Body of Law:
Two aspects of this settlement are worth noting. First, the CFTC's use of a gag order to prevent the defendant, who neither admitted nor denied liability, from "mak[ing] any public statement denying" liability, or even "creat[ing] the impression that the Complaint and/or this Consent Order is without a factual basis." Second, the CFTC's use of CEA Section 6(c)(1), which makes it unlawful to engage in "any manipulative or deceptive device or contrivance . . . "
Both of these provisions are currently subject to legal challenges that could affect their use in the future. First, the use of a similar gag order regularly employed by the SEC in its enforcement settlements is currently being challenged by the CATO Institute on First Amendment grounds, with the court being asked "to declare it void in every settlement where it has appeared for nearly 50 years." In commenting on the use of such gag orders in enforcement settlements, The Wall Street Journal points out the incongruity of allowing convicted murderers the right to complain that the justice system treated them unfairly, but not allowing the same for administrative respondents. See Shut Up the SEC Explained and How the SEC Silences-Criticism.
Second, in CFTC v. Monex Credit Co., Civil Action No. 8:17-CV-01868 (C.D. Ca. May 1, 2018), a federal district court rejected the CFTC's argument that its new anti-manipulation authority bestowed by Dodd-Frank applies to transactions with or without market manipulation. Instead, the Court concluded that "the CEA unambiguously forecloses the application of Section 6(c)(1) in the absence of actual or potential market manipulation." The latter is now the subject of appeal to the Ninth Circuit. That appeal, however, does not rise in the context of spoofing, and would therefore not resolve the question as to whether spoofing is a form of market manipulation.
If the courts uphold the challenges in these two matters, they could substantially affect settlement orders in the future.