The alleged misconduct of the Commodity Futures Trading Commission (CFTC) in the My Forex Funds case has now caught the attention of US lawmakers. Last week, Republican Senator from Iowa, Charles Grassley, sent a letter to Rostin Behnam, the Chairman of the CFTC, asking about the “process and procedure” of the regulator’s administrative proceedings and whether the agency has initiated disciplinary action against the staff involved in the misconduct.

Misconduct by the CFTC Staff

Although the letter, issued on 22 August, did not explicitly mention My Forex Funds by name, it included details of the lawsuit. The agency sued the company in August last year and then froze its and its CEO’s assets, claiming misappropriation of funds. However, those payments were made to the tax authorities, leading the court to unfreeze a significant portion of the assets.

My Forex Funds now alleges that the CFTC knowingly lied to the court to obtain the asset freeze order and is seeking a sanctions order against the regulator. The evidentiary hearing for the sanctions order against the regulator is scheduled for 19 and 20 September.

The Senator's latest letter also highlighted the criticisms made by CFTC Commissioner Caroline D. Pham against the “false, misleading, and incomplete information” provided by the regulator in court and the agency’s inability to conduct internal reviews or hold anyone accountable for this misconduct.

"It’s alarming that CFTC staff have engaged in this misconduct and that the CFTC has apparently failed to hold those employees accountable, particularly when the misconduct has resulted in depriving individuals of their property without due process," the Senator pointed out.

The Regulator Must be Transparent

Now, the 90-year-old Senator is asking the regulator’s Chairman why it took “six months for CFTC leadership to be notified about the aforementioned misconduct and admonishment by the court” and to reveal other examples of such misconduct that the staff failed to inform the leadership about.

The Senator's questionnaire also seeks details of the “internal review of the misconduct” and the “imposed disciplinary and other corrective action” if they have been taken.

Behnam succeeded Heath Tarbert as Chair of the US regulator that oversees the country's futures and derivatives markets. His political stance aligns with the Democratic party, while Commissioner Pham, according to a Bloomberg report, comes from the Republican sect. For proper functioning, 2 out of the 5 Commissioners are usually appointed with allegiance to the opposition party.

“From 2021 to the present, has the CFTC received allegations related to CFTC staff providing false, misleading, or incomplete information in court, administrative, or other proceedings?” the letter by Senator Grassley added. “If yes, list and describe, in detail, each complaint and the misconduct involved. In these instances, was disciplinary or other corrective action taken? If yes, provide, in detail, the disciplinary or other corrective action taken. If not, why not?”