CFTC Announces Policy Governing Criminal Referrals to Department of Justice

On September 5, 2025, the CFTC announced the adoption of its Policy Statement Concerning Agency Referrals for Potential Criminal Enforcement (“Policy Statement”).

Takeaways

• The Policy Statement clarifies the factors the CFTC considers in deciding whether to refer a matter to the U.S. Department of Justice (DOJ) for a criminal investigation.
• The Policy Statement lists several factors for the CFTC to assess in making referrals, including factors that are typically considered at a criminal sentencing in evaluating the severity of criminal conduct or need for punishment. The broad and flexible language in the Policy Statement gives considerable discretion to the CFTC staff, including discretion not to refer a matter to DOJ, notwithstanding the existence of criminal activity.
• The Policy Statement thus provides a framework for the CFTC to elect not to refer a matter for a criminal investigation and for subjects of a CFTC enforcement investigation to argue that a matter should not be referred to DOJ and does not warrant enforcement action.
• Companies should carefully consider the Policy Statement in deciding whether to self-report a potential violation to the CFTC, DOJ, or both.

The Policy Statement directs CFTC Enforcement staff to consider the following factors before referring a matter to DOJ:

• Harm or risk of harm;
• The putative defendant’s potential gains from the offense;
• Whether the putative defendant had specialized expertise;
• The putative defendant’s potential awareness of the unlawfulness of the conduct;
• Recidivism or patterns of misconduct; and
• Whether DOJ involvement will provide additional meaningful protections for market participants.

The CFTC issued the Policy Statement and prior Staff Advisory Letter 25-19 in response to Executive Order 14294, “Fighting Overcriminalization in Federal Regulations,” issued on May 9, 2025. The Executive Order directs federal agencies to take a more transparent and calibrated approach to criminal enforcement arising from regulatory violations. The Executive Order instructs agencies to inventory regulations that carry potential criminal penalties, specify the applicable culpable mental state (mens rea) requirements, publish clear policies describing when and how potential criminal violations will be referred to DOJ, and coordinate with the attorney general to promote consistent, fair, and proportionate application of criminal law across the administrative state.

By its terms, the Policy Statement provides that it does not create any substantive or procedural rights. It notes that the CFTC will provide to the Office of Management and Budget a report by May 9, 2026 containing a list of all criminal regulatory offenses enforceable by the CFTC or DOJ.

The referral Policy Statement follows the CFTC’s April 17, 2025 and February 18, 2025 enforcement advisories issued by the Division of Enforcement and three operating divisions of the CFTC. These advisories detailed policies incentivizing corporate self-reporting and cooperation and clarified the scope of potential referrals from operating divisions of the CFTC to the CFTC Division of Enforcement.

The Policy Statement appears to be consistent with DOJ’s stated approach of streamlining white-collar investigations and prosecutions, as reflected in the memoranda of (1) Deputy Attorney General Todd Blanche, dated April 7, 2025, announcing DOJ’s refocus of enforcement priorities related to investigations and prosecutions concerning digital assets, including to forgo “enforcement actions that have the effect of superimposing regulatory frameworks on digital assets,” and (2) Head of the Criminal Division Matthew Galeotti, dated May 12, 2025, noting DOJ’s “[p]rioritization” of certain white-collar crimes in “high-impact areas,” including “[f]raud that victimizes U.S. investors, individuals, and markets.”