CFTC Reorganizes Enforcement Division to Combat Fraud More Effectively
On Tuesday, Caroline Pham, the acting chair of the U.S. Commodity Futures Trading Commission (CFTC), announced a significant reorganization of the agency’s enforcement division aimed at enhancing its focus on fraud prevention and curbing the trend of “regulation by enforcement.” This strategic shift marks a departure from the previous approach taken under former Chairman Rostin Behnam, during which the CFTC had implemented multiple task forces targeting various areas of concern.
Previously, the CFTC’s Division of Enforcement operated with a range of specialized task forces, including those dedicated to insider trading, cybersecurity and emerging technologies, as well as combating environmental fraud. In a move towards greater efficiency, the number of task forces has now been streamlined to just two.
The newly established Complex Fraud Task Force will oversee the entire enforcement process—from initial inquiries to litigation—specifically targeting complex fraud and manipulation across all asset classes. Paul Hayeck, who serves as a deputy director within the enforcement division, will take on the role of acting chief for this task force. Meanwhile, the Retail Fraud and General Enforcement Task Force will focus on retail fraud and broader enforcement issues, led by Charles Marvine, another deputy director within the agency.
In a press statement, Pham emphasized, “This simplified structure will stop regulation by enforcement and is more efficient.” She further noted that these essential changes are designed to maximize the CFTC’s resources, enabling the agency to take more decisive actions against fraudsters and other wrongdoers, while simultaneously protecting the rights of law-abiding citizens.
The CFTC’s latest announcement highlighted that this new structural approach aims to “utilize the CFTC’s resources more efficiently to prevent fraud, manipulation, and abuse while ensuring market integrity.” Additionally, it seeks to enhance governance and oversight of enforcement actions, thereby preventing regulatory overreach and promoting consistency, fairness, and due process.
This shift in strategy at the CFTC is reflective of a broader transformation occurring within the federal regulatory landscape, particularly at the U.S. Securities and Exchange Commission (SEC), the CFTC’s counterpart. Under the leadership of current Acting Chair Mark Uyeda, the SEC has initiated a Crypto Task Force and has distanced itself from the regulation by enforcement paradigm that characterized the tenure of former Chair Gary Gensler.
