By Chris Prentice
NEW YORK, March 31 (Reuters) – The U.S. Commodity Futures Trading Commission will focus on policing market misconduct such as insider trading in prediction markets and market manipulation in energy markets, the agency’s new enforcement director said on Tuesday.
The agency will focus on a handful of core enforcement areas, also including market abuse such as spoofing and willful violations of laws designed to prevent money laundering, enforcement director David Miller said in his first public remarks since joining the agency earlier this month.
Well-timed trades ahead of U.S. President Donald Trump’s major policy surprises during his second term have potentially led to millions of dollars in profits for unknown traders and drawn scrutiny from observers.
“We are aware of the speculation about insider trading,” Miller said. “We are watching.”
The CFTC and state regulators have been embroiled in legal battles to decide who has jurisdiction over event contracts, which allow traders to bet on “yes” or “no” outcomes of specific events. Meanwhile, concerns over trading activity in these nascent, but growing markets have been mounting.
“Our position is that event contracts are not gaming. The event contracts at issue are swaps. Insider trading law applies,” Miller said.
While outlining the CFTC’s core priority areas, the enforcement director noted the era of so-called regulation by enforcement is over – referring to a criticism of regulators under the prior Democratic administration.
The CFTC plans to boost incentives for companies and individuals to cooperate with the CFTC in its investigations, Miller said. Those that fully cooperate and remediate their issues would pay less in penalties.
Such benefits would even apply if there was a confidential government investigation already underway.
“Cooperation in our view is binary: you’re either in or you’re out,” Miller said. “That means robust, full cooperation.”
(Reporting by Chris Prentice; Editing by Stephen Coates)
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