Category: Futures and Derivatives

Ever since the creation of Bitcoin in the late 2000s, the SEC has warned that, depending on the circumstances, “initial coin offerings” (ICOs) involving digital tokens or coins may be subject to regulation under the federal securities laws.¹ The SEC has provided “facts and circumstances” guidance regarding whether a particular cryptocurrency offering involves a security. See, e.g., the SEC’s Framework for “Investment Contract Analysis of Digital Assets.” But officials have opined that cryptocurrencies sold only to be used to purchase a good or service, such as Bitcoin or Ethereum, may not be securities.²

Continue reading “Two Recent SEC Cases Involving Cryptocurrency Offerings”

On October 6, 2020, the Commodity Futures Trading Commission (“CFTC”) issued a release describing its record-breaking enforcement year.[1] The release noted that in fiscal year 2020 (“FY2020”),[2] the CFTC filed more enforcement actions than any other year in the history of the agency. CFTC Chairman Heath P. Tarbert stated “[w]e are tough on those who break the rules, and this historic year only further underscores this point.”

The most recent headlines emphasize the CFTC’s enthusiasm in pursuing spoofing-related actions.  Of note, the CFTC ordered a registrant and affiliates associated with one of the largest bank holding companies to pay a record $920 million for spoofing and manipulation that spanned over eight years.[3] This penalty comes as the largest monetary relief in the agency’s history. In September alone, the CFTC announced three other spoofing settlements with fines totaling nearly $1.8 million, and brought charges against a trading firm and two of their traders.[4]

Continue reading “CFTC Record Enforcement Year and Director Departure”

A Spoofing Record Breaker

 On August 19, 2020, the Commodity Futures Trading Commission (“CFTC”) issued three orders filing and settling charges against a bank with a provisionally registered swap dealer (the “Firm”) requiring the Firm to pay $127.4 million for spoofing and making false statements, as well as for swap dealer compliance and supervision violations.

Continue reading “CFTC Enforcement Update: A Spoofing Record Breaker & More on “Insider Trading””

Following the high-profile market disruptions caused by the “flash crash” of May 6, 2010, and the “Knightmare” in August 2012, when a coding error in Knight Capital’s trading software resulted in the firm suffering $460 million in losses over the course of 45 minutes, the CFTC sought to determine existing industry practices around automated trading in the futures markets and to evaluate the need for additional regulations. To this end, in 2013, the CFTC published an extensive Concept Release and sought industry feedback on over 120 questions regarding risk controls and system safeguards around automated trading. Market participants applauded the CFTC’s efforts to foster an open discussion on industry best practices, and the industry devoted significant time and resources to drafting thoughtful responses to the Commission’s questions, with over 50 response letters filed.

Continue reading “CFTC Withdraws Regulation AT and Proposes New Electronic Trading Risk Principles”