The Desk: June 2026 Edition

In this month’s edition of The Desk we cover all the bases – sorry maybe I should make a hockey pun? Go Hurricanes! The Division of Enforcement dropped a new advisory on cooperation and announced further cooperation with the SEC. The DoE also continued to issue (and close out) enforcement actions. Additionally, we share our thoughts on the SEC’s proposed rule to permit semiannual reporting, delve into CME’s expected compute futures contracts and close with a discussion of the CFTC and NHL’s memorandum of understanding.

Enforcement Update

This month’s enforcement roundup covers five significant CFTC developments that demand immediate attention from registrants and market participants:

1. the Division of Enforcement’s new Cooperation Advisory, which replaces the prior framework with a clearer path to declinations;
2. Chairman Selig’s keynote remarks at the recent FINRA conference signaling unprecedented coordination among the CFTC, the SEC, FINRA, and the NFA;
3. the CFTC’s preemption lawsuit against Minnesota over the most aggressive state-level ban on prediction markets to date, expanding potential liability well beyond the venues themselves;
4. a second insider trading action involving a prediction market;
5. a spoofing settlement highlighting the agency’s continued focus on cross-product market manipulation in the Treasury futures space.

Whether you are reassessing your self-reporting posture, navigating the evolving prediction markets battleground, calibrating surveillance systems for spoofing and other potential market manipulation risks, or preparing for a new era of inter-agency regulation and enforcement, we’ve got you covered.

CFTC Division of Enforcement Issues New Advisory on Cooperation

As previewed during Director of Enforcement David I. Miller’s March 31, 2026 remarks at NYU Law School, on May 19, 2026, the CFTC’s Division of Enforcement issued CFTC Staff Letter No. 26-15, a comprehensive new Advisory establishing the Division’s “exclusive policy” on cooperation, self-reporting, and remediation in enforcement matters. The Advisory, which is effective immediately, supersedes all prior policies on these subjects—including the February 2025 Enforcement Advisory on Self-Reporting, Cooperation, and Remediation issued under then-Acting Chair Caroline Pham. The Advisory applies to all parties before the Division—both entities and individuals—and all resolutions under it must be approved by the Director of Enforcement, and, if applicable, submitted to the Commission for approval. The new Advisory lands at a moment of transition for the CFTC, as the agency simultaneously re-focuses its enforcement priorities (see, e.g., the CFTC’s motion for relief from judgment, joining Gemini Trust Company, on the basis that the complaint against Gemini, filed during the prior administration, “would not have been [filed] under current enforcement standards”) and contends with significant staffing reductions across all Divisions, including Enforcement.

Prior Cooperation Guidance. The new Advisory represents a significant departure from the February 2025 cooperation and self-reporting guidance in both structure and substance. The 2025 Advisory employed a tiered matrix system that produced presumptive percentage discounts on civil monetary penalties ranging from 0% to a maximum of 55% based on the level of cooperation and self-reporting, and declinations under the 2025 framework were reserved for certain extraordinary circumstances.

Overview of New Cooperation Advisory. By contrast, the new Advisory abandons the tiered matrix entirely in favor of a binary approach to cooperation—what Director Miller characterized in his March 2026 NYU Law remarks as “[l]ike jumping into a lake; you’re either in a hundred percent or you’re out”. At its core, the new Advisory provides what Director Miller describes as “a clear path to declinations,” offering market participants a simplified framework for earning cooperation credit. The new Advisory includes the following:

