CFTC Continues Enforcement Focus, Forms Insider Trading Task Force: The CFTC Focused a Series of Recent Enforcement Actions on Manipulation, Aiding and Abetting, Spoofing, and Insider Trading; and the CFTC Announced an Insider Trading and Information Protection Task Force

Sullivan & Cromwell LLP - October 12, 2018

In recent actions, the U.S. Commodity Futures Trading Commission (the “CFTC”) has continued to pursue cases alleging market manipulation and attempted market manipulation, aiding and abetting of market manipulation, and spoofing. Describing its recent efforts, the CFTC has said that it filed 83 enforcement actions in the last Fiscal Year, representing an approximately 25% increase over each of the prior three years. Notably, the CFTC brought more manipulative conduct and spoofing cases over the past year than ever before, resolving more than 25 such cases.

Separately, and in connection with filing a civil complaint alleging charges related to insider trading in the regulated commodities and derivatives markets, the CFTC’s Division of Enforcement recently announced the formation of an Insider Trading and Information Protection Task Force (the “Insider Trading Task Force”). The Insider Trading Task Force is designed to identify and bring charges against those who engage in insider trading or otherwise improperly use confidential information in connection with the markets overseen by the CFTC. The civil complaint charged an introducing broker and one of its associated persons for allegedly misusing material, nonpublic customer information in connection with block trades of energy futures contracts. Key aspects of the complaint are summarized below. Although the CFTC previously had reached consent resolutions in two matters relating to alleged insider trading, the recently filed complaint is the first such case to be brought by the CFTC on a litigated basis and provides valuable insight into the enforcement approach that the CFTC may bring to its pursuit of insider trading cases going forward.