How Can Energy Market Participants Prepare for Practical Compliance and Surveillance Challenges? 

The CFTC has signaled that energy market manipulation is now a top enforcement priority, at a moment when volatility in oil markets is drawing scrutiny to how firms trade and how they effectively monitor their own traders. This article looks at what that means in practice for energy market participants, and at the compliance and surveillance challenges it raises.

Evolving Initiatives at the CFTC

Over the past few months, the Commodity Futures Trading Commission (CFTC) has announced a series of new initiatives. These include revisions to the agency’s enforcement program and practices, proposed rulemakings on prediction markets, and solicitation of public comments on market innovations such as 24/7 trading and perpetual futures contracts. 

Changes to the CFTC's Enforcement Program

The CFTC’s enforcement program and related processes have been incrementally evolving over the last year, including substantive amendments to the agency’s Rules of Practice and Rules Relating to Investigations. Notably, they established additional requirements for the form of the recommendation memoranda the Division of Enforcement (the “Division”) submits to the Commission when recommending acceptance of a settlement offer, including that the memoranda be comprehensive in addressing the law and facts and supported by citations to evidence, and made revisions to the Division's procedures for notifying parties that they may be subject to an enforcement action (i.e., the “Wells” process).¹

In March 2026, the agency welcomed a new Director of Enforcement, David Miller. Soon after, Director Miller announced that the Division would be revising its enforcement priorities. It also published a Staff Advisory (the “Staff Advisory”) in May 2026, outlining its revised cooperation policy, providing market participants with the Division’s expectations for obtaining recognition for cooperation during enforcement proceedings.

The Division’s Updated Enforcement Priorities

Upon starting his role as the CFTC’s Director of Enforcement, David Miller outlined the agency’s updated enforcement priorities during remarks at NYU Law School’s Program on Corporate Compliance and Enforcement (PCCE).² Director Miller explained that going forward, the Division “will have five priority areas: (i) insider trading (including in the prediction markets); (ii) market manipulation (particularly in the energy markets); (iii) market abuse/disruptive trading; (iv) retail fraud (including Ponzi schemes); and (v) willful violations of Anti-Money Laundering (“AML”) and Know-Your-Customer (“KYC”) laws and rules.”³

While Director Miller stressed that the Division intends to adhere to its priority areas and not engage in regulation by enforcement, he noted that the Division will still take action in other areas where it sees indicia of repeated and deliberate violations. Director Miller also emphasized cooperation between regulatory agencies in pursuing potential violations. 

Firms are now on notice of the Division’s enforcement plans and can improve their ability to prevent violations.

CFTC Staff Advisory on Cooperation in Enforcement Matters

The CFTC published the Staff Advisory outlining the Division’s revised policy on cooperation in enforcement matters on May 19, 2026.⁴ The Staff Advisory sets forth considerations for declinations and cooperation credits. It is designed to provide market participants with more transparency into enforcement practices. Notably, the Staff Advisory requires that a party seeking a declination must meet all of the following factors:

• Voluntarily self-report to the CFTC;
• Fully cooperate during the Division’s investigation;
• Timely and appropriately remediate the misconduct at issue;
• Provide full restitution or disgorgement where applicable; and
• There are no aggravating circumstances that would preclude eligibility.⁵

Publication of the Staff Advisory is a welcome development for firms that may be facing potential enforcement activity and need clarification and guidance on their engagement with the Division. Access to appropriate data and analytics, along with effective monitoring practices, will be critical to firms’ ability to self-report and remediate in accordance with the cooperation policy. 

The CFTC's Renewed Focus on Energy Market Manipulation

Preventing fraud, manipulation, and abuse has historically been a core mission of the CFTC and these remain top areas for enforcement, as reflected in the Division’s updated enforcement priorities.⁶

The CFTC released its Fiscal Year (FY) 2025 Enforcement Report (the “Enforcement Report”) in May 2026. Although the CFTC brought 13 new enforcement actions in FY 2025,⁷ down from 58 in FY 2024,⁸ the CFTC has indicated that it is not rolling back enforcement but rather re-focusing it on material violations and those more apt to cause customer or market harm, such as fraud, manipulation, and abuse. The Enforcement Report’s “Looking Forward” section highlighted Director Miller’s announcement of the Division’s updated enforcement priorities, including the focus on fighting manipulation in energy markets.⁹   

Why Do Energy Markets Have Heightened Risks of Manipulation and Abuse?

In his announcement of the updated enforcement priorities, Director Miller observed that manipulative activities in the energy markets are especially harmful due to relatively inelastic demand and limited substitutability.¹⁰ Director Miller also noted that price increases caused by manipulation in energy markets hurt consumers directly and can result in wider economic pressures on production, shipping, and storage. 