• A party that meets all five conditions—(1) Voluntary Self-Report, (2) Full Cooperation, (3) Timely and Appropriate Remediation, (4) Full Restitution and/or Disgorgement, and (5) the absence of aggravating circumstances (e.g., intentional or reckless misconduct occurring over an extended period)—will be eligible for a declination, meaning the Division will not recommend that the Commission institute an enforcement action.
• Where a party cooperates but falls short of full declination eligibility—for example, because its self-report did not qualify as a Voluntary Self-Report or because aggravating factors are present—the Advisory establishes defined penalty reduction ranges: at least 50% for good-faith self-reports that did not qualify as Voluntary Self-Reports, and at least 25% for matters involving aggravating factors, with a maximum recommended reduction of 75%.
• A third tier of cooperation credit, capped at no more than 25%, remains available for parties that provided some cooperation but did not fully satisfy the Voluntary Self-Report or Full Cooperation requirements. However, parties in this tier must have provided Timely and Appropriate Remediation and Full Restitution and/or Disgorgement to receive credit.
• The Advisory also introduces important refinements to how the Division assesses self-reporting: a Voluntary Self-Report will qualify even if the CFTC already has independent knowledge of the misconduct, provided the report is made before any known or reasonably anticipated imminent threat of disclosure through a whistleblower, the media, or another government investigation.
• The Advisory also carries forward the safe harbor for good-faith self-reports later found to be inaccurate, provided the inaccuracies are promptly supplemented and corrected.

Key Takeaways. Registrants and market participants should consider the following practical takeaways:

• First, the clearer and potentially more accessible path to declinations should prompt registrants and market participants to review and, where necessary, strengthen internal compliance programs, escalation protocols, and surveillance systems so that potential violations can be identified early and self-reported promptly. Indeed, the Advisory’s definition of “Voluntary Self-Report” rewards speed: a report must be made “within a reasonably prompt time after becoming aware of the misconduct,” and the Division expects registrants not to defer disclosure until a routine or periodic reporting date.
• Second, the binary nature of cooperation under the new framework underscores the importance of an all-or-nothing commitment: partial cooperation will yield significantly less credit than Full Cooperation, which requires, among other things, disclosing all relevant non-privileged information, sharing internal investigation findings without breaching privilege or work-product protections, making personnel available for interviews, and preserving all relevant records.
• Third, the new Advisory’s emphasis on Timely and Appropriate Remediation as a prerequisite for any form of cooperation credit—including a root-cause analysis, implementation of corrective measures, and accountability for individuals involved in the misconduct—means that companies should be prepared to undertake meaningful remedial steps early in an investigation, not merely at the resolution stage.
• Finally, given the Division’s stated priorities around insider trading, market manipulation, and retail fraud, market participants operating in higher-risk areas, particularly prediction markets, energy derivatives, and digital asset-adjacent products, should be especially attuned to the potential benefits the Advisory offers and the Division’s clear signal that it is actively watching these markets.

CFTC Chairman Selig Signals New Era of Regulatory Coordination at FINRA 2026 Annual Conference

On May 12, 2026, CFTC Chairman Michael S. Selig delivered keynote remarks at the FINRA 2026 Annual Conference in Washington, D.C. Chairman Selig used the address to lay out a comprehensive vision of enhanced coordination and harmonization among the CFTC, the SEC, FINRA, and the NFA. He framed the overall harmonization agenda as “common sense,” emphasizing that alignment “streamlines compliance and reduces costs for market participants"” while strengthening market integrity. Here are the highlights from his remarks:

• Elevated Role of SROs. Chairman Selig framed FINRA and the NFA as indispensable to effective oversight, noting that modern markets are “too complex, too fast-moving, and too interconnected to be effectively overseen by government agencies alone.” He emphasized FINRA’s role in broker-dealer oversight and the NFA’s “continuous supervision” of swap dealers as capabilities the federal agencies could not independently replicate, signaling expanded expectations for SRO examinations and surveillance.
• CFTC-SEC Harmonization Initiatives. Chairman Selig described unprecedented coordination with SEC Chairman Paul Atkins, who Selig worked under when he was at the SEC, including execution of a CFTC–SEC memorandum of understanding, launch of a joint harmonization initiative, and the CFTC’s participation in the SEC’s “Project Crypto.” The agencies have also advanced a common-sense crypto asset taxonomy and expect to issue joint requests for comment on portfolio margining and swap data reporting, including alignment of CFTC swap data rules with SEC Regulation SBSR.
• Coordinated Enforcement. Chairman Selig declared that the CFTC and SEC are “coordinating enforcement like never before,” with “parallel actions and information sharing” reducing the risk of “duplicative or inconsistent outcomes for the same underlying conduct.” Market participants under investigation should expect more coordinated, rather than completely siloed, enforcement activity across both agencies.
• FINRA-NFA Coordination. Chairman Selig also called on FINRA and the NFA to deepen their own collaboration, identifying coordinated examinations, recordkeeping alignment, surveillance coordination, and shared risk insights as priority areas.

