Key Takeaways

• David Miller, the newly appointed Director of the CFTC’s Division of Enforcement, signaled that the agency is ramping up enforcement activity, with a “laser focus” on serious violations of fraud, market manipulation and market abuse.
• Miller asserted that the CFTC has jurisdiction over event contracts, emphasizing that existing CEA anti‑fraud provisions apply fully to prediction markets.
• Miller underscored the role of exchanges as the first line of defense against market abuse and warned against offering event contracts that are dependent on a single person or small group of people as they may be particularly susceptible to manipulation and insider trading. This is consistent with the CFTC’s February 25, 2026 press release, which highlighted two disciplinary actions brought by a prediction market relating to insider trading.
• Miller also announced that the Division of Enforcement is preparing a new cooperation policy intended to provide clearer incentives—and potentially declinations—for companies that self‑report, cooperate fully, and remediate misconduct. In a novel twist, the CFTC will give full credit to companies that self-report promptly, timely and in good faith, even if the CFTC already knew of the conduct through a confidential source.

Background

Speaking recently at NYU Law School, David Miller outlined his enforcement philosophy and priorities as the new head of the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement (Division). While emphasizing that the “era of regulation by enforcement is over,” Miller made clear that the CFTC intends to vigorously pursue fraud, manipulation and abuse. In his remarks, Miller outlined five enforcement priorities, addressed the CFTC’s oversight of prediction markets and previewed a new policy on cooperation and self-reporting. Miller said the CFTC will be hiring additional staff to address the priority areas. The remarks are the clearest signal yet from the CFTC that the Division, which brought very few cases over the last year, is poised to increase its enforcement activity.

Enforcement Priorities

1. Insider Trading

Miller focused much of his remarks on insider trading, especially in prediction markets. He stated unequivocally that insider trading in prediction markets is illegal and dispelled the “myth” that insider trading laws do not apply to these markets. In particular, he reiterated the CFTC’s position that event contracts meet the statutory definition of “swaps” and that Section 6(c)(1) of the Commodity Exchange Act (CEA) and CFTC Regulation 180.1 prohibit fraudulent and deceptive trading practices, including insider trading, in the swaps markets.

Miller also highlighted concerns about the illegal use of government information and noted that the CFTC may prosecute such misconduct under the so‑called “Eddie Murphy Rule” in CEA Section 4c(a)(4), which restricts certain government employees from trading on nonpublic information relating to governmental action. In addition, he emphasized that while trading on one’s own legitimately obtained information is permissible, information that is used in violation of a duty owed to an employer under a confidentiality agreement, non-disclosure agreement or employment contract could be misappropriated if used for trading.

2. Market Manipulation

Market manipulation remains a core priority of the Division. Miller advised that the agency will focus especially on manipulation in the energy markets. He explained that manipulation in these markets is uniquely harmful because it directly impacts consumers, and price increases in energy markets can have broad inflationary effects that impact many areas of the economy.

Miller also stressed that exchanges must serve as gatekeepers in policing market manipulation, and exchanges must have robust surveillance and compliance programs to protect markets from abusive practices. In addition, exchanges may list only contracts that are not readily susceptible to manipulation. In the prediction market context, Miller echoed recent CFTC guidance stating that contracts tied to the actions or status of a single individual or a small subset of actors may present a heightened risk of manipulation.

3. Market Abuse and Disruptive Trading

The Division will continue to pursue market abuse and disruptive trading. Such conduct includes spoofing, wash trading and disruptive trading during a settlement period.

4. Retail Fraud

Miller emphasized protecting retail participants from fraud, including Ponzi schemes, commodity pool frauds, impersonation schemes, pig‑butchering scams and phishing attacks. The Division will employ technology to fight evolving fraud techniques, including fraud arising from artificial intelligence (AI)-created images and videos, targeted communications on social media platforms, and fake websites and applications.

5. Willful AML and KYC Violations

Finally, the Division will pursue willful violations of anti-money laundering (AML) and know-your-customer (KYC) requirements. Miller stressed that the Division will not prioritize technical violations but, on the other end of the spectrum, will initiate criminal referrals where appropriate.

Staff Advisory on Cooperation

Miller announced that the Division is preparing a new staff advisory on cooperation, which will replace the current policy issued in February 2025. The purpose of the CFTC’s new policy is to incentivize self-reporting and cooperation and provide greater transparency and simplicity. Although the new advisory has not been published, Miller previewed that the policy will provide a clear path to declination for companies that self‑report, cooperate fully and remediate fully, absent aggravating circumstances. In contrast to prior cooperation policies, cooperation under the new policy will be assessed on a binary (yes or no) basis rather than a sliding scale. And unlike the policies of other federal agencies, the CFTC will credit self-reporting done promptly, timely and in good faith even if the CFTC was already aware of the conduct from a confidential source. Miller did not elaborate on how this might impact the CFTC’s whistleblower program.

What this Means for Market Participants.

Miller’s remarks send a clear message that the CFTC is preparing for a more aggressive enforcement phase, particularly in prediction markets and energy markets. Firms should assume that trading in these markets is being actively monitored, both by the CFTC and the exchanges, and that enforcement investigations may follow any potentially fraudulent, manipulative, or abusive trading. Our experienced white collar and regulatory lawyers can assist with reviews of policies and procedures and other considerations in light of these stated directives.