized the importance of these changes in maximizing the CFTC’s resources to go after fraudsters and bad actors while ensuring that law-abiding citizens are not unfairly punished. The new structure is intended to enhance governance and oversight of enforcement matters, prevent overreach, and promote consistency, fairness, and due process.
The shift away from regulation by enforcement at the CFTC mirrors similar changes happening at the U.S. Securities and Exchange Commission (SEC). Under Acting Chair Mark Uyeda, the SEC has also taken steps to establish a Crypto Task Force and move away from the previous strategy of regulation by enforcement.
Overall, the reorganization of the CFTC’s enforcement division signals a renewed focus on combatting fraud and manipulation, while also striving to maintain market integrity and uphold fairness and due process. These changes are designed to streamline operations, improve efficiency, and ensure that enforcement actions are targeted towards those who engage in fraudulent activities, rather than casting a wide net that may inadvertently impact innocent parties.