by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part IV of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here. For Part II, discussing recent enhancements in the CFTC’s ability to detect insider trading, and four of the CFTC’s foundational insider trading cases, click here. For Part III, discussing two of the CFTC’s recent settlements involving insider trading and misuse of confidential information, click here.

In another new area of collaboration between the agencies, the CFTC’s Division of Enforcement announced in March 2019 that it would work alongside the DOJ to investigate foreign bribery and corruption relating to commodities markets, issuing an enforcement advisory on self-reporting and cooperation for violations of the CEA involving foreign bribery.[1] The agency’s first enforcement action in this area arrived in late 2020 with an order that included a focus on misappropriation of confidential information.

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by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part III of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here. For Part II, discussing recent enhancements in the CFTC’s ability to detect insider trading, and four of the CFTC’s foundational insider trading cases, click here.

Three additional settlements recently announced by the CFTC further reinforce the agency’s interest in identifying and deterring misappropriation of confidential information. The latest matters also herald the arrival of criminal enforcement by the DOJ in this area.

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by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part II of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here.

Expansion of CFTC Resources to Detect and Deter Insider Trading

In 2018, to enhance its efforts to identify and take action against insider trading, the CFTC announced the formation of an Insider Trading and Information Protection Task Force (Task Force). The CFTC described the Task Force as “a coordinated effort across the Division to identify and charge those who engage in insider trading or otherwise improperly use confidential information in connection with markets regulated by the CFTC.”[1] The Task Force has endeavored to “thoroughly investigate and, where appropriate, prosecute instances in which individuals have abused access to confidential information — for example, by misappropriating confidential information, improperly disclosing a client’s trading information, front running, or using confidential information to unlawfully prearrange trades.”[2] The Division of Enforcement has noted the ongoing importance of this effort, including in its FY2019 Annual Report, which emphasized that “[i]llegal use of confidential information can significantly undermine market integrity and harm customers in our markets.”[3]

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by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

Among the many changes resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), one that has been slow to develop, but broad in its significance, is the assertion of authority by the Commodity Futures Trading Commission (CFTC) to police insider trading and misappropriation of confidential information in commodities markets. As the primary regulator for derivatives across a wide range of markets, spanning agriculture, energy, interest rates, and beyond, the CFTC had limited authority to address insider trading throughout most of its history. Starting in 2015, however, the agency began bringing enforcement actions against individuals and companies for trading based on misappropriation of confidential information. Since then, the CFTC has brought a series of actions that provide insight into the scope of its new authority, and it has devoted substantial resources to pursuing new cases. Recent enforcement actions in 2020 and early 2021 have continued this trend.

This four-part post reviews the evolution of the CFTC’s insider trading enforcement authority, summarizes the agency’s recent cases, and highlights key developments, including the advent of “tipper” liability, the use of data analytics to identify potential misconduct, and the emergence of parallel criminal enforcement actions. Financial institutions and market participants should be aware that the CFTC — and now also the Department of Justice (DOJ) — will continue to be on the lookout for additional cases to pursue in this emerging area of enforcement.

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