Key Takeaways. Registrants and market participants should consider taking concrete steps in response to this harmonization agenda.

• First, firms with cross-market exposures should prepare now for the anticipated joint CFTC–SEC rulemakings on portfolio margining and swap data reporting, including alignment of CFTC swap data rules with SEC Regulation SBSR. The agencies have signaled that joint requests for comment are imminent, and these rulemakings may create opportunities to advocate for more efficient capital treatment and reduced compliance costs.
• Second, entities under investigation or enforcement scrutiny should operate on the assumption that inter-agency information sharing between the CFTC and SEC is now robust and institutionalized; defense strategies must account for parallel proceedings and coordinated enforcement outcomes where applicable.
• Third, dually registered firms should proactively assess their compliance programs for inconsistencies across securities and derivatives obligations, particularly as FINRA and the NFA move toward coordinated examinations, aligned recordkeeping requirements, and shared surveillance.
• Finally, digital asset market participants should closely monitor implementation of the agencies’ joint crypto asset taxonomy—which classifies assets into five categories (digital commodities, digital collectibles, digital tools, stablecoins, and digital securities)—and ongoing developments under the joint Project Crypto initiative, as we await the future of the Clarity Act proposed legislation.

Shortly following Chairman Selig’s speech, the SEC and NFA announced a joint memorandum of understanding to harmonize regulatory coordination.

We will continue to monitor these developments and are available to discuss their impact on your operations, compliance programs, or pending enforcement matters.

CFTC Sues Minnesota to Block State Law Criminalizing Prediction Markets

On May 19, 2026, the CFTC filed a complaint for injunctive and declaratory relief in the U.S. District Court for the District of Minnesota against the State of Minnesota, Governor Tim Walz, Attorney General Keith Ellison, the Minnesota Department of Public Safety, and the Director of its Alcohol and Gambling Enforcement Division, challenging SF 4760—a new state law, signed by Governor Walz on May 18, 2026. That law makes operating or assisting in the operation of a “prediction market” in the State of Minnesota a criminal felony. The statute’s reach is notably broad: beyond criminalizing the creation and operation of prediction markets, it extends felony liability to those who:

• Identify or list events for use in wagers (potentially including news organizations);
• Provide “verification services” (potentially including professional sports leagues);
• Hold or direct funds for the purpose of taking positions on event contracts (potentially including banks and credit-card companies); and
• Provide “supportive services” or advertise/market financial or technological products promoting event contract trading (potentially including blockchain and other technology firms as well as celebrities and influencers who publicly tout prediction markets).

The CFTC is seeking to enjoin the law from taking effect on August 1, 2026.

The CFTC’s complaint asserts a single cause of action under the Supremacy Clause (U.S. Const. art. VI, cl. 2). Specifically, the CFTC argues that the Commodity Exchange Act’s (“CEA”) exclusive-jurisdiction provision, 7 U.S.C. § 2(a)(1)(A), expressly and impliedly preempts SF 4760 insofar as it purports to regulate event contracts—derivative instruments that trade on CFTC-registered designated contract markets (“DCMs”)—and that the new law creates multiple direct conflicts with federal regulatory requirements, including the requirement that DCMs provide “impartial access” to all eligible participants nationwide.

This action is the latest in a series of federal preemption lawsuits the CFTC has recently filed—against Arizona, Connecticut, Illinois, New York, and Wisconsin—to defend its exclusive regulatory authority over prediction markets and event contracts. However, this one stands out. As the CFTC notes in its press release, SF 4760 represents the most aggressive state-level effort (to date) to shut down CFTC-regulated markets. Unlike other states that have sought to enforce existing gambling laws against sports-related event contracts, Minnesota’s law targets all event contracts—including contracts on government actions and weather events that have traded on CFTC-registered exchanges since the 1990s.

