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Enforcement Round-Up
CFTC Enforcement
On January 20, 2026, Chairman Michael Selig issued a public statement outlining his vision to “future‑proof the CFTC for tomorrow’s innovations.” As expected, he echoed the goals articulated by former Acting Chair Caroline Pham—namely, a shift away from regulation-by-enforcement approaches that risk stifling responsible innovation, while still “protecting the public from fraud, scams and market manipulation.” hair Selig underscored his philosophy by noting that “[t]he CFTC’s approach should be to deliver the minimum effective dose of regulation—nothing more and nothing less.”
In line with that message, on January 16, 2026, the CFTC released an omnibus enforcement update announcing resolutions in three separate matters. Each case focused primarily on individual misconduct involving allegations of fraud, market manipulation, or misappropriation. Two matters resolved ongoing federal court actions. As part of their CFTC consent orders, the individuals received temporary bans on registration and trading with the CFTC. Additionally, those individuals had already been convicted or pled guilty to parallel criminal charges brought by the Department of Justice.
In the third matter, the CFTC filed a new complaint in the U.S. District Court for the Northern District of Oklahoma, alleging that an individual and his firm fraudulently solicited and accepted more than $10 million from investors for an unregistered commodity pool. Similarly, the individual has already been sentenced to five years in prison and ordered to pay monetary relief in a separate criminal proceeding.
SRO Enforcement
While the CFTC has been—and is expected to continue—moving away from pursuing technical or compliance‑oriented violations that lack clear client or market impact, self-regulatory organizations (SROs) continue to actively investigate potential violations of their rules. Details of the non‑public inquiries that may have been closed without disciplinary action of course remain unknown; however, more recent disciplinary notices suggest SROs may be occupying some of the enforcement space the CFTC has stepped back from.
For example, at the end of December 2025, ICE Futures U.S. issued a Disciplinary Notice against Skyview Ventures LLC for violating Rule 4.02(c) (wash trades). Although the notice contains minimal underlying factual detail, the matter involves a single instance of wash trading in a particular futures product where the underlying orders appear to have inadvertently matched.
Precious Metals Fraud
On January 23, 2026, reports emerged that German prosecutors are investigating potential fraud totaling approximately €460 million at Heraeus Precious Metals (HPM). Authorities are examining allegations that, between 2015 and 2025, HPM retained certain metals remaining in recycling equipment—despite those materials being the property of at least two of HPM’s customers.
The inquiry reportedly began after a whistleblower raised concerns, leading to a year‑long internal investigation. When its auditor, KPMG, expressed concerns with the quality of the investigation, the company engaged an external law firm to conduct a two‑phased follow‑up investigation. That review remains ongoing under supervisory board oversight.
Tiffany Payne | Email
Winter Storms Cause Natural Gas Prices to Spike to All-Time Highs
Severe winter weather can have a significant impact on energy markets, particularly natural gas.
- Freezing temperatures increase heating demand from consumers and can also disrupt and restrict output of oil and gas producers and drive-up spot natural gas prices.
- Continued strong demand from liquefied natural gas export markets also impacts the supply and demand balance.
With this recent bout of extreme winter weather including winter storms Fern and Gianna:
- About 15% of total U.S. natural gas production was offline last week.
- Natural gas prices soared by more than 120% over the prior week, reaching a 3-year high in the middle of last week, with Henry Hub natural gas spot prices reaching an all-time high average of $30.565/MMBtu on Monday January 26.
- Henry Hub natural gas futures spiked 70% to $5.27/MMBtu (though temporarily trading even higher), by Friday of last week.
- Overall, the impacts to physical gas supply were better managed due to preparedness in the wake of widespread gas disruptions during previous storms including Winter Storm Uri in 2021 in Texas.
In addition to managing price risk during periods of extreme volatility, market participants grapple with obligations to deliver or take delivery of natural gas under supply and trading contracts in extreme winter weather, which may be impracticable, infeasible, impossible, or prohibitively expensive depending on the weather impact on gas production and pipelines. Notwithstanding these factors, performance obligations for these transactions generally may only be contractually excused if the inability to perform is caused by force majeure.
While the usage of the term force majeure was adopted in French civil law as part of the Napoleonic Code, the principle that no one is expected to perform the impossible (ad impossibilia nemo tenetur) has a longstanding history in Roman law and has proliferated to most domestic legal systems around the globe.
Under the North American Energy Standards Board (“NAESB”) Base Contract for Purchase and Sale of Natural Gas (“Base Contract”), the industry standard agreement for natural gas purchase and sales, neither party is liable to the other if the failure to perform an obligation to make or take delivery was caused by Force Majeure. The term “Force Majeure” generally means any cause not reasonably within the control of the party claiming suspension and includes, but is not limited to “weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe. .
.” See section 11 of the NAESB Base Contract. That seems pretty straight forward; however, the exact circumstances under which a party may claim Force Majeure and have performance excused have and can be the subject of dispute, particularly where the economic consequences are significant.
