The Commodity Futures Trading Commission (CFTC) has settled an administrative insider-trading case over event contracts on what a president would say out loud, finding that a White House teleprompter operator misappropriated speech drafts to trade Kalshi “mention markets” — and moving the US prediction-market argument off jurisdiction and onto market integrity.

On August 28, 2026, the CFTC entered an order in In re Gabriel Perez, CFTC Docket No. 26-06, finding that Perez violated Sections 4c(a)(3), 4c(a)(4)(C) and 6(c)(1) of the Commodity Exchange Act (CEA) and Regulation 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1) and (3) (2025), by trading event contracts on words President Donald J. Trump would speak, using drafts he read roughly an hour before delivery. The order imposes $107,539.02 in disgorgement, a $65,000 civil monetary penalty and a three-year trading ban. This analysis walks through what the order actually found, how the CFTC reached event contracts through the swap definition, how three jurisdictions diverge, and what compliance teams should take from it.

Key facts

• Docket and date: In re Gabriel Perez, CFTC Docket No. 26-06, order entered August 28, 2026, signed by Deputy Secretary Robert N. Sidman (CFTC order).
• Provisions found violated: CEA Sections 4c(a)(3), 4c(a)(4)(C) and 6(c)(1), 7 U.S.C. §§ 6c(a)(3), 6c(a)(4)(C), 9(1), and Regulation 180.1(a)(1) and (3) (CFTC order, Part IV).
• Sanctions: $107,539.02 disgorgement due within 10 days; $65,000 civil monetary penalty, $15,000 within 30 days and the balance in monthly instalments within 18 months; a three-year ban on trading on or subject to the rules of any registered entity (CFTC order, Part VI).
• Trading record: 14 Trump mention markets on KalshiEX LLC, profitable on 39 of 43 contracts; account opened December 8, 2025 (CFTC order, Part II).
• Cooperation credit: roughly a 40% penalty reduction, above the 25% ceiling CFTC Staff Letter No. 26-15 (May 19, 2026) sets for Part III matters.
• Settlement posture: Perez consented “without admitting the findings and conclusions herein” (CFTC order, Part V).

Methodology and sources

This analysis is built on primary documents only. The core text is the CFTC’s administrative order in Docket No. 26-06, entered August 28, 2026, read in full, with the Commission’s Release 9289-26. It is set against four further CFTC documents: the Division of Enforcement’s event-contract advisory of February 25, 2026, the Van Dyke and Spagnuolo complaint announcements of April 23 and May 27, 2026, and the settled order in In re George Santos, CFTC Docket No. 26-05, of July 31, 2026. Cooperation mechanics come from CFTC Staff Letter No. 26-15. Comparative material is drawn from European Securities and Markets Authority (ESMA) product-intervention measures and Financial Conduct Authority (FCA) Policy Statement PS19/11. The window is December 2025 to August 2026. No allegation in a pending civil complaint is treated here as a finding.

What the order actually found

The order does not advance an exotic new theory. It applies the misappropriation theory of insider trading, familiar from securities law, to a product the CFTC first has to establish is within its reach at all. That route runs through the swap definition. Section 1a(47)(A) of the CEA defines a swap to include an agreement “that provides for any purchase, sale, payment, or delivery . . . that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence”. The order holds each Trump mention market contract is a swap on that basis, adding two alternative grounds: that they are “at a minimum, binary options on excluded commodities”, and are “commonly known to the trade as swaps”. Only once that is settled does Regulation 180.1 attach.

The CFTC’s misappropriation test, as the order sets it out, has four elements: that a person misappropriates confidential information in breach of a pre-existing duty of trust and confidence to the source; does so intentionally or recklessly; in connection with a product subject to the Commission’s jurisdiction; and for a personal benefit. The order grounds the duty in two places — the Standards of Ethical Conduct for Employees of the Executive Branch at 5 C.F.R. § 2635.101(b)(3) (2025), and Sections 4c(a)(3) and 4c(a)(4)(C) of the CEA themselves. Materiality is conventional: the exact words in the prepared remarks are information a reasonable person “would have viewed as important in deciding whether to select between a ‘Yes’ or ‘No’ position”. The order cites CFTC v. EOX Holdings L.L.C., No. 19-cv-2901 (S.D. Tex. Sept. 30, 2021), and the Commission’s 2011 adopting release at 76 Fed. Reg. 41,398, 41,403.

