EXCHANGES AND MARKET REGULATION—CFTC issues adviso

EXCHANGES AND MARKET REGULATION-CFTC issues advisory on referrals for potential criminal enforcement - 11 July 2025

The new guidance follows Executive Order 14294, "Fighting Overcriminalization in Federal Regulations," published in the Federal Register on May 14.

The CFTC's Division of Enforcement has issued an advisory describing its plan to address criminally liable regulatory offenses in accordance with Executive Order 14294, providing guidance to be followed when the DOE, as the CFTC division responsible for making referrals to the Department of Justice, considers whether to refer potential violations of criminal regulatory offenses to DOJ.

The Executive Order stated its intent was "to ease the regulatory burden on everyday Americans," and it indicated that where enforcement is appropriate, agencies should consider civil rather than criminal enforcement of strict liability regulatory offenses, or, if appropriate and consistent with due process and the right to jury trial (see Jarkesy v. Securities and Exchange Commission, 603 U.S. 109 (2024)), administrative enforcement.

Guidance given to both DOE and DOJ. The advisory also lists a set of factors DOE staff should consider when determining whether to refer alleged violations of criminal regulatory offenses to DOJ. Factors to consider include:

• The harm or risk of harm, pecuniary or otherwise, caused by the potential offense;

• The potential gain to the putative defendant that could result from the offense;

• Whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue;

• Evidence, if any is available, of the putative defendant's general awareness of the unlawfulness of his conduct, as well as his knowledge or lack thereof of the regulation at issue;

• Whether the putative defendant is a recidivist or has otherwise engaged in a pattern of misconduct; and

• Whether the involvement of the Department of Justice will provide additional meaningful protection to participants in the derivatives markets.

Not to be used against the U.S. The CFTC said the guidance is not intended to create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

The DOE's advisory was issued in accordance with Section 7 of the Executive Order in lieu of the requirement for publication in the Federal Register. Currently, there is no majority vote of the Commission to authorize Federal Register publication.

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