Enforcement

CFTC Sues Minnesota to Block State Ban on Prediction Markets

Summary: The CFTC filed a federal lawsuit against the State of Minnesota seeking to block a newly enacted law that would make operating or assisting in the operation of a prediction market a criminal felony under state law. The agency argues that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over futures and event contracts, and that Minnesota’s law improperly conflicts with federal authority. The CFTC is seeking a preliminary injunction before the law is scheduled to take effect on August 1, 2026. In announcing the action, Chairman Michael S. Selig emphasized that the law could criminalize participation in lawful, CFTC-regulated markets, including weather-related contracts historically used by farmers to hedge risk.

Why it matters: The lawsuit underscores the CFTC’s increasingly aggressive defense of its exclusive jurisdiction over prediction markets and event contracts. For investment managers and market participants, the action signals that federally regulated event contracts are likely to remain an active and evolving area of oversight, even as states attempt to challenge their legality. The outcome could shape the future regulatory landscape for platforms and advisers with exposure to these markets.

Potential action: Firms trading or evaluating event contracts should monitor developments in the CFTC’s litigation campaign and assess whether existing compliance policies adequately address these products. Advisers may also want to evaluate disclosure, surveillance, and risk management practices for any strategies involving prediction markets or related instruments.

Read More Here(CFTC)

Rulemaking

SEC Proposes Sweeping Reforms to Simplify Public Offerings and Reporting Requirements

Summary: The SEC has proposed a broad package of rule amendments designed to make it easier and less costly for companies to access the public markets. The proposals would raise the threshold for “large accelerated filer” status from $700 million to $2 billion in public float and provide newly public companies with a five-year grace period before becoming subject to those heightened reporting and internal control requirements. The SEC also proposed expanding eligibility for shelf registrations by removing certain public float and reporting history requirements, while simplifying selected executive compensation and periodic disclosure obligations. SEC Chairman Paul S. Atkins said the reforms are intended to encourage companies to “go and stay public.”

Why it matters: These proposals represent one of the most significant capital formation initiatives in recent years and signal a clear shift toward reducing compliance burdens for public companies, particularly small and mid-sized issuers. If adopted, the changes could lower the cost of IPOs, increase flexibility in accessing capital markets, and reduce certain disclosure obligations while preserving core investor protections. For investment managers, the reforms may expand the pipeline of public offerings and create additional investment opportunities, while also potentially affecting the amount and timing of information available for due diligence and portfolio monitoring.

Potential action: Investment managers should monitor the rulemaking process and evaluate how streamlined disclosure and offering requirements could affect investment analysis, valuation models, and monitoring practices for public companies. Managers that participate in IPOs or invest in small- and mid-cap issuers may also want to assess how reduced reporting obligations could impact transparency and comparability across issuers.

Read More Here (SEC)

In the News

Suspicious $800 Million Oil Trade Surge Draws CFTC Scrutiny

Summary: The Commodity Futures Trading Commission is investigating a burst of more than $800 million in crude oil futures trading that occurred minutes before President Trump announced in March that the United States would postpone planned strikes on Iran. The announcement caused oil prices to drop sharply, generating substantial profits for several trading firms. According to reporting by The Wall Street Journal, regulators are reviewing whether any market participants traded on material nonpublic information or received advance notice of the announcement. The inquiry has reportedly expanded to include additional Iran-related trading episodes in April and May.

Why it matters: The investigation highlights the CFTC’s continued focus on insider trading and market manipulation in commodity and derivatives markets, particularly when geopolitical developments trigger significant price moves. For commodity pool operators, hedge funds, and macro managers, the matter underscores the importance of controls around information sourcing, trade rationale documentation, and surveillance for potentially sensitive event-driven trading.

Potential action: Firms trading commodities, futures, or related derivatives should review policies governing the use of political intelligence and other nontraditional information sources. Compliance teams may also want to conduct targeted surveillance around trades placed ahead of major geopolitical announcements and confirm that investment rationale and approvals are appropriately documented.

Read More Here (WSJ)

Events

Orical’s Regulatory Breakfast Briefing | May 27, 2026

Summary: Orical LLC will host a Regulatory Breakfast Briefing on Wednesday, May 27, 2026, at 9:00 AM (ET), with both in-person attendance at 641 Lexington Avenue, 17th Floor, New York, NY and a virtual option available. The session will feature Eric A. Schultz of Reliant Fund Services and focus on current SEC scrutiny and what it means for investment managers.

Why it matters: As SEC exam priorities continue to evolve, firms are seeing increased focus on core areas such as fraud, disclosure, conflicts of interest, and operational controls. Understanding how exam focus is shifting, and where firms are getting caught, can help managers better prepare for regulatory scrutiny.

Potential action: Firms should review their compliance programs with an emphasis on reconciliation processes, recordkeeping practices, and disclosure controls to ensure alignment with current SEC expectations. Those interested in attending in person should note that space is limited and email zaslanian@orical.org to reserve a spot.

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SEC Announces 2026 Compliance Outreach Seminar for Investment Advisers and Investment Companies

Summary: The SEC New York Regional Office will host a virtual Compliance Outreach Program seminar for investment advisers and investment companies on June 16, 2026, from 9:15 a.m. to 2:15 p.m. ET. SEC examinations and enforcement staff will discuss a range of current compliance topics, including examination priorities, enforcement trends, and issues affecting newly registered advisers. The program is designed to provide practical insights for chief compliance officers and other senior personnel responsible for overseeing compliance programs.

Why it matters: The SEC’s outreach seminars often provide an early indication of the issues regulators are focusing on in examinations and enforcement actions. For advisers, the program offers a direct opportunity to hear from SEC staff on current expectations and emerging areas of scrutiny, including topics that may shape exam preparedness and compliance testing in the coming year.

Potential action: Chief compliance officers and legal teams should consider attending the seminar and reviewing the agenda to identify areas where internal policies, testing, and disclosures may warrant additional attention. Firms may also use the program as an opportunity to benchmark their compliance framework against current SEC expectations and prepare for future examinations.

Read More Here(SEC)