Proprietary Trading Lawsuit Dismissal Left Regulatory Questions Unresolved

In May 2025, a US federal court dismissed the Commodities Futures Trading Commission’s (CFTC) fraud lawsuit against proprietary trading firm My Forex Funds (CFTC v. Traders Global Group Inc. (My Forex Funds).

According to a Barnea firm blog, while initially appearing to be a decisive legal victory for My Forex Fund (MFF), the court’s decision was based entirely on the plaintiff’s procedural failings rather than the merits of the case.

The ruling did not clear the company of the serious allegations that prompted the lawsuit, and it leaves important questions about regulatory scrutiny in the proprietary trading sector open.

The CFTC had alleged that MFF defrauded over 135,000 customers of more than $310 million through deceptive practices common to the proprietary trading business model.

The complaint alleged that MFF misled customers into believing they were trading in live markets, when in fact transactions occurred in demo environments, and that the company acted as a counterparty rather than a partner in customer success.

The regulator also accused MFF of manipulating trade outcomes through artificial slippage and hidden fees, and of using customer fees to pay supposed trading profits. That structure, the CFTC said, resembled a Ponzi scheme.

The court dismissed the action solely because the CFTC misrepresented evidence, including labeling a legitimate tax payment as illicit. The court ordered the commission to pay $3.1 million in expenses.

Although MFF avoided a judicial finding of fraud, the CFTC’s original complaint remains a public record of the conduct that regulators may deem deceptive or improper.

The case signals that similar firms could face heightened scrutiny even without new legislation.

According to the blog, the allegations raised in the suit highlight the vulnerabilities of the proprietary trading sector. It suggests that prop trading companies consider adjustments such as increased transparency and risk management measures that account for potential regulatory amendments.