My Forex Funds Case: “Careless and Sloppy” CFTC Lead Attorney Admits Shortcomings

The lead attorney of the Commodity Futures Trading Commission (CFTC), Ashley Burden, admitted he was “careless and sloppy” during the investigation in its lawsuit against the proprietary trading platform My Forex Funds and its CEO, Murtuza Kazmi, according to recent court filings by both the regualtor and the prop trading firm.

Burden’s admission came during the evidentiary hearing, as the defendants' legal representatives pushed for a sanctions order against the US regulatory agency.

The CFTC, for its part, argued that the evidence presented by the defendants demonstrated that the regulator's "mistakes were limited and inadvertent."

Finance Magnates recently reported that My Forex Funds and the CFTC are likely negotiating a settlement deal.

“Careless and Sloppy” Conduct

The investigative shortcomings were related to the misrepresentation of a CAD 31.5 million payment, which was made to the Canadian tax authorities but was initially regarded by the regulator as misappropriation of payments by the defendants. Based on that misrepresentation, the agency received a statutory order to freeze all firm and CEO assets.

However, it later emerged that the CFTC was aware during its initial investigation that the payment was made to the tax authorities. The defendants used this information to seek a sanctions order, leading to the testimony of the lead regulatory attorney in the case. However, according to Burden, he missed a crucial email that clarified the payment was for tax authorities.

“During the evidentiary hearing, Mr. Burden agreed that his conduct was ‘careless and sloppy.’ When asked if, as an officer of the court, it was insufficient to rely on the adversary’s advocacy to satisfy his own duty of candour, Mr. Burden replied, ‘Right,’” the recent motion filed by the defendants stated.

“The CFTC’s investigation was limited to collecting records from third parties and taking the testimony of one witness,” the filing added. “The CFTC did not interview any of the defendants’ employees or customers.”

My Forex Funds further emphasised that the CFTC staff acted in “bad faith” during the investigation.

Interestingly, one of the CFTC Commissioners, Caroline Pham, also publicly criticised the regulatory investigators for their actions against the proprietary trading firm and its CEO.

“Defendants Presented Scant Evidence”

Meanwhile, the CFTC defended itself against the proposed sanctions order in a recent filing.

“Sanctions are not necessary or appropriate to redress the CFTC’s mistakes in this matter,” the filing stated, adding: “Defendants presented scant evidence of any intentional misconduct.”

The CFTC further pointed out that the evidence submitted by the defendants showed that the regulator’s “mistakes were limited and inadvertent.” Although it admitted that its staff overlooked an important email, which led to mistakes, it did not act in bad faith.

“Although the CFTC holds itself to the highest standards, that standard does not require perfection,” the CFTC added. “These are not the sort of ‘exceptional circumstances’ that would warrant any sanction, much less dismissal—the sanction of ‘last resort’ the defendants request. Defendants’ motion for sanctions should be denied.”