CFTC announces amendments to Rules of Practice and Investigations

On December 3, 2025, the Commodity Futures Trading Commission (CFTC or Commission) published a final rule concerning amendments to CFTC Rules of Practice and Rules Relating to Investigations (the Rule).¹

The Rule, which became effective immediately:

• Seeks to enhance transparency, fairness and due process in enforcement proceedings
• Revises the Wells process (a formal communication by agency enforcement staff of a potential enforcement action) to provide clearer notice of potential enforcement action
• Modifies handling of recommendation memoranda for greater consistency
• Updates settlement procedures to improve clarity and alignment with best practices

Background

By implementing the Rule, the CFTC seeks to address longstanding criticisms regarding opacity and discretionary practices in its enforcement program. The amendments implemented by the Rule align CFTC procedures more closely with those of the Securities and Exchange Commission (SEC), providing respondents with clearer notice and greater opportunity to respond to potential charges.

Acting Chairman Pham stated, “the CFTC has nearly boundless discretion to investigate and prosecute violations of the law, and our sanctions and penalties are rarely challenged. That is why, for over 3 years, I have called for the CFTC to uphold the highest standards of integrity, diligence and excellence in our enforcement actions to maintain the public’s trust in the CFTC’s ability to oversee our markets with fairness and in service to justice.”²

The Rule is just one of the several steps taken by the CFTC this year to improve transparency with market participants. Previously, the CFTC issued an enforcement advisory addressing self-reporting, cooperation and remediation, as well as an advisory on criminal referrals to the Department of Justice. Furthermore, the Division of Enforcement (the Division), along with the CFTC's operating divisions, released a referral advisory on how Division staff will evaluate materiality and other criteria that the operating divisions will use to determine referrals to the Division when recommending an investigation or enforcement action.

Key highlights

Written Wells notices

The CFTC now requires Wells notices be provided in writing whenever possible. If an oral notice is given, it must be promptly confirmed in writing. This change ensures that respondents receive clear and documented notice of specific charges that the Division has made preliminary determinations to recommend to the Commission.

Extended response time

Respondents are now afforded a minimum of 30 days to respond to a Wells notice, compared to the previous practice of allowing as little as 2 to 14 days. Shorter periods may be permitted only for good cause and with specified senior lawyer approval.

Objective recommendation memoranda

The Division must prepare comprehensive and objective memoranda when recommending enforcement actions or settlements. These memoranda must include factual and legal foundations, cite supporting evidence and address unfavorable facts or precedents.

Full Commission review

All written Wells submissions must be forwarded to the full Commission, rather than only upon request. This ensures that the Commission has a complete record before making enforcement decisions.

Settlement authority clarification

The amendments confirm that the Commission may accept settlement offers by order, either through a formal meeting or its seriatim process.

Removal of outdated references

The Rule eliminates obsolete references, such as facsimile communications, and updates Appendix A of Part 11, Rules Relating to Investigations, to reflect current practices.³

Comparison table

Implications for market participants

These amendments have several practical implications for market participants.

First, and most importantly, firms may have more transparency into what the CFTC’s alleged charges are by encouraging Enforcement staff to provide specifics when previously not required.

Second, the extended response period for Wells notices provides respondents with a meaningful opportunity to prepare comprehensive submissions, which may influence the Commission’s decision-making.

Third, the requirement for objective recommendation memoranda and full Commission review enhances transparency and reduces the risk of enforcement actions based on incomplete or biased information. Finally, the clarified settlement authority and removal of outdated references modernize the CFTC’s procedures, promoting efficiency and fairness in enforcement matters.

Respondents are encouraged to contact CFTC staff early to clarify potential charges and supporting evidence. This can simplify investigations, prevent confusion and lead to more effective settlement talks.

Special thanks to senior counsel Stephan Ariyan for assisting in the preparation of this article.

1 The Rule was promulgated as an interpretative rule and therefore was not subject to the typical notice and comment rulemaking requirements of the Administrative Procedure Act. Furthermore, the Rule became effective immediately, with the CFTC claiming a “good cause” exception to general pre-publication public comment period procedures; noting such requirements would be “impracticable, unnecessary or contrary to the public interest” since the amendments “will promote efficiency and facilitate the [CFTC]’s core mission without imposing any new burden on market participants or the public.” See Amendments to CFTC Rules of Practice and Rules Relating to Investigations, 90 Fed. Reg. 55642 (Dec. 3, 2025).

2 US Commodity Futures Trading Comm’n, Acting Chairman Pham Announces Reforms to Wells Process, Amends Rules of Practice and Rules Relating to Investigations, Release Number 9144-25 (2025).

3 17 C.F.R. Part 11.