1. CFTC Announces Inaugural Meeting of the Innovation Advisory Committee
On August 10, Commodity Futures Trading Commission (CFTC) Commissioner Michael Selig announced that the Innovation Advisory Committee (Committee), formerly the Technology Advisory Committee, will host its inaugural meeting on August 20 in Washington, D.C. The Committee was created to advise the CFTC on topics such as technology, law, policy, and finance. The meeting will be livestreamed on the CFTC’s website. The Committee may make recommendations relating to the impact and implications of technological changes with respect to financial markets and the U.S. economy. Members include representatives from industry leaders and market participants. See the press release here.
2. CFTC Issues Reminder to Market Participants Regarding Clear Pricing Information
On August 7, the CFTC’s Division of Market Oversight and the Market Participants Division (Staff) issued a letter to CFTC-regulated entities involved in listing, soliciting, or accepting event contracts, reminding them of their obligations under the Commodity Exchange Act and CFTC Regulation 180.1. Staff’s immediate concern is event-contract derivatives, where some products reportedly are being marketed using “American odds” associated with casino gambling rather than nominal or percentage pricing that reflects market pricing. As Staff notes, product design, pricing displays, and customer-facing marketing must clearly distinguish regulated derivatives markets from bookmaker-style wagering.
The letter states that derivatives prices are market-determined, cleared through centralized clearinghouses, and often reflected in real-time bid and ask prices, while prediction markets serve price- and information-discovery functions through transparency. By contrast, Staff warns that bookmaker-style odds may mislead users about the nature of the transaction, obscure market depth and pricing impact, and create confusion that could be exploited to steer users toward higher-margin, non-market-priced bookmaking products. Entities involved in listing, soliciting, or accepting orders for event-contract derivatives are expected to review pricing displays, marketing materials, and partner or affiliate information practices. See the press release here and the letter here.
3. SEC Charges Private Fund Adviser in Alleged Fraud in Connection With Pre-IPO Stocks
On August 10, the Securities and Exchange Commission (SEC) announced that it has filed a complaint in the U.S. District Court for the Southern District of New York against a private fund adviser, its chief executive officer, and affiliated general partners in alleged fraud in connection with investments in pre-IPO shares by misappropriating client assets and charging millions of dollars in undisclosed fees. According to the complaint, the defendants allegedly induced investments through false statements, misused fund assets through unauthorized loans, charged undisclosed markups and fees, and pledged client fund assets as collateral for a third-party credit line without disclosure to affected funds or investors. In one case, the defendants allegedly raised more than $15 million from an investor by falsely claiming that an investment vehicle he controlled owned shares of certain pre-IPO stock, despite the vehicle at that point not holding any shares.
Generally, with respect to markups, a general partner would borrow fund capital, on an unauthorized and undisclosed basis, to purchase shares of pre-IPO stock and then sell the pre-IPO stock to the fund at a price higher than the acquired price. In some circumstances, the defendants misrepresented the cost of acquisition in an attempt to conceal the price-per-share markup. Separately, the defendants also charged an acquisition fee, even in situations where the applicable fund agreement did not authorize or disclose such a fee. See the press release here and a copy of the complaint here.
4. United Kingdom Opens the FCA Handbook Through a New API
On August 6, the United Kingdom’s Financial Conduct Authority (FCA) announced the release of the FCA Handbook through an application programming interface (API), which is intended to lessen the burden of complying with FCA requirements by allowing software systems to directly integrate the FCA Handbook API in a structured, machine-readable format. The API seeks to reduce manual processes and provide benefits to firms subject to FCA regulations by providing firms with real-time rule mapping, track rule changes, and support AI solutions, and may foster the development of more efficient and consistent compliance tools. See the press release here and the FCA’s FAQs here.
5. Kalshi Denied Preliminary Injunction in Connecticut
On August 10, a federal court in Connecticut denied KalshiEX LLC’s request for a preliminary injunction that would have blocked state officials from enforcing Connecticut’s gaming laws against Kalshi’s sports-event contracts. The court held that Kalshi was unlikely to show that its sports-event contracts are “swaps” under the Commodity Exchange Act (CEA), reasoning that contracts tied to the outcomes of sporting events or in-game occurrences are not contracts on the “occurrence” of an “event” within the statute’s ordinary meaning. The court also concluded that, even if the contracts were swaps, Kalshi was unlikely to prove that federal law preempts Connecticut’s gambling regime, emphasizing the CEA’s preservation of state regulatory authority and the state’s traditional police power over gambling.
The court noted that between 80 percent and 90 percent of Kalshi’s listed contracts and revenue were tied to sports-event contracts, while the CFTC had not reviewed any of those contracts under the CEA’s special event-contract rule. The ruling adds to a growing split among federal courts and a broader wave of state and federal litigation over Kalshi’s sports contracts, underscoring continued regulatory uncertainty at the intersection of derivatives law, prediction markets, and state sports-betting regimes. See the order here.
