A New Era: New CFTC Enforcement Director Outlines Updated Priorities and Cooperation Policy

Making clear that the era of “regulation by enforcement” is over, Commodity Futures Trading Commission (CFTC) Director of Enforcement David Miller delivered a comprehensive address at a special event hosted by the NYU Law School’s Program on Corporate Compliance and Enforcement on March 31. Only three weeks into his new role, Miller set forth a new vision for the agency’s enforcement approach — focusing only on the most serious violations, acting decisively, and ensuring fairness and transparency in all enforcement actions. 

Miller left no doubt that the CFTC’s Division of Enforcement (DOE) intends to concentrate on its core mission: policing fraud, manipulation and abuse. He also outlined the DOE’s enforcement priorities, which include how the DOE intends to monitor for insider trading in prediction markets. He gave his roughly 15-minute remarks and subsequent fireside chat to a group that included former CFTC Directors of Enforcement, practitioners, market participants and reporters, and concluded by discussing the DOE’s new approach to cooperation credit, announcing substantive changes to the policies established only a little over a year ago, including a first-of-its-kind declination policy that may offer market participants a clear path to navigate future enforcement matters without penalties. 

DOE Enforcement Priorities Under Chairman Selig

Miller outlined five key areas that will define the CFTC’s enforcement agenda under his leadership.

1. Insider Trading: Miller dispelled the “myth” that insider trading is permissible in prediction markets, stating unequivocally that it is illegal under the Commodity Exchange Act (CEA) and CFTC regulations to misappropriate material, nonpublic information (MNPI). He emphasized that the CFTC will “vigorously” pursue cases involving the misappropriation of MNPI, focusing on those who tip or trade derivatives on such information in violation of a duty owed to the source.
2. Market Manipulation: Miller made clear that fighting market manipulation remains fundamental to the CFTC’s core mission and noted particular concern with potential manipulation in energy markets, where price manipulation can have widespread inflationary effects due to inelastic demand and limited substitutability. Miller described exchanges as an “essential part of the fight against market manipulation and insider trading,” and expects the exchanges “to do their part” to further the CFTC’s efforts to combat this misconduct.
3. Market Abuse and Disruptive Trading: Miller emphasized that the DOE will continue its enforcement efforts targeting abusive practices such as spoofing, disruptive trading during market closes and wash trading.
4. Retail Fraud and Ponzi Schemes: Miller noted that protecting retail investors remains a top priority for the DOE, especially as fraudsters employ new techniques involving AI, social media and fake websites. In order to do so, he explained that the CFTC has dedicated a large task force to combat these schemes and will leverage technology and expertise to litigate these cases aggressively.
5. Willful Violations of AML and KYC Rules: Miller also emphasized that the CFTC will focus on prosecuting entities that willfully violate anti-money laundering (AML) and know-your-customer (KYC) rules, which Miller described as essential tools in fighting crime in the markets. Importantly, Miller clarified that the DOE will not focus on technical violations of these rules. Instead, the DOE will crack down on any CFTC-registered entity that willfully disregards these rules. 

While these constituted the five pillars of the DOE’s enforcement priorities, Miller left no doubt that the DOE will continue to bring enforcement actions outside of these areas where it identifies parties that repeatedly or willfully violate the CEA or CFTC rules. 

Interestingly, when asked how the CFTC plans to address its priorities given recent staff shortages reported in the press, Miller rebuked the notion that the agency does not have adequate resources to do its job.  At the same time, he repeatedly remarked that the DOE is looking to hire additional staff to help support its enforcement efforts. 

Insider Trading in Prediction Markets: A Clear Stance

One of the priorities that stood out among the others was Miller’s discussion of insider trading in prediction markets. This priority stood out because, as reported by Katten in the past, insider trading in prediction markets is getting a lot of attention in the press and on Capitol Hill. Miller made it explicitly clear that insider trading is prohibited in all CFTC-regulated markets, including in event contracts traded on prediction markets, and that the DOE is “watching” these markets for violations. Miller clarified, however, that the CFTC is focused on insider trading arising from the misappropriation of MNPI by individuals who have a duty not to disclose or otherwise act on the confidential information, which is distinct from individuals who are permitted to trade based on their own MNPI to manage their risk. 

While the CFTC intends to monitor these markets, Miller made clear that the exchanges are the “first line of defense” in stopping insider trading and manipulation. In particular, Miller lauded Kalshi’s recent disciplinary actions related to insider trading, and pointed to the recommendations in the recent CFTC’s advisory on prediction markets that outlined steps exchanges can take to prevent insider trading, including considering, before listing, whether certain contracts are susceptible to manipulation or distortion, and developing lists of employees holding jobs that may give them access to MNPI. Miller noted that the CFTC has also taken steps to help monitor and support these markets, including entering into the recent Memorandum of Understanding (MOU) with Major League Baseball (MLB). He explained that the MOU is an effort to facilitate information sharing and protect the integrity of professional baseball-related derivatives.

Miller highlighted many public concerns about the illegal use of government information and made clear that the CFTC will monitor and prosecute the illegal use of such information, relying on a number of existing statutes, including the Stock Act and the “Eddie Murphy Rule” (Section 4c(a)(4) of the CEA). 

New Cooperation Policy: Binary Standard and Declination Pathway

Miller also announced a forthcoming advisory that will overhaul the CFTC’s year-old cooperation policy, including significant changes to the agency’s declination policy, with the goal of incentivizing rapid and robust cooperation. Miller emphasized that the new policy is designed to provide clarity and fairness to market participants, be transparent and fair, and move matters to resolution rapidly.

• Clear Path to Declination: One of the most consequential changes to the cooperation policy was the introduction of a new declination policy, which Miller indicated was designed to encourage and reward market participants for making the “right choice.” Under this policy, if a party (i) self-reports, (ii) fully cooperates, and (iii) fully remediates (including paying restitution and disgorgement), and absent aggravating circumstances (such as pervasive misconduct by senior management or recidivism), the CFTC will provide a “clear path” to declination — meaning no enforcement action.
• Self-Reporting Requirements: Miller announced that the CFTC will offer self-reporting credit to parties that make a prompt, timely and good-faith self-report, even if the CFTC is already aware of the issue or confidentially investigating the matter. However, there are limits, and a self-report is not eligible for credit if the information is already public or if imminent disclosure is reasonably suspected, either through a whistleblower report, SRO investigation or press report.
• A Simplified Standard for Cooperation: The CFTC will abandon its previous “cooperation matrix” in favor of a binary, all-or-nothing standard, meaning that parties will either be deemed to have fully cooperated or not; there is no partial credit. Miller made clear that full cooperation will require disclosing all relevant non-privileged information, sharing internal findings, making individuals available for interviews, preserving and providing all relevant documents (including from overseas), and providing ongoing reporting of developments. Miller also made clear that if a party fails to cooperate, they will lose their path to obtain a declination.
• Remediation Expectations: Miller indicated that for market participants to obtain declination credit, the DOE expects market participants to complete full remediation of underlying issues, address root causes, implement compliance changes, discipline responsible employees and provide restitution to victims.
• Substantial Benefits for Cooperation Without Self-Reporting: Miller noted that for parties that did not self-report but fully cooperate and remediate, the CFTC will offer a substantial reduction in penalties, though not a declination.

Miller’s Vision For A Focused, Fair, and Transparent Enforcement Regime

Director Miller's message was clear: the CFTC will pursue fraud, abuse and manipulation aggressively but fairly. These new policies signal a shift toward clarity, accountability and market integrity. The agency is ready to evolve alongside the markets it protects.