CFTC Director of Enforcement Outlines Enforcement Priorities, Including Insider Trading in Prediction Markets

Overview

On March 31, 2026, the Commodity Futures Trading Commission’s (“CFTC”) Director of Enforcement, David Miller, delivered his first public remarks since assuming his role earlier that month.[1] Consistent with Chairman Michael Selig’s recent statements, Director Miller stated that the “era of regulation by enforcement is over.” The CFTC, he stated, will adhere to its “core purpose of policing fraud, abuse, and manipulation.”

He outlined five enforcement priority areas: (i) insider trading (including in the prediction markets); (ii) market manipulation (particularly in the energy markets); (iii) market abuse/disruptive trading; (iv) retail fraud; and (v) willful anti-money laundering/Know Your Customer (“AML/KYC”) violations.

With regards to insider trading in the prediction markets, which he defined as instances where “there is misappropriated information,” Director Miller warned that this is the “kind of serious violation that we are going after vigorously” and the CFTC would “aggressively detect, investigate, and, where appropriate, prosecute insider trading in the prediction markets.”

He also stated that the CFTC will “soon” be issuing a new Staff Advisory on Cooperation. He highlighted that this new advisory is “designed to ensure the rapid disposition of matters while appropriately crediting parties for their cooperation.” The new advisory will more closely align the CFTC’s policies with recent amendments to the cooperation program by the Department of Justice and will rescind the CFTC’s 2025 cooperation guidance.[2]

In this memorandum, we discuss these developments and key takeaways, with a focus on implications for the prediction markets.

The CFTC’s Enforcement Priorities

Director Miller identified five enforcement priorities for the CFTC:

• Insider Trading: Director Miller stated that the CFTC will “focus closely on insider trading,” which remains “illegal under the [Commodity Exchange Act (“CEA”)] and our regulations in all our markets—including the prediction markets.” As he discussed in greater detail with respect to the prediction markets, Director Miller noted that “our insider trading authority is about the misappropriation of material non-public information [(“MNPI”)]—and thus involves the use of information in violation of a duty owed to the source of that information.”

• Market Manipulation: Director Miller stated that the CFTC will “aggressively” investigate and prosecute market manipulation “where we have good reason,” emphasizing that manipulation distorts price signals, imposes costs on consumers, and hinders the efficient functioning of markets, and noting that the CFTC will refer such manipulation to the U.S. Department of Justice in appropriate cases. Director Miller pointed to manipulation in energy markets as a particular area of concern given the recent volatility of energy prices. He further stated that “we expect the exchanges to do their part” as a “a critical line of defense” against manipulation and insider trading given their obligations under the CFTC’s core principles to “have appropriate surveillance, compliance practices and procedures, promote fair and equitable trading, protect markets from abusive practices, and, importantly, to only list contracts that are not susceptible to manipulation.”

• Market Abuse and Distortion: Director Miller stated that the CFTC will continue to focus on combating market abuse, including “spoofing, disruptive trading during a closing period, and wash trading,” which undermine market efficiency and price discovery, indicating that such conduct can be a form of manipulation.

• Retail Fraud: Director Miller also noted the CFTC’s continued focus on retail fraud such as Ponzi schemes, commodity pool frauds, and “pig butchering.”[3] Though he noted that fraudsters have implemented new tools, including AI-generated media and spoofed websites, he stressed that the CFTC will use technology to fight misconduct employing these evolving techniques, especially when it targets at-risk populations including the elderly and those with limited financial literacy.

• Willful AML/KYC Violations: Finally, Director Miller stated that the CFTC will prosecute willful violations of AML/KYC rules, including by initiating criminal referrals when appropriate. Moreover, he noted that the CFTC will also pursue repeated or willful noncompliance with other CFTC rules and CEA provisions, even outside the five enumerated areas.