The inelasticity of supply and demand for energy can make it difficult for consumers to adjust to relatively sudden or large price level changes. For instance, if someone depends on their car to drive to work, their demand is generally not flexible, and they must absorb gas price increases. Likewise, supply can be inflexible regardless of demand increases because there are short-term infrastructure limitations, such as building new plants or pipelines. 

Energy market volatility can be driven by supply and demand shocks, which can invite opportunities for market manipulation and other prohibited trading practices. Other structural characteristics of energy markets can also increase manipulation risks, such as relative illiquidity in certain markets or trading strategies leveraging relationships between physical products and financial derivatives.  

In a current example of energy price instability, oil market volatility has increased since the outbreak of the 2026 Iran war in late February. The conflict has led to uncertainties about physical delivery and supply, pushed up consumer prices, and had broader inflationary impacts. Brent crude oil rose to around $140 a barrel in April, roughly double February’s average price of around $71. Prices fell back to about $80 by mid-June,¹¹ around the time a framework deal to end the war was announced.¹² Industry experts suggest the impacts of the Iran war on global energy markets are likely to continue for some time, including production and shipping disruptions in the Gulf, as well as price volatility risk.¹³

Connected to this period of oil market volatility, there have already been public questions about trading patterns where there was a significant increase in oil futures trading ahead of announcements related to the conflict and the status of the Strait of Hormuz. Several members of Congress prepared letters to the CFTC specifically requesting an investigation into whether these trades involved insider information.¹⁴

While those instances raise questions about possible insider trading more than price manipulation, they show that market conduct risks can be greater in times of volatility.

What Are Key Trends in Energy Market Manipulation and Abuse Cases?

There have been many historical CFTC enforcement matters in the energy markets focused on benchmark price manipulation, cross-market manipulation, spoofing and other forms of disruptive trading, false reporting, and wash trading. More recently, enforcement matters have also included bribery and corruption-related violations and misappropriation of material nonpublic information (MNPI), which were leveraged to further manipulative schemes. 

Some of the most well-known energy market manipulation and abuse cases have commonalities in the types of behaviors that led to violations.¹⁵

• Benchmark Manipulation: Several cases alleged that trading activity during benchmark pricing windows was solely to influence settlement prices in a direction benefiting traders’ financial derivative and physical positions.
• Insider Trading: In enforcement actions involving MNPI, traders wrongly obtained confidential information for the purpose of transacting upon it in a manner that would benefit their positions. 
• Spoofing: Another matter centered on algorithmic spoofing activities in various commodity categories, including energy. Spoofing entails placing bids or offers with the intent to cancel them before execution, creating a false impression of market interest.    
• Improper and Off-Channel Communications: A few case examples cited evidence of communications among traders that showed intent to unlawfully influence prices and market movements for their own advantage, while another matter noted that potentially relevant communications occurred off-channel and were not readily available to the regulator. 
• Control and Governance Failures: In addition to misconduct by traders, firms were found to have control failures and surveillance inadequacies. In some cases, there were also broader issues with the firms’ compliance and governance culture.     

In these case examples, the CFTC highlighted that market misconduct led to ill-gotten profits (or reductions in losses) for the traders and their manipulative and disruptive trading activities harmed other market participants by distorting prices and undermining market integrity. 

As energy market manipulation and abuse cases have evolved, coordination between enforcement bodies has also increased. Notably, alongside several of the seminal CFTC enforcement matters in this area, the Department of Justice (DOJ) also brought parallel criminal prosecutions, such as for violations of the Foreign Corrupt Practices Act (FCPA).

What Does This Mean for Energy Market Participants? 

The Division’s revised enforcement strategy pinpoints areas of risk where firms subject to CFTC regulations may need to refocus their compliance efforts. The violations it will be looking for are not new; for example, prohibitions on manipulation and insider trading have existed for many years. Though the types of violations may not be new, the way they could arise now may be novel. An example of this is on prediction markets. The updated enforcement priorities suggest a plan to concentrate resources in these areas. While enforcement actions for technical violations may be less likely, investigations into high-priority enforcement areas (e.g., energy market manipulation) should be expected to garner increased attention. 

Practical Compliance and Surveillance Challenges

Energy market manipulation and abuse cases often refer to inadequate compliance practices, supervision failures, and deficiencies in communications and trade surveillance. Where material weaknesses in compliance and surveillance programs contribute to violations, employers have been penalized, sometimes with costly remediation programs or compliance monitorships. Traders also face personal risk with fines and trading bans stemming from their misconduct.

