CFTC Commissioner Caroline D.Pham calls for action on alleged misconduct in My Forex Funds case
In a statement issued this week, Commissioner Pham expressed serious concerns about the allegations in the 11th sanction motion filed by the CFTC in the case against Traders Global Group. The motion accuses CFTC staff of making false statements to the court over a six-month period.
“This is a serious issue, and our commission will be rigorously reviewing how we handle alleged CFTC misconduct,” Pham said. “Law enforcement agencies cannot tolerate this kind of behavior.”
For My Forex Funds, this could be a turning point in a case that has been ongoing since September last year, as the proprietary trading firm has maintained that the commission may have misconstrued some of the payments, which led to its assets being frozen.
Additionally, in November, MFF distanced itself from the allegations and questioned the CFTC’s jurisdiction over its operations. The motion argues that the transactions between MFF and its clients fall outside of regulatory oversight.
In early March, Finance Magnates reported that the firm’s representatives would seek sanctions against the CFTC for alleged distortion of facts. The company cited the “severe abuse of power” by the US Securities and Exchange Commission in handling the DEBT Box case, similar to the allegations against the CFTC.
A motion filed in a New Jersey court stated: “Recognizing that sanctions are an extraordinary remedy, it is necessary to condemn and correct the severe abuse of unilateral procedures by the CFTC and its power as a government law enforcement agency.”
The motion seeks “an evidentiary hearing so that the pattern of CFTC misconduct and its impact on the defendants’ rights can be fully understood and corrected.”
Pham outlined several proposals for addressing the issue:
Reassigning the case to CFTC enforcement personnel from different regional offices or headquarters. Having the CFTC’s Office of General Counsel or the US Department of Justice handle the 11th sanction motion instead of the enforcement division.
The commissioner expressed shock at the failure to take these measures, pointing out that it took six months for the commission to receive a warning from the courts about the CFTC. The Commodity Futures Trading Commission (CFTC) was established by the Commodity Exchange Act (CEA) in 1974. The commission protects and regulates market activities, prevents manipulation, fraud, and abusive trading practices, and promotes fair futures contracts. The CEA also includes the Shad-Johnson Accord, which specifies the powers and responsibilities of the CFTC and the Securities and Exchange Commission in overseeing financial contracts.
Pham also raised broader concerns about the CFTC’s internal procedures, stating that she had previously found the enforcement division “less than forthright in its recommendations about enforcement actions to the commission, including omitting evidence and legal arguments.”
“Concealing the truth from the commission is unacceptable, especially with rubber-stamp approval leading the public into the deprivation of constitutional rights and property,” Pham declared.
The commissioner called for cultural reform within the CFTC, increasing transparency, and stating that “sunlight is the best disinfectant.”
In conclusion, it is worth asking whether we would have witnessed the subsequent issues in the entire retail prop trading industry in February if it were not for the crackdown on My Forex Funds by market regulators.
