Executive Summary
- What’s new: The CFTC announced changes to its rules for investigations to give targets more rights and to require the Enforcement Division to submit written memoranda to the full commission when recommending settlements.
- Why it matters: The changes will help ensure that the full commission is promptly provided with a respondent’s side of the story and will be informed of any weaknesses in the Enforcement Division’s case. The changes are similar to recent amendments in SEC rules.
- What to do next: Targets of CFTC investigations should take advantage of the additional time to prepare a Wells submission, and consider requesting that submissions be sent directly to the commission before a charging recommendation is made.
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On December 1, 2025, the Commodity Futures Trading Commission (CFTC) announced revisions to its Rules of Practice and Rules Relating to Investigations to promote transparency and ensure due process in the commission’s enforcement actions. The revised rules reform the CFTC’s Wells process to give more rights to respondents and require the Division of Enforcement (Division) to provide an internal memorandum when recommending that the commission accept an offer of settlement.
The Wells Process
The commission has introduced several revisions to its process for notifying persons that they may be named in an enforcement action, commonly known as the Wells process. Many of the commission’s revisions are similar to changes recently announced by the Securities and Exchange Commission (SEC) to its Wells process.
First, Division staff must now provide a Wells notice in writing whenever possible, and if done orally, such notice must be followed by written confirmation. The written notice must identify the specific charges that the Division intends to recommend and outline the supporting facts and circumstances that form the basis for the recommendation, with reference to specific evidence.
Second, the time for an individual or entity to provide a response to a Wells notice has been increased from 14 days to 30 days. The Division may impose a shorter timeframe with approval of the director or deputy director of the Division if it demonstrates good cause, a change from the previous requirement, which did not explicitly require good cause.
Third, the submitter of a Wells submission may request that their response be promptly provided to the commission after submission rather than waiting for the Division to provide the Wells submissions to the commission at the same time the Division submits its charging recommendation, which was previously the case.
Finally, all written Wells submissions will now be forwarded to the commission, a change from the prior protocol, where submissions were forwarded only upon the request of the submitting party.
Settlement Memorandum Requirement
The commission also adopted a requirement that the Division prepare and provide an internal memorandum to the commission when recommending acceptance of a settlement offer. Specifically, the Division is required to submit an objective memorandum that provides a thorough explanation for the factual and legal basis for the recommendation and must acknowledge and distinguish any unfavorable facts or legal precedents. These revisions are intended to ensure the development of an accurate and complete administrative record.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.