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CFTC Commissioner Exposes Alleged Staff Misconduct in My Forex Funds Case

Staff Misconduct in My Forex Funds Case

Highlights

  • CFTC Commissioner Caroline D. Pham exposes alleged staff misconduct in the My Forex Funds case, including false statements to the court.
  • Pham calls for immediate action, including case reassignment and external handling of sanctions motion.
  • Broader concerns were raised about CFTC’s transparency and accountability in enforcement actions.

The Commodity Futures Trading Commission (CFTC) finds itself embroiled in controversy as Commissioner Caroline D. Pham raises alarming concerns about staff conduct in the My Forex Funds case (MFF) investigation. A Rule 11 sanctions motion filed in the CFTC v. Traders Global Group case accuses CFTC staff of making false statements to the court over six months.

Commissioner Pham’s statement emphasizes the severity of the situation: “This is a grave matter, and we, the Commission, will be subject to intense scrutiny over how we handle the alleged CFTC misconduct.” She further asserts, “This type of behavior cannot be tolerated at a law enforcement agency.”

The allegations could significantly impact the ongoing case against MFF, which has been under scrutiny since September. The proprietary trading firm has consistently challenged the CFTC’s interpretations and jurisdiction, arguing that transactions between MFF and its customers fall outside the regulatory scope.

Call for Reform and Transparency

In response to the allegations, Commissioner Pham has proposed several immediate actions for the My Forex Funds Case:

  1. Reassigning the case to CFTC Enforcement staff from a different regional office or headquarters.
  2. Tasking the CFTC’s Office of General Counsel or the U.S. Department of Justice with handling the Rule 11 sanctions motion.

Pham expressed shock at the delay in implementing these measures, noting it took six months for the Commission to be notified of the court’s admonishment of CFTC conduct in the case.

The Commissioner’s concerns extend beyond this specific case. She revealed previous instances where the Division of Enforcement “has not been candid with the Commission in its recommendations on enforcement actions, including omitting evidence and legal arguments.” Pham strongly criticized this practice, stating, “It is unacceptable to ‘hide the ball’ from the Commission, especially to get a rubber stamp approval to railroad the public into settlements that deprive Americans of their Constitutional rights and property.”

This controversy raises broader questions about transparency and accountability within the CFTC. As the case unfolds, it may have far-reaching implications for the retail prop trading industry, which has faced significant challenges since February.

The outcome of this investigation could potentially reshape regulatory practices and restore trust in the CFTC’s oversight capabilities. As Commissioner Pham aptly put it, “Sunlight is the best disinfectant,” emphasizing the need for greater transparency in regulatory processes.

Also read: Former Yukom Employee Sentenced in Binary Options Fraud Case