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Enforcements
CFTC obtains restitution order in commodity pool fraud
Summary: On September 25, 2025, the U.S. District Court for the Middle District of Tennessee entered a consent order against Michael and Amanda Griffis for running a fraudulent commodity pool called “Blessings Thru Crypto.” The couple raised over $6.5 million from at least 145 investors, claiming to trade commodity futures through a platform called “Apex.” Instead, more than $4 million went to an illegitimate overseas exchange, and the rest was misappropriated for personal expenses. The order requires $5.5 million in restitution, a $1.35 million civil penalty, and imposes a permanent trading and registration ban.
Why it matters: The case underscores CFTC’s aggressive stance against commodity-pool fraud, especially schemes involving offshore platforms and opaque trading programs. It highlights the importance of transparent fund flows, credible counterparties, and honest disclosures to investors.
Potential action: Firms marketing derivatives-linked products should ensure counterparties and platforms are legitimate, investor disclosures are clear about risks and fund custody, and internal controls can verify that returns come from actual trading activity.
Read More Here (CFTC)
SEC Sues Prophecy for Hidden Losses
Summary: The SEC filed a lawsuit against Prophecy Asset Management LP, its CEO/CIO Jeffrey Spotts, and sub-advisor Brian Kahn, alleging a multi-year scheme to conceal hundreds of millions of dollars in losses from investors. According to the SEC, the defendants misrepresented capital allocations, engaged in sham transactions, and fabricated documents to mislead auditors and investors.
Why It matters: This high-profile enforcement action underscores the SEC’s ongoing focus on “gatekeeper” accountability in the asset-management space. The case highlights recurring SEC concerns such as misrepresenting losses and risk exposure, lack of transparency in sub-advisor relationships, and audit-related deception. If successful, the SEC could pursue injunctions, disgorgement, civil penalties, and potential officer-and-director bars.
Potential action: Investment advisers and funds should re-evaluate their disclosures involving third-party or sub-advisor arrangements to ensure clarity and completeness. They should strengthen oversight and audit protocols of sub-advisor counterparties to guarantee the accuracy and integrity of documentation. Firms should also review internal controls to detect red flags such as excessive position concentrations or collateral mismatches—that echo the allegations raised in this case.
Read More Here (SEC)
What Regulators Are Saying
SEC Opens the Door to State Trusts for Crypto Custody
Summary: The SEC’s Division of Investment Management issued a staff no-action letter indicating that SEC-registered advisers may treat certain state-chartered trust companies as qualified custodians for digital asset custody, subject to due diligence and safeguarding obligations (Sept 30, 2025).
Why it matters: Broadens custody options for crypto/infrastructure funds and may ease operational constraints, especially for smaller or emerging managers.
Potential action: Diligence eligible state trust companies; evaluate whether migrating custody improves cost, counterparty risk, and regulatory posture; update Form ADV, client disclosures, and custody controls accordingly.
Read More Here(SEC)
SEC and CFTC Announce Round Table to Discuss Harmonization
Summary: The SEC and CFTC scheduled a joint roundtable for September 29, 2025, to discuss regulatory harmonization across securities and derivatives, following earlier joint statements committing to closer coordination.
Why it matters: Unified oversight could streamline obligations for advisers using derivatives, digital assets, or hybrid structures, while raising the bar on reporting precision and cross-market accountability.
Potential action: Identify strategies or fund structures that span SEC/CFTC regimes and assess potential impacts; prepare comments for submission around the roundtable; monitor post-event updates for proposals affecting reporting, innovation exemptions, custody, disclosure, and margin.
Read More Here (SEC)
SEC and CFTC operations curtailed amid shutdowns
Summary: On Sept 30, 2025, the SEC’s Division of Investment Management and Division of Corporation Finance announced curtailed operations due to the federal shutdown, with only limited functions continuing and separate notices outlining ongoing market-structure work.
Why it matters: Registrations, relief requests, and comment cycles may be delayed—raising operational and disclosure risk if timelines aren’t adjusted.
Potential action: Add buffer to filing calendars, prepare contingency disclosures and LP communications, and coordinate with counsel to triage time-sensitive submissions.
Read More Here (SEC)Read More Here (CFTC)
CFTC issues no‑action letter for electricity binary options
Summary: The CFTC staff granted a no‑action position regarding electricity binary options, temporarily easing compliance concerns in that niche product line.
Why it matters: Funds exploring bespoke energy, power, or volatility derivatives may have flexibility pending further rule clarity.
Potential action: Assess whether existing or prospective trades fall into relief scope and evaluate fallback regulatory plans.
Read More Here (CFTC)
In The News
SEC Fast-Tracks End of Quarterly Reports: Semiannual Regime Ahead
Summary: SEC Chair Paul Atkins said the agency will fast-track a move to end mandatory quarterly earnings reports in favor of semiannual results, with a proposal targeted as soon as late 2025 or early 2026.
Why it matters: This would materially change disclosure cadence for public companies, with potential knock-on effects for transparency, market volatility, and how managers track and model portfolio comps.
Potential action: Monitor the rulemaking timeline, evaluate impacts on portfolio companies’ reporting calendars and valuation workflows, and prepare investor-relations and compliance updates if the proposal advances.
Read More Here(Reuters)
There’s a new Sheriff in Town, and its name is the Texas Stock Exchange
Summary: The SEC approved the Texas Stock Exchange (TXSE) to register as a national securities exchange; TXSE says it plans to launch trading in Q1 2026.
Why it matters: A new U.S. exchange could pressure listing fees and standards at NYSE/Nasdaq, alter routing and execution dynamics, and create fresh liquidity venues—implications for trading costs, market data, and where portfolio companies might list.
Potential action: Track TXSE rule filings and member access requirements; confirm broker/OMS/EMS connectivity and routing logic; assess any index or benchmark impacts if companies migrate listings; brief execution teams on potential venue-quality changes.
Read More Here(Reuters)
Events
Orical Fireside Chat: From Sandlot to SportsCenter, an Interview with James Pitaro
Summary: Orical will host the first-ever “Fireside Chat” with James A. Pitaro (Chairman of ESPN), an invite-only conversation for clients and friends covering leadership, media-rights economics, and the future of sports streaming.
Click Here to Reserve Your Virtual Seat (Orical)
Surveillance vs. Privacy: Inside the SEC’s Crypto Roundtable
Summary: The SEC’s Crypto Task Force will host a public roundtable on “Financial Surveillance & Privacy” at SEC HQ on Oct. 17, 2025 (1–4pm ET); in-person registration is required, the event will be webcast, and it may be rescheduled if there’s a lapse in appropriations.
Why it matters: Expect discussion that could shape how advisers using digital assets approach surveillance, blockchain analytics, AML/KYC, and investor-data privacy—informing future policy, exams, and potential rulemaking.
Potential action: Register and plan attendance; review your transaction-monitoring, data-governance, and privacy policies ahead of the session; prepare talking points or a post-event comment to address surveillance/privacy trade-offs relevant to your strategies.
Read More Here(SEC)
About Orical
Orical is a trusted leader in investment management compliance consulting and compliance technology solutions. Founded by experienced investment management attorneys and former C-Suite executives, Orical has spent over 15 years helping investment advisers, private funds, and asset managers meet regulatory requirements with confidence. Our team delivers practical, business-focused compliance solutions designed to reduce risk, streamline operations, and navigate complex SEC and regulatory challenges.