Insider Trading in the Prediction Markets

With regards to insider trading in the prediction markets, Director Miller cautioned that “[w]e are watching.” He discussed the scope of the CFTC’s prohibition on insider trading, rejected the “myth” that “insider trading is permissible” in the prediction markets by providing an analysis of the CFTC’s authorities, and highlighted some particular contracts that are of concern. His statements are consistent with recent remarks by U.S. Attorney for the Southern District of New York, Jay Clayton, who stated that prediction markets are an area of focus and noted that placing a bet through a “prediction market doesn’t insulate you from fraud.”[4]

In defining insider trading in this context, he noted that he was addressing “misappropriated information,” acknowledging that “you are absolutely entitled to trade on MNPI that you rightfully own” where you are “not breaching a duty to the source of the information.” With regards to “misappropriated” information, he stated that “liability attaches when an individual: (1) possesses [MNPI]; (2) misappropriates that information by trading on or tipping in breach of a duty of trust and confidence owed to the source of the information; and (3) does so with scienter.” While the test is anchored in the breach of fiduciary duty concept, the Director also observed that, in his “experience, those who hold MNPI are often subject to a web of legal and confidentiality obligations,” including those who work for sports leagues or major corporations.

Applied in the context of prediction markets, he stated that “the clear statutory reading and the Agency’s view” is that event contracts are “swaps” and, as such, the anti-fraud provisions of the CEA apply and “prohibit insider trading in the prediction markets.” This position reflects the CFTC’s position that the CFTC has “exclusive jurisdiction over CFTC-regulated designated contract markets” and that it would not permit states to regulate states to “re-characteriz[e] swaps trading on [designated contracts markets] as illegal gambling.”[5]

Director Miller provided examples of event contracts that are of particular concern. In a potential reference to a recent insider trading incident involving an editor for the YouTuber MrBeast,[6] Director Miller presented a situation where “an individual traded a contract related to a YouTube channel while having an employment relationship with the subject of the contract” and “appeared to have access to [MNPI] related to his trades—in violation of exchange rules.” He also highlighted contracts based on the “actions or status of a person or small group of people” such as “injury contracts” in the sports context, noting that “those with advance, non-public knowledge of an injury—say a trainer—could use that information to trade” potentially “in violation of a duty of confidentiality.”[7] He also highlighted the “illegal use of government information to trade” and stated that the CFTC “will be policing the illegal use of government information in the prediction markets.”

In addressing potential insider trading and manipulation, he emphasized that the exchanges themselves are the “first lines of defense.” Referencing a recent CFTC advisory that discussed steps exchanges could take to prevent insider trading and manipulation, Director Miller emphasized that exchanges should consider whether certain contracts pose a heightened risk of price distortion or manipulation before listing them.[8] He also encouraged exchanges to cooperate with sports leagues to identify individuals with MNPI, noting the CFTC’s recent memorandum of understanding with a sports league allows them to exchange information and protect relevant event contracts.[9]

New Cooperation Advisory

Finally, Director Miller announced that the CFTC will issue a new staff advisory on cooperation, replacing the February 2025 cooperation advisory.[10] Under the new policy, absent aggravating circumstances, a party that self-reports, cooperates fully, and remediates fully will have “a clear path” to obtaining a declination. Aggravating circumstances might include “pervasive intentional or reckless conduct by ownership or senior-most management” or “[r]ecidivist activity involving intentional or reckless conduct.” In defining the policy, Director Miller emphasized three points.

• Self-Reporting: Parties will be eligible for declination if they self-report timely, promptly, and in good faith, “regardless of whether the CFTC already knew about the issue confidentially.” However, a self-report would not be eligible “where the information is public or the party knows or suspects that there is an imminent disclosure from another source.”

• Cooperation: Director Miller stated that cooperation will require full “hundred percent” cooperation. This includes “disclosing all relevant non-privileged information, sharing internal investigation findings without breaching privilege or work-product protections, making personnel available for interviews, preserving all records including ephemeral messages, undertaking good-faith efforts to secure documents located overseas, and, under our policy, continuing to report.”

