The Commodity Futures Trading Commission (CFTC) has announced a major reorganization of its Division of Enforcement, with an intent to shift its focus to combating fraud and protecting victims while eliminating what critics have called “regulation by enforcement.”
Acting Chairman Caroline D. Pham said the restructuring aims to streamline investigations, enhance efficiency, and ensure fair oversight of US derivatives markets without imposing new compliance standards through enforcement actions.
Pham said the move is designed to better allocate the agency’s resources to target fraudulent actors rather than imposing unnecessary burdens on legitimate market participants. The reorganization will help the CFTC fulfill its core mission while ensuring enforcement actions do not create unintentional regulatory mandates.
According to Pham:
“This simplified structure will stop regulation by enforcement and is more efficient. These much-needed changes will maximize the CFTC’s resources to bring more actions to pursue fraudsters and other bad actors and not punish good citizens.”
Two primary units
The restructuring consolidates multiple enforcement task forces into two primary units.
The Complex Fraud Task Force, led by Acting Chief Paul Hayeck, will oversee all preliminary inquiries, investigations, and litigation involving sophisticated fraud schemes and market manipulation across commodities, derivatives, and digital assets.
Meanwhile, the Retail Fraud and General Enforcement Task Force, under Acting Chief Charles Marvine, will handle cases involving retail investor fraud and general enforcement matters under the Commodity Exchange Act.
CFTC Acting Director of Enforcement Brian Young said the changes will allow the agency to sharpen its focus on fraud while ensuring fair and consistent enforcement practices. He noted that as financial markets evolve, so do fraudulent schemes, making it essential for regulators to adapt.
Young said:
“This task force realignment will enhance our vigorous and energetic enforcement program by empowering our talented staff to focus their expertise on matters that secure justice for victims and uphold public confidence in the integrity of our markets.”
Industry concerns
The decision to restructure comes amid a broader debate over the role of enforcement in financial regulation, particularly in the case of digital assets.
Industry participants and lawmakers have raised concerns that agencies such as the CFTC and the Securities and Exchange Commission have sometimes used enforcement actions to set compliance expectations without clear rulemaking, leading to regulatory uncertainty.
Pham’s decision signals a shift toward a more transparent and predictable approach, prioritizing formal rulemaking over ad hoc enforcement actions. The restructuring also reflects ongoing discussions in Congress about the future of financial market regulation, particularly in areas such as crypto and digital assets.
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