Chairman Selig’s Initial Thoughts on Direction for the CFTC in 2026

On Thursday, Jan. 29, Chair of the Commodity Futures Trading Commission, Michael S. Selig, outlined CFTC priorities for 2026 and beyond. With Securities Exchange Commission Chair Paul Atkins at his side, Selig discussed how the CFTC would partner with the SEC on Project Crypto. He also noted that he has already directed CFTC staff to begin upgrading CFTC regulations and that he looked forward to leading the CFTC into a new era of modernization, harmonization, and future-proofing regulations.

Such regulations should bring important clarity and guideposts for CFTC enforcement efforts, including the Commission’s Whistleblower Program.

Below are a few takeaways directly from Chairman Selig’s speech:

A Tradition of Market Innovation

Today, commodity markets are experiencing a period of rapid transformation. Blockchains, crypto assets, and smart contracts are introducing new methods for trading, clearing, settling, margining, and collateralizing commodity price exposures. These innovations have the potential to reduce operational frictions by enhancing liquidity and streamlining post-trade processes. At the same time, new products such as prediction markets, “mini” contracts, and perpetual futures have experienced rapid adoption.

• Direction: The CFTC is positioning itself to build on its historic role as a forward-looking regulator. By applying clear rules, principles-based oversight, and harmonizing with fellow regulators, like the SEC, the Commission’s objective is to help ensure that the next generation of commodity markets develop onshore—continuing a legacy that stretches from the grain pits of Chicago to the digital markets of the future.

The Crypto Capital of the World

America is home to the most transparent and well-regulated financial markets in the world. With thoughtful engagement and a commitment to principled innovation, the U.S. is uniquely positioned to extend its preeminence into the crypto era.

The GENIUS Act is law and Congress is on the cusp of passing market structure legislation.

Therefore, America’s financial regulators, like the CFTC, must modernize and harmonize their approach to regulation to future-proof our markets for the innovations of tomorrow.

• Direction: CFTC staff will make full use of the agency’s existing authorities to begin upgrading our regulations for America’s Golden Age.

Project Crypto: Modernizing and Harmonizing Financial Regulation

The CFTC is partnering with the SEC on Project Crypto—bringing coordination, coherence, and a unified approach to the federal oversight of crypto asset markets.

Project Crypto recognizes that crypto markets span across agencies’ respective regulatory boundaries. Therefore, the agencies will collaborate on developing clear, durable, rules that will:

• Advance a clear crypto asset taxonomy
• Clarify jurisdictional lines
• Remove duplicative compliance requirements
• Reduce regulatory fragmentation

Ensuring that innovation takes root on American soil, under American law, and in service of American investors, customers, and businesses.

New Accord: Delivering Clarity and Certainty to Crypto Asset Markets

With a wide range of new crypto assets and on-chain financial markets, we’re due for a new cross-agency agreement to govern these markets.

SEC Chairman Atkins recently laid out a common-sense crypto asset taxonomy that will make clear that digital commodities, digital collectibles, and digital tools are not “securities”—even when they are sold as part of an investment contract. 

• Direction: CFTC staff will work with SEC staff to consider joint codification of this framework as an interim measure while Congress finalizes legislation.

Expanding Eligible Tokenized Collateral 

With a clearer taxonomy in place, the next question becomes how blockchain technologies can be harnessed to strengthen market resilience and market functions.

In certain markets, 24/7 trading offers meaningful advantages, particularly where global participation is essential to market efficiency.

• Direction: CFTC staff will develop rules to enable the responsible deployment of additional forms of eligible tokenized collateral.

Onshoring True Perpetual Derivatives

The pace of innovation with crypto assets has also led to experimentation with novel types of derivatives, such as “perpetual contracts,” i.e., derivatives with no fixed maturity date.

• Direction: The CFTC will use the tools at its disposal to onshore perpetual and other novel derivative products so that they can flourish across both centralized and decentralized markets, subject to appropriate safeguards.

Safe Harbors for Software Developers and Users

Digital wallets, decentralized finance protocols, layer-2 networks, and other on-chain software systems are now part of everyday finance. However, uncertainty persists regarding the appropriate regulatory treatment of these technologies under the CFTC’s existing framework.

• Direction: The CFTC will explore ways in which the agency can encourage innovation in software development and support builders as they work toward product market fit, including by assessing whether an innovation exemption may be appropriate in certain circumstances. 

At every step, the CFTC’s actions will reflect a commitment to establish clear and unambiguous safe harbors for software developers to ensure that the crypto innovations of today and tomorrow are Made in America.

Leveraged Crypto Asset Trading

Intermediated trading will continue to play an important role in crypto markets. That includes trading conducted both on- and off-exchange with leverage, margin, or financing. The CFTC is taking concrete steps to foster these trading activities, including:

1. CFTC staff will begin drafting rules clarifying when leveraged, margined, or financed retail commodity transactions in crypto may be offered off-exchange under an “actual delivery” exception.
2. CFTC staff will begin drafting rules codifying requirements for “designated contract markets” (DCMs) that choose to offer these transactions on their current platforms. Codification should promote consistency, transparency, and a uniform application of core protections across venues—hallmarks of the CFTC’s regulatory regime.
3. CFTC staff will explore the creation of a new category of DCM registration that is tailored specifically to retail leveraged, margined, or financed crypto asset trading. These venues would perform functions similar to traditional DCMs but operate under a purpose-fit regulatory framework.

Facilitating Substituted Compliance and Super-Apps

The CFTC will work closely with the SEC to identify opportunities to better align regulatory requirements across markets. 

• Objective: The objective is to reduce unnecessary duplication that does not improve market integrity. Within the bounds of the law and where appropriate, market participants should be able to offer multiple products through a single platform without navigating an inefficient patchwork of registrations and overlapping regulatory regimes.

