CFTC Announces Changes to Rules Governing Enforcement Investigations and Settlement Recommendations

On December 1, 2025, the Commodity Futures Trading Commission (CFTC) announced amendments to its rules of practice and rules governing investigations, with the stated goal of enhancing transparency, fairness and due process. Most significantly, the amendments alter procedures governing how the CFTC’s Division of Enforcement (the Division): (1) informs persons who may be named in an enforcement proceeding, often referred to as a “Wells notice,” and (2) recommends offers of settlement to the Commission.

Wells Notice Procedures

The Wells process is the procedure by which the Division of Enforcement notifies persons that they may be named in a forthcoming enforcement action. Through amendments to Appendix A of Part 11, the CFTC has revised several aspects of this process.

Consistent with past rules, the Division retains discretion to decide whether to provide a Wells notice, but the amendments contain new requirements for such notices if the Division decides to issue them:

• Notice should be given in writing, and if given orally, it should be followed by written confirmation.
• The written notice or confirmation should identify the specific charges that the Division has preliminarily determined to recommend to the Commission.
• The Division may give potential respondents information about the facts and circumstances that form the basis for the charges, including by referring to specific evidence.

Also consistent with past rules, upon issuing a Wells notice, the Division retains discretion to advise potential respondents that they may submit a written statement to Division staff before consideration of any charges by the Commission. The amendments contain new rules and requirements relating to these written statements:

• Potential respondents now have a minimum of 30 days—increased from 14—to provide a written statement.
• The Division may require a shorter deadline only for good cause and with the approval of the Director or a Deputy Director.
• Persons submitting a written statement may request that it be given to the Commission “promptly”—whereas the Division’s past practice was typically to provide such statements to the Commission contemporaneously with a recommended enforcement proceeding.
• If the Division recommends the commencement of an enforcement proceeding, the Division shall forward any written statement to the Commission promptly. Previous rules required only that written statements be sent to the Commission upon request of the submitter.

Settlement Recommendation Procedure

The CFTC also amended Regulation 10.108(d) to formalize the procedures by which the Division may recommend that the Commission accept an offer of settlement. Under the new procedures, when recommending a settlement, the Division must provide to the Commission an objective memorandum that adheres to the applicable rules of professional conduct, provides a comprehensive explanation of the factual and legal foundation for the recommendation and distinguishes unfavorable facts or legal precedents. The memorandum must be supported by citations to evidence in the investigative record or stipulations by the parties, and legal arguments must be supported by points and authorities.

Other Amendments

The amendments contain three other categories of revisions to the CFTC’s rules of procedure:

• Revisions to Part 10 of the CFTC Regulations to clarify that the Commission may accept an offer of settlement by order instituting proceedings pursuant to the Commodity Exchange Act (CEA), making findings and imposing remedial sanctions, and that the Commission can determine to accept an offer of settlement in lieu of an adjudicatory proceeding either by Commission meeting or by the Commission’s seriatim process.
• Revisions to the definition of “adjudicatory proceedings” in CFTC Regulation 10.2(b) to clarify that adjudicatory proceedings under the CFTC’s rules of practice include the issuance of an order by the Commission instituting proceedings pursuant to the CEA, making findings, and imposing remedial sanctions.
• Revisions to Part 10 of the CFTC Rules to remove references to regulations that are no longer effective and to communications by facsimile machine.

Key Takeaways

Of all these amendments, the changes to the Wells notice procedures are likely to have the greatest practical impact to persons facing a CFTC investigation. By expressly permitting disclosure of evidence, the amendments may enhance potential respondents’ ability to understand the case against them, prepare a meaningful response and have productive conversations with Division staff. Prompt disclosure of Wells submissions to the Commission, moreover, may expedite the Commission’s consideration of the matter and allow Commissioners to take a more active role in reviewing and shaping enforcement recommendations.

With respect to settlement recommendations, the amendments memorialize the Division’s preexisting practice of recommending settlements to the Commission by memorandum. By requiring Division staff to provide citations to the factual record and to distinguish unfavorable facts and legal precedents, the amendments may result in more comprehensive memoranda, ensuring that the Commission has an accurate and complete record on which to base its decisions.

Alongside changes to the Wells process, the CFTC has recently issued advisories regarding self-reporting, cooperation and remediation; criminal referrals and referrals by operating divisions to the Division of Enforcement. The cumulative effect of these amendments and advisories is a more respondent-friendly enforcement environment. Individuals and firms facing CFTC inquiries now benefit from clearer guidance, enhanced procedural protections and better opportunities to present their side of the story.