Preventing potential market manipulation and abuse enforcement actions requires firms to evaluate the effectiveness of their compliance frameworks in mitigating violations, paying particular attention to important areas like assessing applicable market conduct risks and addressing challenges in monitoring and surveillance. 

Through our work, we have observed a correlation between compliance and surveillance program deficiencies and regulatory fines. In enforcement actions based on compliance and surveillance deficiencies, critical failures, including absence of controls, often lead to more severe penalties. Developing and maintaining reasonably designed and effective controls starts with assessing the firm’s risks, especially as they change. Understanding risks allows firms to better tailor compliance and surveillance programs, and in turn be better prepared for regulatory scrutiny. 

Even firms with well-developed compliance and surveillance programs can still face challenges in preventing and detecting manipulation, insider trading, and other prohibited market practices. Bad actors are often sophisticated at circumventing operative controls. Beyond problematic trading behaviors, we have observed firms struggling with:

• Fragmented communication and coordination between the three lines of defense;
• Lack of appropriate resourcing for compliance and surveillance functions; 
• Supervision and escalation failures;
• Insufficient policies and policy enforcement;
• Data quality and integrity deficiencies that have material impacts; 
• Inadequacies in third-party vendor selection and monitoring; and
• Issues with the suitability and successful deployment of surveillance systems. 

Another space where we see growing concerns is effectively conducting cross-market monitoring. Energy markets are vulnerable to cross-market manipulation. We expect that the importance of robust cross-market surveillance will grow given the Division’s emphasis on the updated enforcement priorities. Cross-market manipulation can be particularly difficult to surveil. In energy markets, trading strategies can include both physical product contracts and financial derivatives. Related trades can span multiple platforms and geographies, so surveillance scenarios must identify and interpret correlations in the data to be effective. Adding to complexity, trading venues have unique data formats and large volumes of data that may be complicated to reconcile.

Examples of violative conduct from the high-profile cases that we highlighted above speak to some of these compliance and surveillance challenges. Findings in those enforcement matters called out:

• Surveillance deficiencies in detecting uneconomic trades and correlating physical and derivatives trading data; 
• Use of off-channel communications and associated recordkeeping failures;
• Insufficient controls related to benchmark price-setting windows and price reporting; 
• Disempowered compliance functions; and
• Supervision and governance breakdowns. 

By understanding issues identified in prior enforcement actions and common compliance and surveillance challenges, energy market participants can position themselves to meet regulatory expectations. Firms can strengthen their defenses against potential manipulation violations by establishing and upholding key preventative and detective measures. Such measures include:

• Appropriate surveillance parameters that recognize questionable trading patterns;
• Effective alert and escalation management; 
• Timely and accurate trading data ingestion and output; 
• Targeted and up-to-date policies and procedures;
• Periodic reassessment of risks and controls; and
• Frameworks for investigations and discipline.

Energy market participants must remain cognizant of shifting market conditions, potential market innovation-related changes, and other situations that could increase risk and volatility, and evaluate impacts on the efficacy of their compliance and surveillance programs accordingly.

How A&M Can Help

In light of the CFTC’s updated enforcement priorities, firms should reexamine their compliance and surveillance programs to identify potential gaps and remediation needs in areas where the Division will be focusing. As discussed above, there are various risks and challenges that firms may face in strengthening their defenses against targeted enforcement topics. 

Additionally, with the enactment of the Division’s refreshed cooperation policy, firms should be ready to meet the new standards for self-disclosure. Firms will benefit from reviewing the Staff Advisory in detail to understand the Division’s outlook on the declination process, in the event they become subject to a potential enforcement matter. 

With deep experience in commodities markets, our team has the subject matter expertise to help energy market participants in understanding the CFTC’s expectations and implementing necessary enhancements to compliance and surveillance frameworks. We also have extensive experience in providing support for investigations and litigation matters related to manipulative and disruptive trading, as well as preparing regulatory inquiry responses. 

Beyond matters before the CFTC, we have assisted firms that are facing potential actions from other enforcement bodies such as exchanges, the Federal Energy Regulatory Commission (FERC), the UK Financial Conduct Authority (FCA), and federal and state Departments of Justice. Our team has worked on a wide variety of cases involving energy trading violations, including benchmark manipulation, false reporting, bribery and corruption, insider trading, spoofing, and others. 

We specialize in helping our clients identify possible regulatory compliance issues and implementing corrective action. Remediation is usually iterative. It calls for specialists who can design and test surveillance scenarios, reconcile and analyze data at scale, and build the right policies and training. We assist our clients with preparing for regulatory scrutiny by developing complex market and trading analyses, compiling defensible evidence to document causes and pervasiveness of potential violations, and building effective data capture and surveillance solutions that specifically address the compliance challenges tied to physical commodities trading. 