Prediction Markets

The CFTC supports lawful innovation of prediction markets, otherwise known as event contracts, and the important role they play in the broader financial system. Here’s how we will be moving forward to give them more certainty.

1. CFTC staff will withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts and the 2025 staff advisory (No. 25 – 36), which cautioned registrants about offering access to sports-related event contracts due to ongoing litigation.
2. CFTC staff will move forward with drafting an event contracts rulemaking.
3. CFTC staff will reassess the Commission’s participation in matters currently pending before the federal district and circuit courts.

CFTC staff will work with counterparts at the SEC to develop a joint interpretation on definitions of the Title VII Dodd-Frank Wall Street Reform and Consumer Protection Act. This effort would draw clearer lines between certain commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps.

About the Author

Christina McGlosson, special counsel in our Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation. She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.

Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, as part of the U.S. Treasury, the Department of Justice, and other government agencies.

In September, the Securities and Exchange Commission (SEC) withdrew 14 proposed rules dating from the Biden administration. The announcement represented a significant shift in the agency’s regulatory approach to the financial sector under President Trump’s SEC Chair Paul Atkins. Specifically, withdrawing a rule that required investment advisors to “eliminate or neutralize” conflicts of interest arising from their use of artificial intelligence highlights major differences between the Biden and Trump administrations’ assessments of the threat posed by predictive analytical technologies and how best to regulate this rapidly advancing area.

Under the Biden administration, then SEC Chair Gary Gensler rang the alarm bell about the potential impact of artificial intelligence on the financial markets. Prior to becoming SEC Chair, Gensler was a professor at MIT and co-authored a research paper arguing that uniform data and model designs would result in financial market risks. He explained “models built on the same datasets are likely to generate highly correlated predictions that proceed in causing crowding and herding” leading to systematic risks that could unleash a financial crisis. As an example, Gensler cited the 2008 financial crisis, where systemic risk created by the financial sector’s heavy reliance on three major credit agencies to regulate collateral obligations contributed to a global crash. In an August 2023 interview with The New York Times, then-Chair Gensler predicted that just a few AI companies would create financial models undergirding the economic system, setting up global markets for a financial crash. “This technology will be the center of future crises, future financial crises,” Gensler said. “It has to do with this powerful set of economics around scale and networks.”

Not surprisingly, the SEC under Gensler proposed in July 2023 a rule that would have prevented broker-dealers or investment advisors from using AI that resulted in investment firms placing their own interests ahead of investors. Under the proposed rule, investment firms were also required to adopt and maintain written policies and procedures that would prevent such violation of the policy. In addition, the firm would have to comply with certain record-keeping requirements.

The proposal was criticized for several reasons. First, opponents argued the rules would place a serious compliance burden on investment firms. Second, opponents argued that such a proposal hurt the development of new technologies and innovation. Finally, opponents argued the definition of “covered technology” (as applied to AI) was too broad. For example, “covered technology” would include regulating a simple technology like Excel spreadsheets.

The Trump administration and SEC Chair Atkins have taken positions diametrically opposed to Gensler’s, focusing more on enabling innovation than on enforcement. In July, President Trump announced an “AI Action Plan” that described regulation as a barrier to AI innovation. In August, Chair Atkins announced the creation of an AI Task Force consistent with the administration’s approach. The announcement said that the Task Force would “remove barriers to progress” and “focus on AI applications that maximize benefits.” Furthermore, the SEC under Atkins is examining whether investment firms possess the proper governance procedures to monitor AI technologies as opposed to eliminating any conflicts of interests associated with new technologies.

Even those who are proponents of AI’s capabilities believe that AI poses a real threat to financial stability and continue to sound the alarm. In July, OpenAI CEO and ChatGPT co-creator Sam Altman warned about a “significant, impending fraud crisis brought about by artificial intelligence.” The effectiveness of the new administration’s focus on proper disclosure of investment firms’ AI use and governance—as opposed to eliminating conflicts on new technologies—can only be determined over the course of time.

On July 22, 2025, Judge Robert J. Colville of the U.S. District Court for the Western District of Pennsylvania granted preliminary approval of a $167.5 million all-cash settlement to resolve claims that EQT Corporation overstated the synergistic benefits of its $6.7 billion merger with Rice Energy, another natural gas drilling company operating in the Marcellus shale of Western Pennsylvania, in violation of the federal securities laws.

The $167.5 million settlement is the largest securities class action recovery ever in the history of the Western District of Pennsylvania and the 14th largest in the history of the Third Circuit.

As co-lead counsel in the case, Cohen Milstein represents a lead plaintiff group consisting of the Eastern Atlantic States Carpenters Annuity Fund, Eastern Atlantic States Carpenters Pension Fund, Government of Guam Retirement Fund, and Cambridge Retirement System.

In particular, the case alleged that from June 19, 2017 through June 17, 2019, Defendants made materially false and/or misleading statements and omissions regarding EQT’s drilling performance and capability, and about the purported benefits of acquiring Rice Energy, a competitor. The alleged false and misleading statements concerned, among other things, the combined company’s ability to drill 1,200 lateral wells at an average lateral length of 12,000 feet, and to realize $2.5 billion in synergies. The complaint alleged that, after the acquisition, following disappointing financial results midway through the class period, former Rice executives launched and ultimately won a proxy contest to take control of the combined company, citing in part EQT’s failure to seek or realize the stated synergies. The complaint asserted that Defendants’ alleged misrepresentations and omissions caused investors to purchase EQT common stock at artificially inflated prices and/or to approve EQT’s proposed Acquisition. The complaint further alleged that the truth was revealed to the public in a series of partially corrective disclosures on October 25, 2018, February 5, 2019, and June 17, 2019, that caused the price of EQT common stock to decline, causing investors to suffer damages when the truth was revealed.

