CLS Blue Sky Blog

CFTC Releases Enforcement Results for FY 2024

  • Commodity Futures Trading Commission

    • The Commodity Futures Trading Commission today announced record monetary relief of over $17.1 billion for fiscal year 2024. With the resolution of digital asset cases that resulted in the agency’s largest recovery ever, this record amount included $2.6 billion in civil monetary penalties and $14.5 billion in disgorgement and restitution.

    In FY 2024, the agency brought 58 new actions including precedent-setting digital asset commodities cases, its first actions addressing fraud in voluntary carbon credit markets, complex manipulation cases in various markets, and significant compliance cases – including its largest compliance case ever. The CFTC also continued to vigorously litigate pending actions, resulting in significant litigation victories and recoveries. 

    “The CFTC remains steadfast in its duties to protect customers and vigorously oversee CFTC-regulated markets critical to the health of the U.S. economy,” Chairman Rostin Behnam said. “Misconduct in our jurisdictional markets is rarely confined, especially as these boundaries are continually being redefined by disruptive technology. I commend our Division of Enforcement for remaining thoughtful and agile in its response to evolving markets and a growing pool of participants. Their dedication to holding accountable those who violate the Commodity Exchange Act is invaluable to the American public.”

    “Our actions in FY 2024 reflect our commitment to holding recidivist actors accountable, obtaining meaningful monetary relief and sanctions, and implementing robust remediation measures,” said Director of Enforcement Ian McGinley. “This was a year of large-scale, complex cases and settlements in both our traditional markets and in areas of increasing importance, such as voluntary carbon markets. We are committed to prioritizing strong, effective, and focused enforcement to deter future misconduct. I thank our division staff for their unwavering dedication this year; with their expertise and professionalism they are staunch defenders of our markets.”

    Enforcement Performance Highlights

    Enforcement Advisory-October 2023

    At the outset of FY 2024, the division issued an advisory — the Advisory Regarding Penalties, Monitors and Consultants, and Admissions in CFTC Enforcement Actions — providing enforcement staff guidance on enforcement resolution recommendations to the Commission. The advisory provides guidance on three areas: whether proposed civil monetary penalties are sufficient and at the level necessary to achieve general and specific deterrence, which determination includes consideration of respondent’s recidivism; when the imposition of a corporate compliance monitor or consultant is appropriate and what the duties and responsibilities of monitors and consultants should be; and whether admissions should be recommended in a particular enforcement action. [Press Release 8808-23]

    The FY 2024 enforcement actions and litigation victories include the following:

    Digital Asset Commodities

    The CFTC continued to cement its reputation as a premier enforcement agency in the digital asset space. It secured record-breaking monetary sanctions and relief in FTX and Binance, charged Voyager’s former CEO with commodity pool fraud, filed multiple actions involving decentralized finance, filed and settled charges with companies acting as intermediaries to digital asset exchanges, and brought a variety of other digital assets cases. For example, the Commission:

    Manipulative and Deceptive Conduct, Disruptive Trading and False Reporting

    The CFTC is focused on detecting, investigating, and prosecuting misconduct — fraud, manipulation, disruptive trading, and false reporting — that can undermine market integrity. The CFTC filed actions relating to this type of misconduct across markets for gasoline, fuel oil, agricultural commodities, such as cotton and oats, and voluntary carbon credits. In FY 2024, related actions include:

    Reporting, Risk Management, Adequate Compliance Programs and Business Practices

    The CFTC’s enforcement program helps to ensure registrants and registered entities comply with recordkeeping and reporting requirements; adopt and implement proper risk management processes; maintain adequate compliance programs; and engage in appropriate business practices. In FY 2024, related actions include:

    Swaps Data Reporting

    Protecting Customers

    Since its inception, the CFTC has focused on protecting customers in commodity and derivatives markets from fraud and other abuse. Many of the matters above involved important customer protection elements. In addition, below are other CFTC actions that protected the public, including significant litigation victories:

    Misconduct Involving Confidential Information

    Illegal use of confidential information can significantly undermine market integrity and harm customers in the CFTC’s markets. As noted above in discussing anti-manipulation enforcement, the CFTC filed and settled an enforcement action against Trafigura Trading LLC finding it both misappropriated nonpublic information and manipulated a fuel oil benchmark. [Press Release 8921-24] The CFTC filed the following additional actions related to misconduct involving confidential information:

    Trade Practice Violations

    In addition to disruptive trading, which includes spoofing, the CFTC also investigates and prosecutes other trade practice violations that may adversely affect the integrity of the markets, such as violations involving wash trades, fictitious trades, and position limits. The CFTC achieved the following results in this program area:

    Surveillance and Enforcement Data Analytics Office

    Because of the increasingly important role of data analytics in the CFTC’s enforcement program, this year the Division of Enforcement created a new Surveillance and Enforcement Data Analytics Office to enhance the division’s surveillance and analytic capabilities. The office places the division’s existing forensic economist and market surveillance capabilities into one office, an office that can scrutinize markets to detect misconduct, analyze complex matters, and support the division’s investigations and litigations with sophisticated financial, economic, and data analysis. That structure also includes a new section that focuses on developing analytic tools and programs to enhance the investigative analytic, proactive detection, and surveillance capabilities of the division.

    Cooperation With Criminal and Regulatory Authorities

    The CFTC’s enforcement program focuses on collaborative relationships with self-regulatory organizations, and state, federal, and international authorities, including achieving efficiencies through referrals, to meet its enforcement objectives. The parallel enforcement program showcases how the CFTC can most effectively protect markets when working together with colleagues in the enforcement and regulatory community.

    Specifically, the CFTC believes a robust combination of criminal prosecution and regulatory enforcement is critical to deterring violators, punishing misconduct, preserving market integrity, and protecting market participants. An example is the settlement as to liability of a joint enforcement action filed by the CFTC and 30 state securities regulatory agencies that are members of the North American Securities Administrators Association charging a precious metals dealer and its owner for orchestrating a $68 million fraudulent nationwide scheme targeting elderly persons. [Press Release 8489-22, 8812-23]

    Whistleblower Program

    The Whistleblower Program continues to demonstrate its importance to the CFTC’s enforcement program as reflected in the leads generated, successful enforcement actions, and whistleblower awards. The CFTC issued the most awards on record for any fiscal year, and, in another annual record, the Whistleblower Office received over 1,700 whistleblower tips.

    Many different types of whistleblowers received awards this year, including victims, witnesses, insiders, market participants, employees, and compliance professionals. The CFTC granted 15 applications, totaling over $42 million in award payments. Enforcement actions associated with these awards resulted in monetary relief of approximately $162 million collected. Since making its first award in 2014, the CFTC has issued 53 orders granting nearly $390 million in award payments to whistleblowers. Enforcement actions associated with all program awards have resulted in monetary relief of over $3.2 billion.

    These results were issued by the Commodity Futures Trading Commission on December 4, 2024, in Washington, D.C. An addendum to the results includes a table summary of the 58 new actions taken and a list of all FY 2024 actions, including actions involving digital asset-related conduct, and is available here: Addendum: FY 2024 Enforcement Actions.

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