• Remediation: Remediation will require both compensating victims and addressing “corporate deficiencies.” With regards to corporate deficiencies, he states that a party will have to “demonstrate that they have analyzed the conduct, identified root causes, and remediated root causes where appropriate.” This will include “implement[ing] appropriate changes to their compliance program” and “where appropriate, disciplining relevant employees, including both those responsible for the conduct and those with supervisory authority.” In terms of compensating victims, this includes “full restitution to injured parties,” and he added that “parties will have to disgorge their ill-gotten gains.”

Key Takeaways & Looking Ahead

Director Miller emphasized that the CFTC will focus on “conduct that truly causes harm.” Regulated parties may wish to review their compliance programs for the areas that he emphasized would be a focus for the CFTC.

With regards to Director Miller’s remarks regarding prediction markets, designated contract markets and businesses whose activities may be the subject of, or affect, events contracts may wish to undertake a review of their policies and procedures.

• First, companies may wish to review their market policing and surveillance processes. Director Miller emphasized the role of commodity exchanges as the first line of defense against fraud, manipulation, and abuse. Regulated entities that have obligations under the Commodity Exchange Act to govern trading, such as designated contract markets, may wish to review their processes to ensure they can adequately detect the type of misconduct identified by Director Miller and CFTC Chair Selig.[11]

• Second, market participants may wish to consider guidance on employee trading in prediction markets. Director Miller’s focus on insider trading enforcement in prediction markets suggests that market participants—and businesses whose activities may be the subject of, or affect, event contracts, such as sports leagues—should consider implementing written guidance for their employees reminding them of their duties of confidentiality and that they may not use, or share, MNPI for the purpose of trading in prediction markets.

We will continue to monitor for developments regarding the CFTC and the prediction markets and provide relevant updates.

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[1] David I. Miller, Remarks at NYU Law School – CFTC Enforcement Priorities, Insider Trading in the Prediction Markets, and Cooperation with the CFTC (Mar. 31, 2026), available here.

[2] See Paul, Weiss, CFTC Enforcement: 2025 Year in Review (Feb. 19, 2026), available here.

[3] David Kessler & Benjamin Klein, Pig butchering and third-party risk—The widening effort to combat tech-enabled fraud schemes, Westlaw Today, 2026 PRINDBRF 0126 (Mar. 17, 2026), available here; Paul, Weiss, DOJ and Treasury Undertake Significant Enforcement Actions Targeting Southeast Asian Scam Networks, Underscoring Cyber-Enabled Fraud as an Enforcement Priority (Oct. 21, 2025), available here (“Pig butchering” scams involve gaining victims’ trust online, sometimes through romantic scams, and then deceiving them into sending funds, sometimes by investing in fake crypto assets.).

[4] Antonia Apps et al., Paul Weiss Discusses CFTC Regulation of Prediction Markets and SDNY Focus on Fraud, CLS Blue Sky Blog (March 4, 2026), available here.

[5] Brief for CFTC as Amicus Curiae Supporting Appellant at 2, N. Am. Derivatives Exch., Inc. v. Nevada, No. 25-7187 (9th Cir. Feb. 17, 2026), available here; see Antonia Apps et al., Paul Weiss Discusses CFTC Regulation of Prediction Markets and SDNY Focus on Fraud, CLS Blue Sky Blog (March 4, 2026), available here.

[6] Krystal Hur, Kalshi Fines Former Gubernatorial Candidate, MrBeast Employee on Prediction Wagers, Wall Street Journal (Feb. 25, 2026), available here.

[7] He also highlighted a “manipulation” concern with injury contracts because a “player could injure another player to collect on a contract.”

[8] CFTC, CFTC Enforcement Division Issues Prediction Markets Advisory (Mar. 12, 2026), available here.

[9] CFTC, CFTC and MLB Sign Groundbreaking MOU (Mar. 19, 2026), available here.

[10] CFTC, CFTC Releases Enforcement Advisory on Self-Reporting, Cooperation, and Remediation (Feb. 25, 2025), available here.

[11] Paul, Weiss Publications, CFTC Enforcement: 2025 Year in Review (Feb. 19, 2026), available here.