On the facts, the order finds that Perez, a federal employee serving as Technical Advisor to President Trump, operated the teleprompter at the President’s speaking engagements and was physically present at every speech underlying the contracts he traded. He generally had the text about an hour ahead. He bought “Yes” only where he had confirmed the target word appeared in the prepared remarks, and “No” where he had confirmed it did not. On one occasion he reversed a position after watching the President skip the passage containing his word.

Jurisdiction / Regulator	Effective date	Scope	Key requirement	Penalty / sanction
US federal (CFTC)	August 28, 2026	Any person trading event contracts, as swaps, on a designated contract market	CEA Sections 4c(a)(3), 4c(a)(4)(C), 6(c)(1); Regulation 180.1(a)(1) and (3)	$107,539.02 disgorgement, $65,000 penalty, three-year trading ban (Docket No. 26-06)
US exchange level (KalshiEX LLC, DCM)	February 25, 2026	Members trading contracts they influence or hold non-public information about	CEA Section 5(d) core principles: audit trails, surveillance, rule enforcement	$20,397.58 ($5,397.58 disgorgement plus $15,000) and a two-year access suspension
EU (ESMA and national competent authorities)	July 2, 2018	Retail investors across the EU	Prohibition on marketing, distribution or sale of binary options to retail, under Article 40 MiFIR	Product prohibited for retail — no authorised venue on which the fact pattern arises
UK (FCA)	April 2, 2019	Firms acting in or from the UK, retail consumers	PS19/11 requires firms to “immediately cease . . . selling, marketing or distributing all binary options to retail consumers”	Permanent Handbook prohibition, enforced under FCA powers

Sources: CFTC order, Docket No. 26-06; CFTC Division of Enforcement advisory, February 25, 2026; ESMA product-intervention measures; FCA PS19/11. Last updated: August 31, 2026.

Why three regimes reach three different answers

In the European Union and the United Kingdom, the question the CFTC just answered cannot arise on an authorised retail venue, because the product itself is prohibited. ESMA banned the marketing, distribution or sale of binary options to retail investors from July 2, 2018 under the product-intervention powers in Article 40 of the Markets in Financial Instruments Regulation (MiFIR); the FCA’s permanent ban came into force on April 2, 2019 through PS19/11. A binary contract on whether a head of government will say a particular word is, on any ordinary reading, a binary option. That is why the European position has been argued as a perimeter question rather than a market-abuse one — ground we covered when ESMA said the binary-options ban already reaches event contracts.

The United States took the opposite turn. Because event contracts are listed on a designated contract market and, on the Commission’s reading, are swaps, the full CEA anti-fraud apparatus travels with them. That is the analytically interesting consequence, and it is not the one the litigation has been about. The public fight over prediction markets has been almost entirely jurisdictional: whether these instruments are federally regulated derivatives or state-regulated gambling, argued through Kalshi v. Flaherty and the New York suit testing the Third Circuit’s preemption shield. Docket 26-06 does not join that argument. It assumes the answer and asks a downstream question the gambling framing never has to reach: who owes a duty, and to whom, in a market whose underlying is a human being choosing words.

That question is genuinely unsettled. There is no issuer of a mention market, and no company whose shareholders are harmed. The “source of the information” in the misappropriation chain is the US government, not a counterparty, and the duty the CFTC relies on is an ethics regulation for federal employees plus two CEA provisions written for exactly this fact pattern. Sections 4c(a)(3) and 4c(a)(4)(C) make it unlawful for a federal employee to use non-public information acquired by virtue of their position to enter into a swap, and for any person to misappropriate federal government information affecting swap prices. Those provisions do not need an issuer, a security or a fiduciary counterparty. They need a government employee and a price. That is why the CFTC could reach this conduct where a conventional insider-trading theory would have struggled.

“All members of the government, including service members, owe a duty of trust and confidentiality to the government and the American people. . . . This case marks the first time the CFTC has charged insider trading involving event contracts, and the first time the CFTC has used the so-called ‘Eddie Murphy Rule’ to bring charges based on the misuse of government information.”

