CFTC Changes To The Wells Process And Rules Of Practice

On December 1, 2025, the U.S. Commodity Futures Trading Commission ("CFTC" or "Commission") announced amendments to its Rules of Practice and its Rules Relating to Investigations, which includes notable modifications to the CFTC's Wells process. Some of the more notable amendments mirror similar changes to the SEC's Wells process recently explained by SEC Chairman Atkins in an October 2025 speech, including lengthening the period for respondents to respond to a Wells notice, and for enforcement staff to provide sufficient information for potential respondents to understand the potential charges. Both CFTC Acting Chairman Pham and SEC Chairman Atkins noted the need for accuracy, transparency, and due process in enforcement proceedings in announcing these modifications.

Amendments to the CFTC's Rules of Practice

The amendments to the CFTC's Rules of Practice clarify CFTC Regulations 10.2(b) and 10.108(b) to provide that adjudicatory proceedings include the issuance of an order by the Commission instituting proceedings, and that the Commission may accept an offer of settlement by an order instituting proceedings in lieu of an adjudicatory proceeding either by Commission meeting or by the Commission's seriatim process.

Additionally, the Rules of Practice will now require the CFTC's Division of Enforcement ("Division") "to provide an objective memorandum that adheres to the applicable rules of professional conduct, provides a comprehensive explanation of the factual and legal foundation for the recommendation, and distinguishes unfavorable facts or legal precedents" that is supported by citations to evidence in the investigative record or to stipulations by the parties, and legal arguments must be supported by points and authorities.

Revisions to the CFTC's Rules Relating to the Wells Process

The CFTC's amendments also include revisions to Appendix A to Part 11 of the CFTC's Regulations. While the Division will still decide, in its discretion, whether to inform persons who may be named in a proposed enforcement proceeding, the revisions now detail the requirements for such a Wells notice, if given. The revised Appendix A provides that notice should be given in writing when possible, and followed by written confirmation if given orally. Additionally, the notice or confirmation of oral notice now must identify the specific charges that the Division has made preliminary determinations to recommend to the Commission, and that the Division may provide information regarding the facts and circumstances forming the basis for the recommendation by referring to specific evidence.

Revised Appendix A now allows respondents at least 30 days to respond to a notice, as opposed to the 14 days as previously required. The Division can require a submission to be made in a shorter period, but only if there is good cause and the approval of specified senior attorneys. Further, Appendix A now requires that all written statements be submitted to the Commission, as opposed to the prior version which only required that written submissions be forwarded upon the request of the submitter.

Broader Implications

During her term as a Commissioner, Acting Chairman Pham released numerous dissents and statements to enforcement actions brought by the Division criticizing the Division for its "ready, shoot, aim" approach as well as making frequent public remarks calling for reforms. These amendments to the CFTC's Rules of Practice and Rules Relating to Investigations represent the continued effort by CFTC Acting Chairman Pham toward greater transparency and fairness in connection with enforcement proceedings brought by the Division. Indeed, within this past year, the Division previously issued an enforcement advisory addressing self-reporting, cooperation, and remediation, as well as an advisory on criminal referrals to the Department of Justice. Further, the Division, along with the CFTC's operating divisions, released a referral advisory on how Division staff will evaluate materiality and other criteria that the operating divisions will use to determine referrals to the Division when recommending an investigation or enforcement action.

Potential respondents should engage enforcement staff early and proactively seek information from staff about potential charges and evidence supporting those charges. Doing so will help streamline investigations, avoid misunderstandings early, and allow for more informed settlement negotiations.

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