Given the breadth of potentially covered conduct, companies operating in or providing services to the prediction markets ecosystem—including DCMs, futures commission merchants, derivatives clearing organizations, technology providers, financial institutions, and media organizations—should carefully assess their potential exposure to SF 4760 and stay updated on the litigation, which we will be closely tracking.

CFTC Charges Google Employee with Insider Trading on Prediction Market Platform

On May 27, 2026, the CFTC announced that it filed a civil complaint in the U.S. District Court for the Southern District of New York (“SDNY”) against Michele Spagnuolo, a Switzerland-based software engineer employed by Google, for insider trading on the prediction market platform Polymarket.com. This action marks the second time in just over a month that the CFTC has charged an individual with insider trading of event contracts under its anti-fraud authority—Section 6(c)(1) of the CEA and Regulations 180.1(a)(1) and (3)—following its April 23, 2026 complaint filed in SDNY against Gannon Ken Van Dyke, an active-duty U.S. Army serviceman.

The CFTC alleges that Spagnuolo, operating under the Polymarket handle “AlphaRaccoon,” exploited sensitive nonpublic information concerning Google’s official Year in Search list for 2025—obtained through his employment at Google—to trade event contracts tied to search-result outcomes with near-perfect accuracy. According to the complaint, from at least October 2025 through December 2025, Spagnuolo purchased “Yes” or “No” shares on at least twenty-three Year in Search List contracts and generated approximately $1.2 million in profits. The CFTC is seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of the CEA. A parallel criminal complaint was also unsealed on the same date by the U.S. Attorney’s Office for SDNY, alleging substantially similar conduct.

This enforcement action further reinforces the CFTC’s view that prediction markets are CFTC‑regulated markets subject to the same anti‑fraud and insider‑trading principles applicable in traditional derivatives markets. Potential criminal exposure adds another layer of risk. Organizations employing individuals with access to nonpublic information—whether government agencies, sports leagues, corporations, or other entities—should evaluate whether their existing policies adequately address the risks posed by prediction market trading and consider refreshing compliance training and personal trading policies accordingly.

CFTC Spoofing Settlement Yields $200,000 Penalty and Trading Ban

On May 6, 2026, the CFTC announced that it had filed and simultaneously settled an enforcement action against Sidney Lebental, a dual French-American citizen residing in New York, for spoofing in violation of Section 4c(a)(5)(C) of the Commodity Exchange Act. The CFTC’s order found that Lebental, who served as head of the linear rates desk at a global financial institution’s New York office, engaged in spoofing on approximately 50 occasions between January and September 2019 while trading treasury futures—primarily Ultra U.S. Treasury Bond futures contracts—on the Chicago Board of Trade. Lebental’s alleged strategy involved placing genuine orders for cash Treasuries (or, in some cases, a Treasury futures contract) on one side of the market while simultaneously entering spoof orders on the opposite side in a correlated Treasury futures contract that he intended to cancel before execution, thereby creating a false impression of supply or demand to induce counterparties to trade against his actual positions. Without admitting or denying the CFTC’s findings, Lebental agreed to pay a $200,000 civil monetary penalty, accepted a one-month prohibition on trading commodity interests, and is required to cease and desist from further spoofing violations.

This action underscores the CFTC’s continued enforcement focus on market manipulation, even where the underlying behavior occurred years earlier and involved a single individual trader rather than an institutional desk. Firms and traders active in the interest rate futures and cash Treasury markets should take note of the CFTC’s focus on detecting cross-product spoofing patterns—where spoof orders are placed in one instrument to benefit positions in a correlated product. As such, compliance programs should ensure that surveillance systems are calibrated to monitor for layering and spoofing across correlated products and that relevant firm policies are appropriately scoped to capture such conduct.

Tiffany Payne and Nader Raja | Email

SEC Semiannual Disclosure

On May 5, 2026, the Securities Exchange Commission issued a proposed rule to permit optional semiannual reporting by public companies. Barrett Morris, Kate Wellman, and Ryan Hart discuss the lead up to the proposed rule and some of the potential impacts with regard to contractual obligations in financing and derivatives documentation in the May edition of the Futures and Derivatives Law Report. You can read the article here.