As noted above, while many enforcement matters have comparable findings, the facts and circumstances surrounding the potential violations are unique to every case. We leverage our experiences with similar clients and issues to develop tailored solutions and advice for each firm we collaborate with. We have the capabilities to provide specialized, risk-based solutions for clients transacting in energy markets and across the financial services industry. 

Our Services

• Investigation support and market analysis
• Dispute services and expert testimony
• Compliance program evaluations
• Surveillance program review 
• Risk assessments
• Control testing
• Systems calibration and enhancement
• Data governance, mapping, and validation
• Regulatory change management guidance and implementation 
• Regulatory data reporting 
• Regulatory application and exam support

Learn more about our Disputes and Investigations offerings and other A&M services here.

References

[1] Commodity Futures Trading Commission, “Acting Chairman Pham Announces Reforms to Wells Process, Amends Rules of Practice and Rules Relating to Investigations,” Release No. 9144-25, December 1, 2025.

[2] David I. Miller, “Remarks at NYU Law School – CFTC Enforcement Priorities, Insider Trading in the Prediction Markets, and Cooperation with the CFTC,” March 31, 2026.

[3] Miller, “Remarks at NYU Law School.”

[4] Commodity Futures Trading Commission, “CFTC Staff Issues Advisory on Cooperation in Enforcement Matters,” Release No. 9234-26, May 19, 2026.

[5] Commodity Futures Trading Commission, “CFTC Letter No. 26-15,” May 19, 2026.

[6] Fraud, manipulation, and abuse have long been prohibited practices under the Commodity Exchange Act, as well as CFTC Regulations 180.1 and 180.2. See 17 C.F.R. §180, Prohibition Against Manipulation (Electronic Code of Federal Regulations, accessed July 22, 2026), and 7 U.S.C. § 6c(a) and 7 U.S.C. §9, both accessed July 27, 2026.

[7] Commodity Futures Trading Commission, "Enforcement Annual Report Fiscal Year 2025" (the “Enforcement Report”), Appendix A, May 2026.

[8] Commodity Futures Trading Commission, "CFTC Releases FY 2024 Enforcement Results," Release No. 9011-24, December 4, 2024.

[9] Enforcement Report, pp. 3-4.

[10] Miller, “Remarks at NYU Law School.” 

[11] U.S. Energy Information Administration, "Europe Brent Spot Price FOB (Dollars per Barrel), Daily," a high of $138.21 on April 7, 2026, and approximately $80 in mid-June 2026; U.S. Energy Information Administration, "Europe Brent Spot Price FOB (Dollars per Barrel), Monthly," February 2026 average of $70.89, both accessed July 18, 2026.

[12] Peter Hoskins and Nick Edser, “Oil Prices Fall and Shares Jump after US-Iran Deal Announced,” BBC News, June 15, 2026.

[13] Bennett Voyles, “IDX: Commodity Markets Brace for Lasting Impact from Gulf Shipping Disruption,” FIA / MarketVoice, June 19, 2026.

[14] Members of both the House and Senate requested investigation into suspicious oil futures trading around announcements of military actions and related events in Iran. Their letters can be found at: Sens. Sheldon Whitehouse and Elizabeth Warren, “Letter to the Honorable Michael S. Selig, Chairman of the Commodity Futures Trading Commission,” April 9, 2026; Rep. Ritchie Torres, “Rep. Ritchie Torres Calls on CFTC to Investigate $760 Million Oil Futures Trade Placed Minutes Before Iran’s Strait of Hormuz Announcement,” April 20, 2026; and Sen. Rev. Raphael Warnock, “Warnock, Colleagues Push CFTC for Public Update into Suspicious Oil Futures Trades,” May 27, 2026.

[15] Enforcement actions can be reviewed on the “Enforcement Actions” section of the CFTC’s website. High-profile enforcement actions that provide examples of energy trading-related market conduct violations include but are not limited to: In re Vitol Inc., CFTC Docket No. 21-01 (Dec. 3, 2020); In re TOTSA TotalEnergies Trading SA, formerly known as TOTSA Total Oil Trading SA, CFTC Docket No. 24-19 (Aug. 27, 2024); In re Statoil ASA, CFTC Docket No. 18-04 (Nov. 14, 2017); In re Glencore International AG, Glencore Ltd., and Chemoil Corporation, CFTC Docket No. 22-16 (May 24, 2022); In re Trafigura Trading LLC, CFTC Docket No. 24-08 (June 17, 2024); and In re Panther Energy Trading LLC and Michael J. Coscia, CFTC Docket No. 13-26 (July 22, 2013).