In arriving at this settlement, Cohen Milstein and its co-lead counsel reviewed over 7 million pages of documents, subpoenaed over 50 third parties, participated in over 50 depositions of fact and expert witnesses, retained and worked with experts on the subjects of damages, loss causation, natural gas drilling, and corporate due diligence, and thoroughly reviewed the applicable facts and law. Furthermore, the parties extensively briefed motions to dismiss, for class certification, for summary judgment, and to exclude expert opinions and testimony.

During the hard-fought litigation, the Court certified the class on August 11, 2022, and on September 23, 2022, the U.S. Court of Appeals for the Third Circuit denied Defendants’ petition for interlocutory review of the Court’s order granting class certification.

The case team at Cohen Milstein included Steven J. Toll, Daniel S. Sommers, S. Douglas Bunch, Christina D. Saler, Benjamin F. Jackson, and Alexandra Gray. A hearing to consider final approval of the settlement is set for October 30, 2025.

Heightened Focus on Fiduciary Compliance, Retail Investor Protection, Investment Advisers, and Emerging Technology

On Nov. 17, 2025, the SEC’s Division of Examinations released its Fiscal Year 2026 Examination Priorities. The Division of Examinations (Division) begins by stating that it has reassessed how best to deploy its resources to meet both growing responsibilities and evolving risks shaped by developments in the U.S. capital markets and broader economic and geopolitical forces. The Division further adds, this involves reevaluating our risk-based priorities and how we approach various trends in the markets, new and emerging products and services, and our processes to ensure our examinations continue to be efficient and effective. Division staff carry out their responsibilities with focus and efficiency, ensuring that our risk-based examinations remain effective and responsive to the needs of investors and the marketplace.

The Division is continuously assessing risks and discussing with its colleagues around the SEC how it can best support the SEC’s mission and priorities. Further, the Division’s priorities may shift in response to new or emerging risks, products and services, market events or investor concerns.

The Division is also zeroing in on cross-market risks—cybersecurity, operational resiliency, governance, vendor oversight, access controls, identity-theft prevention (Regulation S-ID), and compliance with updated Regulation S-P data-protection and notification rules. It is heightening scrutiny of emerging financial technologies, including automated tools, artificial intelligence (AI)-driven recommendations, and algorithmic trading, with a focus on data governance, bias mitigation, supervision, model oversight, and AI-related cyber, fraud, and model-risk vulnerabilities.

Notably, the Division does not reference cryptocurrency, signaling a departure from its FY 2024 and FY 2025 priorities.

The FY 2026 priorities are discussed below.

Investment Advisers

Examining investment advisers’ (adviser) adherence to their duty of care and duty of loyalty obligations remains a priority for the Division, particularly regarding aspects of the advisers’ business that serve retail investors. The Division identifies higher-risk categories of advisers: (1) advisers that are dually registered as broker-dealers, particularly where such advisers have representatives who are also dually licensed as registered representatives and receive compensation or other financial incentives that may create conflicts of interest that must be addressed (e.g., account recommendations and allocations); (2) advisers utilizing third-parties to access clients’ accounts, where controls may be insufficient to protect client assets and data; and (3) advisers that have merged or consolidated with, or been acquired by, existing advisory practices, which may result in accompanying operational and/or compliance complexities or new conflicts of interest; and (3) never-examined advisers, with particular interest on registered investment advisers.

Examiners will assess the effectiveness of Advisers’ Compliance Programs. These examinations typically include an evaluation of the adviser’s marketing, valuation, trading practices, expense disclosures and filings, custody, and private fund governance.

Investment Companies

The Division continues to prioritize examinations of registered investment companies (RICs or funds), including mutual funds and exchange-traded funds (ETFs) due to their importance to retail investors, particularly those saving for retirement.

Examinations will generally include compliance programs, disclosures, filings and governance practices with a particular focus on:

• Fund fees and expenses;
• Portfolio management practices and disclosures; and
• Compliance with the amended fund “Names Rule” following the compliance date.

The Division will also prioritize never-before-examined RICs for examination.

Broker-Dealer Trading-Related Practices and Services

Broker-dealer equity and fixed income trading practices remain a Division priority. Areas of review will include extended hours trading and municipal securities, including the rates reset process on variable rate demand obligations, priority of orders, and mark-ups disclosure. The Division will also review broker-dealers’ routing and execution of orders.  With respect to Regulation SHO, the Division will review whether broker-dealers are appropriately relying on the bona fide market making exemption. The Division will also examine broker-dealer sales practices and continue to prioritize retail investor protections under Regulation Best Interest (Reg BI).  

Examinations will also focus on products that are complex or tax advantaged, such as variable and registered index-linked annuities; ETFs that invest in illiquid assets such as private equity or private credit; municipal securities, including 529 Plans; private placements; structured products; alternative investments; and other products that have complex fee structures or return calculations, are based on exotic benchmarks, are illiquid, or represent a growth area for retail investment.

Self-Regulatory Organizations

The Division will assess the effectiveness of regulatory and enforcement programs at national securities exchanges, such as Financial Industry Regulatory Authority (FINRA), and the Municipal Securities Rulemaking Board (MSRB).

For clearing agencies, examiners will focus on risk management frameworks, liquidity and collateral practices, recovery and wind-down planning, and remediation of prior findings.
Security-based swap dealers and execution facilities should expect targeted reviews of transaction reporting, margin and capital requirements, and operational-risk controls.