Barrett Morris, Kate Wellman and Ryan Hart | Email

CME to Launch Compute Futures Contracts

The AI infrastructure race has driven one of the most rapid construction and financing cycles in recent memory, with syndicated lending in the triple‑digit billions of dollars. Data center capacity is expanding at break-neck pace to meet surging demand for access to GPU‑accelerated compute capacity supporting AI development and implementation. At the same time, this growth is reshaping related capital markets: lenders, private equity sponsors and infrastructure investors are deploying record levels of debt and structured financing to support increasingly large and complex data center projects.

As access to AI compute becomes more widely available, but pricing for on‑demand, GPU‑backed infrastructure remains fragmented across providers, AI developers and other market participants are increasingly looking for ways to hedge their exposure to compute costs and capacity availability.

The development of a robust hedging market for any commodity often begins, or is catalyzed, by a futures contract that enables hedge providers to offer clients customized hedging solutions while managing that exposure in an underlying futures market. That is exactly what CME Group plans to spur the creation of with their announcement of an expected launch of a compute futures contract in partnership with Silicon Data (backed by global trading firm DRW), based on daily benchmarks for on‑demand GPU compute pricing.

CME noted that the launch of this first‑in‑kind futures contract is pending regulatory review. As with any new futures contract, an established Designated Contract Market (“DCM”) may wish to socialize the contract specifications and underlying benchmark with the Commission and division staff to provide an opportunity to review the product prior to submitting a Regulation 40.2 ‑Certification. Given the development of cash markets for AI‑related compute capacity, it appears likely that these types of compute‑linked futures contracts will emerge (at CME and potentially other DCMs).

What remains to be seen is: (1) where market liquidity will concentrate and the depth of that liquidity following initial rollouts, and (2) how hedge providers will structure CFTC‑regulated swap products referencing a DCM‑traded compute pricing index as the underlying.

Stuart Armstrong and Barrett Morris | Email

NHL/CFTC MOU

Just around one month ahead of the start of the Stanley Cup Playoffs, on May 21, the CFTC and the National Hockey League announced the signing of a Memorandum of Understanding (“MOU”). The intent behind the MOU is to create a free flow of information between the entities designed to ensure the integrity of professional hockey and fair and transparent prediction markets. The NHL’s press release also notes they have “implemented layered protections to monitor these markets, working directly with its partners to ensure integrity.”This MOU follows the CFTC’s other MOU with Major League Baseball and bears some key differences (interestingly, the NHL may have more sports league self-regulatory teeth to it). The NHL’s MOU states that individuals from the NHL will “communicate regularly” with the CFTC; whereas, the MLB’s MOU states that parties will meet “at least monthly”. The NHL is not held to a fixed interval for which to share information. Another meaningful difference is that the NHL’s MOU pulls the NHL’s commercial arm into the data sharing agreement – NHL Enterprises, L.P. In contrast, the MLB’s MOU only permits information to be shared with Major League Club owners serving on MLB’s Executive Council. This difference brings more entities (and data) into the “tent”. It also grants more NHL entities access to CFTC data, which should improve efforts to provide effective oversight of these markets with regard to NHL-related events contracts. A final key difference is that when the MLB announced their MOU it was in parallel with an announcement that Polymarket is the official prediction market exchange for the MLB and they granted Polymarket exclusive access to certain data. The NHL did not announce a partnership with any prediction market exchange in connection with or since the posting of the CFTC MOU.

We expect to see additional MOUs announced as the CFTC seeks to bolster its oversight of prediction markets.

Barrett Morris and Stuart Armstrong | Email

Interesting Links

• ISDA Paper on Capital Models Benchmarking
• BIS Bulletin No. 123 – Investment funds’ de facto currency risk exposure
• CFTC No-Action Letter on Data Reporting for Event Contracts
• CFTC Approves Capital Comparability Determination and Order for Certain Nonbank Swap Dealers Domiciled in the EU
• CFTC Issues Proposed Rule to Modify Clearing Requirement for Canadian Dollar- and Mexican Peso-Denominated Interest Rate Swaps
• ISDA OTC Derivatives Compliance Calendar

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.