In a recent statement, CFTC Commissioner Caroline Pham has once again voiced strong criticisms against the Commodity Futures Trading Commission’s (CFTC) regulatory practices, following her earlier objections regarding the agency’s conduct in the My Forex Funds case.
Appointed by President Biden, Pham has consistently raised concerns about the unclear delineation of roles and responsibilities among different divisions within the CFTC.
Ongoing Criticism of Regulatory Practices
Commissioner Caroline Pham has not shied away from pointing out the shortcomings of the CFTC, the primary U.S. regulatory body overseeing financial derivatives markets. In her latest remarks, Pham highlighted the agency’s improper reinterpretation of long-standing regulations, citing a lack of rational basis and public transparency. She attributes these issues to the unclear roles and responsibilities among CFTC divisions, which she argues has led to a problematic approach of regulation by enforcement.
This is not the first time Pham has taken issue with the CFTC’s actions. Last September, she publicly questioned the ethics of the regulator’s lawsuit against Traders Global Group Inc., the company behind My Forex Funds. Her concerns extended to allegations that CFTC staff made false statements in court, which she believes could subject the Commission to significant scrutiny.
Pham stressed, “Such behavior is unacceptable for a law enforcement agency,” while pointing out that My Forex Funds is now seeking sanctions against the CFTC.
Broader Concerns and Jurisdictional Conflicts
Beyond her specific criticisms of enforcement practices, Pham has also questioned the CFTC’s broader administrative proceedings. She argued that the agency’s dual role as prosecutor and judge in its cases lacks the necessary checks and balances, potentially compromising fairness and due process.
Pham also touched on the ongoing jurisdictional tensions between the CFTC and the SEC, particularly in the realm of cryptocurrency regulation. She pointed out a potential overreach in the CFTC’s actions against Kraken, which she believes could undermine investor protection laws by blurring the lines between securities and trading activities.
Caroline D. Pham’s Background
Caroline Pham has been serving as one of the five CFTC Commissioners since April 2022, having been nominated by President Biden. With a background that includes roles as Special Counsel and Policy Advisor at the CFTC, as well as significant experience at Citi, Pham brings a wealth of regulatory and market expertise to her position.
Call for Reform Within the CFTC
In her latest critique, Pham emphasized the need for the CFTC to clarify its standards on self-reporting and cooperation. She proposed enhanced procedures to improve regulatory clarity, consistency, and governance within the agency.
She highlighted the importance of adherence to the Commodity Exchange Act, which mandates that market participants meet stringent registration and compliance standards to operate within derivatives markets.