CLEARING AGENTS

These examinations will focus on clearing agencies’ core risks, processes, and controls and will cover the specific areas required by statute, including the nature of clearing agencies’ operations and assessment of financial and operational risk.

The Division will conduct risk-based examinations of registered clearing agencies that have not been designated by statute as systemically important. The Division will examine for compliance with the SEC’s Standards for Covered Clearing Agencies, which are rules requiring policies and procedures that address core risk-management functions, including maintaining sufficient financial resources, protecting against credit risks, managing member defaults, and mitigating operational risk.

TRANSFER AGENTS

The Division will continue to examine transfer agent processing of items and transfers, recordkeeping and record retention, safeguarding of funds and securities, and filings with the SEC. Examinations will also focus on transfer agents that use emerging technology to perform their transfer agent functions.

FUNDING PORTALS

The Division will focus on funding portal arrangements with qualified third-parties regarding the maintenance and transmission of investor funds and examine whether funding portals are making and preserving required records.

SECURITY-BASED SWAP DEALERS (SBSDs)

The Division will continue to focus its examinations on whether SBSDs are complying with their obligations under Regulation SBSR to accurately report security-based swap transactions to security-based swap data repositories. The Division also expects to focus on SBSDs’ risk management practices and compliance with capital, margin and segregation requirements.

SECURITY-BASED SWAP EXECUTION FACILITIES (SBSEFs)

The Division expects to begin conducting examinations of registered SBSEFs focusing on the SBSEF’s rules and related internal policies and procedures addressing trade monitoring, trade processing, and participation. Moreover, the Division plans to assess how SBSEFs establish programs of risk analysis and oversight to identify and minimize sources of operational risk.

Additional Areas Impacting Market Participants

Cybersecurity practices by registrants remains vital to help ensure the safeguarding of customer records and information. Particular attention will be placed on policies and procedures pertaining to governance practices, data loss prevention, access controls, account management, and responses and recovery to cyber-related incidents, including those related to ransomware attacks. In addition, focus will be on training and security controls that firms are employing to identify and mitigate new risks associated with AI and polymorphic malware attacks, including how they are operationalizing information from threat intelligence sources.

The Division will assess compliance with Regulations S-ID and S-P, as applicable. Examinations will focus on firms’ policies and procedures, internal controls, oversight of third-party vendors, and governance practices. Regarding Regulation S-ID, the Division will focus on firms’ development and implementation of a written identity theft prevention (ITP) program that is designed to detect, prevent, and mitigate identity theft in connection with covered accounts. Specifically, the Division will assess the reasonableness of firms’ policies and procedures included within their ITP programs, including whether they are reasonably designed to identify and detect red flags, particularly during customer account takeovers and fraudulent transfers, and include firm training on identity theft prevention.

The Division remains focused on emerging financial technology, i.e., registrants’ use of certain products and services, such as automated investment tools, AI technologies, and trading algorithms or platforms, and the risks associated with the use of emerging technologies and alternative sources of data. As such, the Division will examine firms that engage in activities such as automated investment advisory services, recommendations, and related tools and methods.

Regulation Systems Compliance and Integrity (SCI) will focus on policies and procedures related to incident response and how SCI entities review the effectiveness of these policies and procedures and SCI entities’ management of third-party vendor risk and properly identifying vendor systems that qualify as SCI systems or indirect SCI systems.

Anti-Money Laundering (AML) remains a Division priority. The Bank Secrecy Act (BSA) requires certain financial institutions, including broker-dealers and certain RICs, to establish AML programs. AML programs should be reasonably designed to prevent these financial institutions from being used for money laundering or the financing of terrorist activities and to achieve and monitor compliance with applicable BSA requirements.

Lastly, the Division will review whether broker-dealers, advisers, and RICs are monitoring the Department of Treasury’s Office of Foreign Assets Control sanctions and ensuring compliance with such sanctions.

Whistleblowers Play a Critical Role

Whistleblowers play a critical role in ensuring the integrity of the U.S. and global financial markets. Both the SEC and CFTC rely on whistleblowers to help them enforce violations of the federal securities laws and the Commodity Exchange Act. If you have witnessed fraud, or noncompliance with the examination priorities listed above, consider blowing the whistle.

What to Do if You Have Witnessed Fraud or Noncompliance:

1. Speak with an Experienced Whistleblower Attorney: Contact an experienced whistleblower attorney who understands the SEC and CFTC whistleblower programs. These consultations at Cohen Milstein are confidential and free of charge. Counsel can guide you through the process and assist in preparing and submitting your Tip, Complaint, and Referral (Form TCR) to the SEC or CFTC.
2. Gather Your Information: Along with your personal observations and a completed Form TCR, the SEC and CFTC requires supporting information that is original and not in the public sphere.
3. Understand the Potential for a Whistleblower Award: If your information leads to a successful SEC or CFTC enforcement action resulting in more than $1 million in monetary sanctions, you may receive an award ranging from 10-30% of any amount collected.

The SEC’s Whistleblower Program and the CFTC’s Whistleblower Program provide comprehensive guidelines on reporting fraud and the whistleblower process. Access the Tip, Complaint or Referral (TCR) forms: SEC Form TCR and the CFTC Form TCR.

About the Author

Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation. She is the former director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.

Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, as part of the U.S. Treasury, the Department of Justice, and other government agencies.

Responding to a call to action by President Donald Trump, Securities and Exchange Chair Paul Atkins is “fast-tracking” a proposal that would allow publicly traded US companies to file financial reports twice a year instead of quarterly. The proposed rule change has triggered opposition by some stakeholders.

If the rule is relaxed, it would end a practice that has undergirded the US investment framework for 55 years. Since 1970, US companies have been required to file unaudited “Form 10-Q” reports with the SEC to share certain information about their financial performance with shareholders, in addition to submitting audited annual Form 10-K reports.

