Remember “financial regulators”? Yeah, those were the days. FT Alphaville was reminded of that halcyon bygone era by this cutting overnight commentary from John Lothian, a Chicago pit trader turned media mogul.
It has been 59 days since Michael Selig was sworn in as CFTC chairman. Since then, he has named two senior advisors, a chief of staff, and a general counsel. He has yet to name a single head of any of the divisions that do the nuts and bolts work of the CFTC, or at least are supposed to, assuming there were any employees left to do it. The CFTC full-time employee headcount has been slashed by over 20 percent since the Trump administration took office.
The spirit of the remaining CFTC staff is haunted by the gutting of the CFTC divisions, as evidenced by the recent news about the Chicago offices’ enforcement attorney team. The CFTC staff has been pushed out, forcibly retired, DOGED, and stripped of its mission during the Trump administration.
The lone CFTC commissioner is the perfect emblematic representation of this personnel phenomenon across the organization. He can only be overwhelmed and feel like he’s in over his head as he captains an adrift CFTC.
Selig, who is doing the work of five commissioners and an uncountable number of departed staff, needs to get his act together and name some division heads who can help him and restore some gravitas to the agency. Right now, this commission looks like a trivial regulator, seriously lacking knowledge of the broader commodity futures markets and direction from its leader.
Full disclosure, Alphaville’s long-standing view of the CFTC is that the agency is a regulatory canker, birthed only because the SEC was snooty about regulating pork belly futures, sustained in unnatural life by pork-barrel politics, and perennially vulnerable to industry capture — most recently by crypto.
This predates the Trump administration, but has become even more pernicious under it, with first acting CFTC chair Caroline Pham and now Selig turning a troubled regulator with a few fine staffers trying to do a job under difficult circumstances into a husk. As Lothian writes:
The problem, I believe, is the agenda: to be the most crypto-friendly commission possible. The longer [Selig] fiddles like Nero, the greater the risk is for the rest of the industry that is seriously threatened by the largely unregulated prediction markets will burn. The gutting of the Chicago enforcement office and the hollowing out of the Chicago office, the “spiritual home” of the futures markets, have been interpreted by industry analysts as a clear signal that the government is withdrawing from active, on-the-ground monitoring of the major derivatives exchanges.
Former CFTC officials have warned that the collapse of the Chicago enforcement attorney bench represents a catastrophic loss of institutional memory. The pursuit of fraud and market manipulation in complex financial products requires deep expertise that new hires or automated systems cannot easily replace.
As Alphaville has also highlighted many times before, there’s a similarly worrying neutering of the larger and even more important Securities and Exchange Commission.
Caroline Crenshaw’s final exit at the beginning of the means that the SEC now has no commissioners from the minority party for the first time ever, apart from a temporary six-month window in 2008. With the Trump administration still to name a replacement for Crenshaw or fellow former Democrat Jaime Lizarraga — who left in November 2024 — it looks like a wholly partisan SEC is now the new normal.
That might not have been a problem if the SEC’s staff were allowed to get on with their jobs, but the agency is in turmoil and there’s been a massive amount of people leaving over the past year.
SEC chair Paul Atkins even bragged about this last year, highlighting in his first town hall meeting in May that staffing had shrunk from about 5,000 full-time employees and 2,000 contractors in October 2024 to 4,200 employees and 1,700 contractors. Since then it has reportedly shrunk further, and, as the law firm Gibson Dunn has noted, the SEC’s budget request indicates that Atkins expects the exodus to continue in 2026.
Many of the people leaving were among the SEC’s most experienced officials, and Atkins has made his priorities clear with their replacements (when they even have been replaced).
The best example of this is the appointment of Meg Ryan as the SEC’s Director of Enforcement. As Alphaville noted at the time, the SEC’s new top cop is a former judge of the United States Court of Appeals for the Armed Forces and lecturer on military law with zero experience in financial and regulatory law or prosecution.
She has stayed noticeably quiet in her new job, until finally giving a speech to the Los Angeles County Bar Association earlier this month. Here she laid out her priorities as the US finance industry’s most important enforcement official:
I offer that my guiding principles as the Director are no different than those which have guided me as a Marine, as a law clerk, and as a judge.
Namely, integrity, honor, fidelity to the law, and an unwavering commitment to the fair and judicious use of the formidable power and resources the federal government has entrusted to me. To quote Spiderman, with great power comes great responsibility.
I believe these principles mirror the Chairman’s commitment to upholding the rule of law and ensuring fair process to all those who participate in and benefit from our capital markets.
You can see these guiding principles in the statistics of the SEC’s enforcement actions under the new regime.
The financial watchdog doesn’t appear to have released the data itself — apparently Atkins believes that this just encourages SEC staff to do their jobs — but various law firms and legal scholars have compiled the numbers from public data. They are stark. Here’s a tally from Brattle Group, a consultancy:
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As you can see, the number of enforcement actions tumbled to an eight-year low last year, and even this was only flattered by an unusually high in the first half of 2025 — a hangover from the previous SEC regime. As Brattle noted, “the second half of FY25 marked an unprecedented slowdown in SEC enforcement”.
Ryan insisted in her speech that it was unfair to focus on this decline.
Fraud in our capital markets persists, and so does my staff as they work to eliminate it.
Put another way — reports that enforcement work at the SEC has been tossed to the wayside are not only greatly exaggerated but flat out wrong. But I will say that I am far more concerned with the quality and impact of the enforcement actions that we bring than with chasing numbers.
Perhaps this refocusing will be healthy, and the SEC will in 2026 start chasing down the “liars, cheats and thieves” that Atkins has made the priority. But the early indications are underwhelming.
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Unfortunately, the emasculation of US financial regulation comes at a time that Jim Chanos has aptly described as “the golden era of fraud”. The finance industry is now teeming examples of both subtle and overt dodginess.
For people who actually think finance is both interesting, important and generally good, it’s a sad state of affairs. As Lothian wrote in his own lament:
Enforcement is now solely in Washington’s hands, allowing politically driven cases to proceed or be stifled. Given the pardons issued by President Trump, there has never been a better time to be a crook.
This chaotic formula for enforcement is a disaster or a cluster of disasters waiting to happen, given the explosive growth in retail futures trading, prediction markets, and legitimized crypto trading. With the CFTC off the derivatives beat, “God help us” is the last defense.
Further reading:
— ‘The darkest depths of winter still lie ahead for America’s capital markets’ (FTAV)
