US CFTC Faces Sanctions for Willful Bad Faith Conduct in 2023 Fraud Case

A U.S. federal court, guided by Special Master Jose L. Linares, has recommended sanctions against the Commodity Futures Trading Commission (CFTC) for willful and bad faith misconduct in its 2023 enforcement action against Traders Global Group Inc., the operator of My Forex Funds. The court report detailed multiple false statements and sanctionable behaviors by the CFTC over a year, leading to calls for dismissal of the case with prejudice and payment of legal fees. Acting CFTC Chairman Caroline D. Pham acknowledged the severity of the agency's misconduct, describing it as inexcusable and indicative of a broader cultural failure within the Division of Enforcement. The CFTC was found to have deliberately misled the court, engaging in obfuscation and retaliation against internal critics who raised concerns about the agency's conduct. Legal counsel for My Forex Funds criticized the CFTC for falsely accusing their clients of fraud and improperly freezing their assets based on misleading court submissions. The case underscores significant accountability and transparency failures within the CFTC, with calls for corrective actions to restore the agency's credibility.