The quarterly reporting requirement makes the US somewhat of a global outlier—to some, quarterly reporting is part of what makes US stock markets the gold standard for transparency; others consider it costly red tape that encourages short-termism.

President Trump falls squarely in the latter camp. During his first term in 2018, he urged the SEC to ditch quarterly reports, but the initiative stalled after the Commission issued a request for comment on the matter. On September 15, President Trump again pushed the idea in a social media post as a way for corporations to “save money” spent on compliance “and allow managers to focus on properly running their companies” instead of doing so “on a quarterly basis.”

This time, however, President Trump has an important ally in SEC Chair Atkins, who voiced immediate support and pledged to fast-track the rule in a September 29 Financial Times opinion piece.

“The government should provide the minimum effective dose of regulation needed to protect investors while allowing businesses to flourish,” Chair Akins wrote, saying he was “fast-tracking President Trump’s proposal to equip companies with the option to report on a semi-annual basis, rather than locking them into the current quarterly reporting regime.”

In the article, Chair Atkins praised President Trump for ending the “mission creep” by which the SEC had “drifted from the precedent and predictability that sustain … confidence” in capital markets and abandoned “its core mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation.”

Specifically, he blasted predecessors who he believes strayed from the “principle of materiality” to write rules “for shareholders who seek to effect social change or have motives unrelated to maximising the financial return on their investment.” 

“It is time for the SEC to remove its thumb from the scales and allow the market to dictate the optimal reporting frequency based on factors such as the company’s industry, size and investor expectations,” Chair Atkins said. “Giving companies the option to report semi-annually is not a retreat from transparency.”

Chair Atkins noted that foreign companies listed on US exchanges are only required to file semiannual reports, as are companies in the European Union and the United Kingdom. Both imposed quarterly financials for a time before reverting to twice-yearly reports, the EU from 2004 to 2013 and the UK from 2007 to 2014. Most Canadian and Japanese companies, like those in the US, file quarterly financial reports, as do all companies in India and China, which is ironic, given President Trump’s assertion in his social media post that “China has a 50 to 100 year view on management of a company …”

Critics say less frequent reporting will hurt shareholders, especially retail investors, by widening the gap between publicly available information and facts known by company insiders. Unlike Chair Atkins, they say the move will undermine transparency by reducing the steady flow of reliable financial information to market participants.

In a 2020 research article in The Accounting Review, researchers studying thousands of US and European peer companies across multiple industries found that when US companies announced quarterly earnings, the European companies’ stock price more closely tracked their US counterparts when the European companies weren’t reporting.

The authors of article, “The Dark Side of Low Financial Reporting Frequency,” concluded that the “information vacuum” created by semiannual reporting caused investors to “periodically overreact to peer-firm earnings news in the absence of own-firm earnings disclosures in interim periods.” In addition, investors overcorrected when the European peer companies finally issued their semiannual earnings reports.

“We conclude[d] that less-transparent reporting causes more volatile and less efficient stock prices,” said Salman Arif, an associate professor at the University of Minnesota’s Carlson School of Management and one of the paper’s authors.

Some also take issue with the idea that semiannual reporting will motivate managers to make longer-term decisions. On September 19, columnist James Mackintosh of The Wall Street Journal argued that President Trump was “wrong in every possible way.” For one thing, six months isn’t the long term, he wrote. For another, US companies actually do invest for the long term despite quarterly reporting, he said, citing technology companies’ investment of “nearly $400 billion this year in long-term artificial intelligence projects.”

Furthermore, Mackintosh wrote, there was “no effect on investment or research spending for companies that switched to half-yearly reporting” in the UK since quarterly requirements were eliminated in 2014. “Indeed, if quarterly reporting were such a huge barrier to companies, it’s odd that the U.S. market is thriving, while London is struggling to attract new listings or even hold on to existing once,” he said.

Chair Atkins has said he would present a proposed rule for public comment late this year or in early 2026. SEC rule changes typically take more than a year go into effect, even when expedited, and there is no guarantee the new rule will be approved or what exact shape it will take. Given the strong opposition to less frequent reporting among academics, institutional investors, and shareholder advocates, the public comment period should yield a vigorous debate.

Governments impose taxes known as tariffs and duties on goods that are manufactured abroad and imported for use or sale within their borders. Tariffs are used to generate revenue, protect domestic industries and jobs, enhance national security, and serve as bargaining power in trade negotiations. But as global trade grows more competitive and tariff rates rise, so too does tariff evasion, an expanding fraudulent practice that harms Americans and impedes fair competition. 

In 2025, the U.S. government greatly expanded the tariffs it charges on goods imported from numerous countries. Almost half of all goods that enter the U.S. are now subject to tariffs. These tariffs, which vary by product and country of origin, in some cases exceed 100% of the imported products’ value. While business owners, CEOs, consumers, economists, and politicians have differing views on the effectiveness of U.S. trade and tariff policies, tariffs are legal obligations that must be paid. When importers evade these obligations, they not only cheat the government and American citizens out of billions in revenue but also gain an unfair advantage over competitors who play by the rules and abide by the law.  

The Widening Tariff Gap 

According to economists at Goldman Sachs, importers evaded payment of an estimated $125 billion in tariffs on goods imported into the U.S. in 2023. The difference between the total amount of tariffs owed and the total amount paid is referred to as the “tariff gap.” While tariff gap data for 2025 is not yet available, with the U.S. government’s expansion and escalation of tariffs this year, tariff evasion schemes are increasing in prevalence, and the tariff gap is widening. Studies show that when tariff rates rise, tariff evasion increases disproportionately. Tariff cheaters, on average, lower the tariff amounts they actually pay by a substantially higher percentage than the amount of the tariff rate increase – i.e., for every 1% tariff increase, the tariff gap widens by 3%. 

