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CFTC Announces Reforms To Rules Of Practice And Investigations
12/17/2025On December 1, 2025, the Commodity Futures Trading Commission ("CFTC" or "the Commission") announced amendments to its Rules of Practice and Rules Relating to Investigations, which will affect how enforcement matters are developed, presented to the Commission, and resolved. Acting Chairman Caroline D. Pham, who has been critical of some of the Commission’s prior enforcement practices, framed the reforms as efforts to strengthen due process, enhance transparency, and improve the integrity and completeness of the administrative record in enforcement actions. Most notably, the amendments strengthen the Wells process by requiring that Wells notices clearly set out the potential charges and the relevant supporting facts, and by increasing the minimum response period from 14 days to no less than 30 days.
Amendments to the Rules of Practice and Rules Relating to Investigations
The revisions fall into five categories across CFTC procedures:
- The Commission revised the definition of “adjudicatory proceedings” in Part 10 under the Rules of Practice to clarify that adjudicatory proceedings include the issuance of an order by the Commission instituting proceedings pursuant to the Act, making findings, and imposing remedial sanctions.
- The Commission removed obsolete references to regulations that are no longer effective and references to fax communications to streamline Part 10 provisions.
- The Commission clarified its Rules of Practice to now expressly confirm that the Commission can accept settlement offers by order in lieu of an adjudicatory proceeding, either by Commission meeting or by the Commission's seriatim process.
- The Commission established requirements for the form and content of settlement recommendation memoranda provided by the Division of Enforcement (“the Division”) to the Commission. Memoranda must be objective, adhere to professional conduct rules, provide a comprehensive factual and legal foundation, distinguish unfavorable facts or legal precedents, cite evidence in the investigative record or stipulations for factual assertions, and support legal arguments with points and authorities.
- Finally, the CFTC amended Appendix A to Part 11 of the Rules Relating to Investigations, updating the Wells process by detailing the issuance procedures and the content of notices, and extending response timelines.
The revisions to the Wells process are the most consequential for enforcement targets and respondents. The Wells process governs how the Commission notifies individuals or entities subject to enforcement actions. The Commission now requires that the Division provide written notices, when possible, of the potential charges and the relevant facts and circumstances supporting the allegations. If an oral notice is issued, it must be followed by written confirmation. Additionally, this amendment was apparently intended to increase transparency and end what Acting Chairman Pham described as a practice of “secret” charges against individuals or entities. Moreover, in response to the notices, recipients are now given a minimum of 30 days to submit a written Wells response, an increase from the prior 14-day minimum.
Acting Chairman Pham expressly linked these reforms to her prior public statements calling for higher standards in CFTC enforcement. In those statements, she warned that overbroad assertions of the deliberative process privilege, especially when invoked or delegated to staff rather than the agency head, can shield relevant facts and final determinations from scrutiny, undermine due process and enable “secret agency law.” Tying the recent rule revisions to these previously expressed concerns could be the Commission signaling an intent to remedy perceived structural shortcomings in both the Wells process and internal communications. The amendments are effective immediately and were published in the Federal Register on December 3, 2025.