In the wake of Winter Storm Uri and the ensuing force majeure related litigation created by disputes between market participants, much of which has worked its way through district and appellate courts, a group of energy and power producers submitted a request to revise the Base Contract Force Majeure provisions due to three primary areas of concern: (1) clarity regarding repeated claims of force majeure for an avoidable situation; (2) requirements that parties claiming force majeure should take actions to prevent the condition; and (3) additional specificity regarding the force majeure events. Energy producers submitted comments opposing the proposal noting that the proposal disproportionately shifted force majeure risk to sellers, which upsets the current balanced approach to force majeure events. That approach has been in use since the creation of the Base Contract due to the prevailing view that it results in fair and reasonable outcomes. The NASEB Executive Committee, comprised of a variety of end-users, producers and other stakeholders, voted in September 2023 to recommend no action be taken on the proposal.
As a result, market participants wishing to address the allocation of force majeure risk or to revise language in the Base Contract must continue to separately negotiate revisions to the standard provisions or include additional provisions in transaction confirmations. The impacts of these current winter storms may have been less severe in terms of the curtailment of natural gas supply than in previous occurrences, but price volatility and any supply or transportation curtailment impacting market participants continue to reinforce the importance of force majeure provisions in natural gas contracts.
Participants need to carefully assess the circumstances of a transaction or series of transactions to determine whether they wish to include additional or revised force majeure language and consider the multiple post-2021 court decisions interpreting the Force Majeure provisions of the NAESB Base Contract.
Sources and Further Reading:
Why U.S. Natural Gas Prices Just Exploded to Multi-Year Highs
Natural gas prices spike as winter storm approaches
U.S. Deep Freeze Wreaks Havoc on Texas Oil Producers and Refiners
Henry Hub Prices Smash All-Time Records as Winter Storm Fern, LNG Tag-Team to Tighten Balances
Oxford Public International Law – Force majeure
Stuart Armstrong | Email
Clarity Act Update
The Clarity Act is allegedly…supposedly near the finish line, maybe. The bill passed the House in 2025, but has remained stuck in the Senate. On Monday, February 2, banking and digital asset industry groups and Coinbase met in Washington D.C. to try to find a path forward. Both traditional financial institutions and digital asset exchange (which are quickly establishing themselves) carry a big stick in D.C. Reportedly, entitlements to yield on stablecoins is now the thing holding the bill back.
The bill was set to advance in mid-January, but stalled after reports that Coinbase pulled its support for the then current draft of the bill. Key issues that Coinbase’s CEO shared on X included (i) de facto ban on tokenized securities; (ii) DeFi prohibitions and giving the government “too much access to your financial records and removing your right to privacy”; (iii) erosion of the CFTC’s authority; and (iv) amendments that would prevent rewards or yield on stablecoins.
Meanwhile Senator Elizabeth Warren issued a letter to the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, that in fact the bill would provide “sweeping exemptions” from key anti-money laundering regulations to certain market participants transacting in cryptocurrency.
Rather than having me predict what will happen, let’s check Kalshi (as of late on 2/2/2026) – “Will crypto market structure legislation become law?” Before 2027: 54%, Before June: 34%, Before May: 23%. There you have it.
Barrett Morris | Email
CFTC Staff Letter No. 26-01 – NAL Regarding Event Contracts (and Kalshi)
“Prediction Markets are this year’s crypto” – Someone. Apologies to whoever said that to me and I can’t remember who to attribute it to. But, the CFTC and many seem to feel the same way. One of the CFTC’s first No-Action letters this year (CFTC Staff Letter No. 26-01) provided relief to event contract market places from swap data reporting and recordkeeping regulations for certain binary and bounded swap contracts. The CFTC is careful to note that the no-action letter “applies only in narrow circumstances.” The CFTC then goes on to state that the relief is similar to its fifteen prior no-action positions regarding reporting binary options and similar transactions. The party making the request must comply with six conditions to receive relief from broader swap data reporting and recordkeeping regulations. Those are: (1) positions must be fully collateralized, (2) clear through its affiliated clearing house, (3) publish the time and sales data for transactions promptly after execution on its website,
(4) provide the CFTC with all transactional information as described in Commission regulation 16.02, (5) comply with all reporting and recordkeeping rules applicable to them in their capacities as a DCM and a DCO, and all other “Relevant Regulation”, and (6) keep and provide upon request records to the CFTC, DOJ, SEC, and any prudential regulator.
In his January 29, 2026, public statement, Chair Selig elaborated on his initial actions with respect to prediction markets, including: (1) the withdrawal of “the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts”; (2) the withdrawal of “the 2025 staff advisory, which cautioned registrants about offering access to sports-related event contracts due to ongoing litigation”; and (3) a staff directive “to move forward with drafting an event contracts rulemaking.
Somewhat relatedly, state gaming regulators and/or State Attorney Generals have Kalshi engaged in litigation across several states – Nevada, Connecticut, Massachusetts, Maryland, New Jersey, and I’m sure other State AGs are watching. Last week, a Judge in Massachusetts gave Kalshi and the State until Wednesday, February 4 (tomorrow!) to agree to the terms of a preliminary injunction – or the judge will draft it himself. Kalshi has an appeal running in parallel, asserting that the Commodity Exchange Act and the CFTC’s regulations preempt state gambling laws. This matter is a litmus test for the rest of the event contract exchanges and we will all be watching closely. Is there an event contract for this scenario? I couldn’t find one. Perhaps Chair Selig would agree. In his January 29 statement, he further noted that he has directed “the CFTC staff to reassess the Commission’s participation in matters currently pending before the federal district and circuit courts” and underscored the CFTC’s responsibility to “defend
its exclusive jurisdiction over commodity derivatives.”
Barrett Morris and Tiffany Payne | Email
Interesting Links
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