Common Tariff Evasion Schemes 

To evade payment of some or all the duties and tariffs owed on goods, many importers engage in fraudulent schemes including these more common schemes: 

• Understating the value of the goods that are being imported in documentation that importers are required to submit to U.S. Customs (i.e., Entry Summary (Form 7501) and commercial invoices) 

• Misclassifying the goods being imported in required documentation submitted to U.S. Customs (i.e., falsely reporting that the good is another product that has a lower tariff or duty rate) 

• Lying about the country of origin in required documentation submitted to U.S. Customs (i.e., falsely reporting that the good was manufactured in another country for which the tariff rate is lower) 

• Smuggling goods into the U.S. without disclosing their entry to U.S. Customs. 

Using the False Claims Act to Hold Companies Engaging in Customs Fraud Accountable  

There is a powerful tool to hold companies that engage in customs fraud accountable and protect fair competition: the False Claims Act. The False Claims Act makes it unlawful to knowingly avoid payment of a financial obligation to the U.S. government. Companies that evade payment of owed tariffs and duties violate the statute. A person who violates the statute is liable to the government for three times the total amount of owed duties and tariffs they did not pay, plus interest, and is also required to pay substantial penalty for each fraudulent import transaction. 

Incentives for Whistleblowers 

To better enable the government to combat fraud that harms the country, Congress included a qui tam provision in the False Claims Act. This provision allows companies and individuals to bring whistleblower or qui tam actions on behalf of the U.S. government against companies that have engaged in customs fraud. To encourage those with information about companies that have engaged in customs fraud to come forward and assist the government in recovering the unpaid duties and tariffs, the law rewards whistleblowers a substantial share – typically 15% to 30% depending on multiple factors ‒ of the recovery the government obtains as a result of the whistleblower’s information and lawsuit.   

Whistleblowers who expose tariff evasion under the False Claims Act not only aid in recovering funds owed to the United States, but they also help uphold trade integrity and fair competition. 

The False Claims Act has been an overwhelmingly effective fraud enforcement tool, recovering over $78 billion for the government and American taxpayers since 1986, and has been successfully used on numerous occasions to combat tariff evasion. This success is largely due to whistleblowers using the statute’s qui tam provision to hold those who engage in customs fraud accountable. 

About the Author

Casey Preston represents plaintiffs across the country in qui tam  actions brought under the False Claims Act against companies that engage in fraudulent conduct that causes economic harm to federal and state governments.

Investors warn forced arbitration will fuel fraud, heighten corporate risk and costs, and destroy shareholder value.

A coalition of more than 60 major institutional investors and pension systems, collectively managing trillions of dollars in direct assets and representing over $8 trillion globally through umbrella organizations and associations, released a letter this week strongly opposing the Securities Exchange Commission’s (SEC) unprecedented policy reversal permitting companies to include forced arbitration provisions into their corporate charters and registration statements.

The letter, signed by dozens of funds hailing from states across the US, including Thomas DiNapoli, Trustee of the New York State Common Retirement Fund, Brad Lander NYC Comptroller and investment advisor to the New York City Retirement Systems, the National Coordinating Committee for Multiemployer Plans, among others, warns that the policy change will strip investors of their established right to hold companies accountable through class action lawsuits and deter fraudulent conduct, and that as a result fraud will proliferate. As noted by SEC Commissioner Caroline Crenshaw in her statements opposing the policy change, securities class actions returned $3.7 billion to defrauded investors in 2024 alone, compared to only $345 million recovered through SEC enforcement actions.

“As fiduciaries, multiemployer plan trustees have a legal duty to protect their participants’ retirement, health, and other welfare benefits. This SEC policy change makes that duty far more difficult to fulfill by stripping plans of established legal tools to recover losses when companies defraud investors. Forced arbitration creates costly, uncertain, and inefficient proceedings that benefit no one—not participants, not plan sponsors, and ultimately not the companies themselves. NCCMP urges the SEC to reverse this harmful policy that puts millions of working families at risk,” said Michael D. Scott, Executive Director, National Coordinating Committee for Multiemployer Plans (NCCMP).

In the letter, the institutional investors emphasize that forced arbitration will not only harm investors, but also companies. Any company attempting to impose such provisions will face immediate legal challenges creating costly uncertainty.

And if upheld, companies will face numerous individual arbitrations forcing executives to respond to potentially hundreds of separate discovery requests and depositions with no mechanism for efficient resolution.

Further, D&O insurance premiums will undoubtedly rise due to the uncertainty of the number of claims that will be brought. And, rather than “making IPOs great again”, as SEC Chair Atkins claims, such provisions will significantly harm US markets, decrease shareholder and company value and make US companies less – not more – attractive to investment.

In addition to the letter, multiple funds and investor entities such as the California Public Employees’ Retirement System (CalPERS), the Council of Institutional Investors (CII), and the International Corporate Governance Network (ICGN), issued their own letters and statements vehemently opposing forced arbitration of securities claims, reinforcing widespread investor concern about the erosion of shareholder rights.

In addition to being among the largest institutional investors in the world, public pension funds and Taft-Hartley union pension funds are the retirement plans for hundreds of thousands of hard-working Americans, including teachers, nurses, dock workers, truckers, firefighters, police officers, and other first-responders.

The coalition is calling on the SEC to promptly reverse course and restore investor protections. To join the coalition, please complete the form below to add your name to the letter. To learn more, read SEC Upends Decades of Precedent and Endorses Forced Arbitration Provisions in IPOs in the Shareholder Advocate.

Join the Coalition

Whistleblowers Encouraged to Step Forward to Help Enforcement Efforts

By Christina McGlosson

During the summer of 2025, both the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) announced a refocus on retail investor harm, insider trading, accounting fraud, and in particular, investor harm involving foreign actors.

2025 Summer Enforcement Actions

Between June and August 2025, the SEC commenced 52 enforcement actions, with 85 defendants or respondents, broken down by fraud type:

The CFTC, by contrast, did not file any new actions in that period.

Highlighted SEC Actions

Here’s a look at a few of the actions that comprise some of the numbers in the chart, above.

Investment Adviser Matters

• TZP Management Associates: On Aug 15, the SEC settled an action involving the calculation of fee offsets. The firm allegedly failed to include interest earned on deferred transaction fees in the offset calculation, thereby charging excess management fees. It also allegedly used a pro rata basis rather than full transaction fees, reducing the offset. The investment adviser agreed to disgorgement, interest, and a civil penalty.
• Retail adviser firms: Two firms faced enforcement actions for failing to disclose conflicts arising from incentive compensation. In one matter, advisers had performance goals tied to assets under a discretionary program; the SEC said that conflicts were not disclosed. Both investment advisers settled, paying significant penalties and disgorgement. In the Matter of Empower Advisory Group, LLC and Empower Financial Services, Inc. settled Aug. 29 and In the Matter of Vanguard Advisers, Inc. settled Aug. 29.
• Cherry‑picking scheme: In North East Asset Management Group, Inc. the SEC alleged that profitable trades were allocated disproportionately to preferred accounts (e.g. of the principal or family), while less favorable trades went to others. The June 3 settlements included disgorgement, interest, and penalties.
• American Portfolios Advisors, Inc. and former executives: The SEC alleged breach of fiduciary duties, nondisclosures of conflicts, overbilling, and the creation of backdated documents during an examination. Only July 11, the Investment Adviser and two executives agreed to penalties and other relief.
• Record‑modification by compliance officer: In Suzanne Ballek’s case, the SEC alleged she modified and even manufactured pre‑clearance trading forms during an investment adviser’s SEC exam. On July 15, Ballek consented to a cease‑and‑desist order and paid a penalty.
• Custody Rule violations: Munakata Associates LLC was charged with failing to satisfy the independent verification requirement under the Custody Rule. The investment adviser’s president had control or access over client accounts but failed to carry out independent verifications. The Aug. 1 settlement included a penalty.

Offering Fraud and Securities‑Based Swap Matters

• The3rdBevco Inc. and CEO Peter Scalise III: On June 17, the SEC settled claims that the company and CEO misled investors about a supposed celebrity brand collaboration (which never existed), misappropriated funds, and sold unregistered securities. Disgorgement, interest, and penalties were part of the settlement.
• MUFG Securities EMEA (a foreign security‑based swap dealer, or SBSD): The SEC alleged failures in recordkeeping, internal supervision, reporting, and false statements in its registration. The SEC claimed it did not adequately maintain required U.S. records and misrepresented that it would adopt required policies. On Aug. 6, the firm agreed to pay a $9.8 million penalty.

Whistleblowers play a critical role in ensuring the integrity of the U.S. and global financial markets. Both the SEC and CFTC rely on whistleblowers to help them enforce violations of the federal securities laws and the Commodity Exchange Act. If you have witnessed fraud, consider blowing the whistle.

What to Do if You Have Witnessed Fraud:

1. Speak with an Experienced Whistleblower Attorney: Contact an experienced whistleblower attorney who understands the SEC and CFTC whistleblower programs. These consultations at Cohen Milstein are confidential and free of charge. Counsel can guide you through the process and assist in preparing and submitting your Tip, Complaint, and Referral (Form TCR) to the SEC or CFTC.
2. Gather Your Information: Along with your personal observations and a completed Form TCR, the SEC and CFTC requires supporting information that is original and not in the public sphere.
3. Understand the Potential for a Whistleblower Award: If your information leads to a successful SEC or CFTC enforcement action resulting in more than $1 million in monetary sanctions, you may receive an award ranging from 10-30% of any amount collected.

The SEC’s Whistleblower Program and the CFTC’s Whistleblower Program provide comprehensive guidelines on reporting fraud and the whistleblower process. Access the Tip, Complaint or Referral (TCR) forms: SEC Form TCR and the CFTC Form TCR.

About the Author

Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.

Christina represents whistleblowers in the presentation and prosecution of fraud claims before the SEC, CFTC, FinCEN, as part of the U.S. Treasury, the Department of Justice, and other government agencies.

Christina McGlosson, Special Counsel: Dodd-Frank Whistleblower Practice

Cohen Milstein Sellers & Toll PLLC

Suite 800

1100 New York Avenue, NW

Washington, DC 20005

E: cmcglosson@cohenmilstein.com

T. 202-988-3970

Advertising Material. This content is informational in nature and should not be read or interpreted as legal advice. Should you need legal advice, please contact a lawyer.

On September 17, 2025, the U.S. Securities and Exchange Commission (SEC) issued a “policy statement” endorsing the inclusion of forced arbitration provisions in initial public offering (IPO) registration statements.

Issued with just one week of public notice, with no opportunity to comment, and without any analysis of the impact of such a “policy” change on either investors or the public markets, the move reverses the Agency’s decades[1]long opposition to such clauses. Though touted by SEC Chairman Paul Atkins as part of his plan to “make IPOs great again,” this dramatic policy shift overlooks the significant costs that forced arbitration imposes not only on investors, but also on the companies it purports to benefit.

The harm to investors is clear. Forced arbitration strips them of the well-established right to pursue class-wide recovery in court. Without the class action mechanism, only the wealthiest shareholders will have the resources to bring claims, leaving retail investors without any recompense when companies engage in fraud. Further, because arbitration is confidential and non-public, the deterrent effect of such litigation will evaporate, likely leading to more fraud.

But smaller investors aren’t the only ones at risk. Fragmenting singular class actions into multiple individual arbitrations will also burden companies with duplicative claims from deep-pocketed, sophisticated investors. Litigating identical allegations across dozens, if not hundreds, of separate arbitrations will significantly inflate legal costs and risks by increasing the likelihood of adverse outcomes, compelling company officers and executives to be deposed in each separate arbitration, and driving up directors’ and officers’ insurance premiums. Companies will also lose key protections available under the Private Securities Litigation Reform Act (PSLRA) and the Federal Rules of Civil Procedure, such as heightened pleading standards and discovery stays during motions to dismiss. Moreover, early adopters of forced arbitration provisions will face an onslaught of litigation challenging the constitutionality and viability of such provisions under both federal and state law.

The structure of private arbitration adds further risk for both sets of stakeholders. Arbitrators are not bound by precedent, and decisions are not published, thereby depriving investors and companies alike of guidance on what conduct is permissible. And without a guaranteed right to appeal, parties have few avenues for recourse if an arbitrator issues a ruling untethered to law.

Both investors and issuers have recognized these risks. In recent years, shareholders and corporations alike have opposed adding forced arbitration clauses to corporate bylaws. In 2018, pharmaceuticals giant Johnson & Johnson sought an SEC no-action letter to exclude a shareholder proposal mandating arbitration for securities fraud claims. The SEC granted such relief, agreeing the provision would violate both federal law and New Jersey state law. More recently, 97.5% of Intuit shareholders— including all major asset managers—voted against a similar proposal.

Ultimately, forced arbitration undermines the integrity of U.S. public markets as a whole. These markets have long attracted investors by operating under a disclosure-based regime that provides material information and a path for redress in cases of fraud. If investors are unable to vindicate their rights, they will exit the market, eroding investor confidence and, in turn, company valuations.

Even as the government shutdown stalls work in Washington, D.C., the Equal Employment Opportunity Commission is taking additional steps to undermine its mission.

The primary federal agency charged by Congress with enforcing the federal employment discrimination laws recently made it easier for employers to discriminate against workers, according to a new internal memo, reported but not yet publicly released.

Since 1971, federal law prohibiting employment discrimination (as interpreted by the Supreme Court) has required employers to use hiring practices which accurately measure job applicants’ ability to do the job. This is to avoid barring people from jobs because of irrelevant characteristics such as their race or gender, even if such exclusion was not intended. 

Referred to as the “disparate impact” rule, it enables workers to challenge employment practices that disproportionately exclude groups of people based on race, gender, or other protected, non-job-related characteristics, where those are not valid measures of who can do the job.

In short, it means that arbitrary hurdles for job applicants have historically been eliminated, and when they haven’t, workers have been able to bring a discrimination claim. That means the job market has a more level playing field for everyone.

For example, let’s say a job posting for a retail or entry-level administrative job requires job applicants to have a college degree. That college degree is likely not necessary to do the job, but workers without one are disproportionately denied the opportunity to be considered. Such workers would have the ability to bring a disparate impact claim against that company.

It’s not just about hiring. Employers who set pay for a position based on what people earned in their prior job — not on the value of the work being done — can also face disparate impact claims and be required to show that prior pay accurately differentiates the value of employees’ current work.

In an era where evidence of intentional discrimination is rarely shown, and employers incorporate increasingly advanced technology in decision making, disparate impact claims are more critical than ever to fight employment discrimination. 

Employers are now frequently using AI to screen applicants, but AI tools may be modeled off the demographics of existing employees, and identify characteristics that are not job-related, like whether you played lacrosse in college.

AI hiring systems may even be a “black box” that does not identify to the employer what criteria it is using. The efficiency gained by using AI must not come at the expense of applicants receiving a fair evaluation on job-related criteria.

Nonetheless, the EEOC has recently begun rejecting all pending claims of disparate impact discrimination, without completing ongoing investigations. Just last month, a leaked internal memo revealed orders to EEOC staff to conclude all investigations into disparate impact claims by the end of September and to notify claimants by the end of October that they must file a lawsuit on their own if they want to continue pursuing their claims.

In doing this, the EEOC is failing to enforce the law that Congress enacted in 1964, which has forbidden employment practices having a disparate impact since at least 1971. There has been no notice posted on the EEOC website or any other form of communication explaining the EEOC’s about face. Instead, the EEOC is leaving those who filed charges to think that it found their claims had no merit.

Fortunately, these civil rights laws can also be enforced by lawyers in the private bar. As the Supreme Court recognized, the nation must rely in part on lawyers acting as a “‘private attorney general,’ vindicating [civil rights laws] that Congress considered of the highest priority.” 

Workers who receive notices of a right to sue should know that the EEOC’s refusal to investigate their claims does not necessarily mean that their claims lack merit or that there is no way forward. To the contrary: The courts are still enforcing the law, including the disparate impact rule. Courts are obliged to do so, as Congress enacted legislation in 1991 that specifically incorporated disparate impact as a form of prohibited employment discrimination. 

But those workers who receive these notices from the EEOC will only have 90 days to file their own lawsuits, or else their claims may be forever time-barred. They should consult a lawyer as soon as possible with experience bringing disparate impact claims.

The EEOC may be abandoning decades of precedent, but the doors to courthouses remain open to workers with disparate impact claims. Do not be deterred by the EEOC’s action or its inaction. If you believe you have been the victim of a discriminatory practice in the workplace, even as a job applicant, there is still a path to justice.