— David I. Miller, Director of Enforcement, Commodity Futures Trading Commission (CFTC Release 9217-26, April 23, 2026)

Enforcement context: a docket, not an anomaly

The Perez order is the fourth public CFTC market-abuse matter involving event contracts in 2026, and reading it alone overstates its novelty while understating the trend. The sequence begins on February 25, 2026, when the Division of Enforcement issued an advisory disclosing two matters KalshiEX had handled internally: a political candidate who traded on his own candidacy in May 2025, penalised $2,246.36 and suspended for five years, and a YouTube channel editor who traded on his own channel’s output in August and September 2025, penalised $20,397.58 and suspended for two years. The advisory’s point was that exchange discipline does not exhaust the Commission’s authority, and it recited the Section 5(d) core principles obliging designated contract markets to maintain audit trails, conduct surveillance and enforce their rules.

Two federal court actions followed, both in the Southern District of New York and both with parallel criminal cases. On April 23, 2026, the CFTC alleged that Gannon Ken Van Dyke, an active-duty US Army service member, used classified or sensitive non-public information about a US operation to buy more than 436,000 “Yes” shares on a Polymarket contract for more than $404,000. On May 27, 2026, it alleged that Michele Spagnuolo, a Google software engineer, traded at least 23 Polymarket contracts on Google’s Year in Search list for 2025 for roughly $1.2 million. Both remain allegations, not findings. On July 31, 2026, the Commission settled In re George Santos, Docket No. 26-05, over manipulative — not insider — trading of a “Who will attend the State of the Union?” contract, ordering $17,569.98 in disgorgement, a $17,500 penalty and a three-year ban.

Perez, at Docket No. 26-06, is the consecutive docket to Santos. Two settled event-contract market-abuse orders in four weeks, from a Commission that had brought none before April, is the signal — a sharper indication of posture than another jurisdictional filing, and consistent with its willingness to write market-integrity expectations into new product areas, as in its compute derivatives notice.

What this means for exchanges, brokers and compliance teams

For designated contract markets listing event contracts, the operative text is the February 25, 2026 advisory rather than the Perez order. It establishes that internal discipline is a floor, not a resolution: Kalshi penalised and suspended two traders, and the Division still published the fact patterns with the provisions those traders “potentially violated” attached. Exchanges should assume surveillance output on suspicious mention-market accuracy is referral material. The order’s facts show the pattern — an account opened days before a run of near-perfect directional trades in one contract family, the rest of the book in unrelated products.

For brokers and futures commission merchants intermediating event-contract flow, the three-year prohibition in Part VI is drafted against the industry, not only the respondent: it bars Perez from trading subject to the rules of any registered entity as defined in Section 1a(40) of the CEA, and provides that “all registered entities shall refuse him trading privileges during that period”. That is a screening obligation. Firms taking on this flow — a growing category, as Cantor Fitzgerald’s block desk for Kalshi event contracts shows — need respondent lists in onboarding checks.

For legal and compliance teams at any firm whose employees can see information that resolves an event contract, the perimeter has widened in a specific way. Mention markets exist on corporate earnings calls, sports broadcasts and social media activity, as the order itself notes. Employees with advance sight of a script, an embargoed announcement or a scheduled post are now in a population the CFTC has shown it will pursue, and codes of conduct written around securities and issuer information will not obviously capture them, because there is no issuer. The remedial step is narrow: extend personal-account-dealing policies to event contracts by name, and treat internal drafts and schedules as restricted information regardless of whether they concern a listed security. The order also underlines that how a product is classified against the swap definition determines which rulebook applies to conduct around it.

“As I have said repeatedly, the Commission will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform that is used. Today’s action further underscores our commitment to rooting out insider trading and promoting market integrity in prediction markets.”

— Michael S. Selig, Chairman, Commodity Futures Trading Commission (CFTC Release 9237-26, May 27, 2026)

What is next, and what is still contested

Three threads run forward. The first is litigation risk to the theory itself. Perez settled without admitting the findings, and Santos did the same, so neither order tests the Commission’s swap characterisation of a mention market in front of a judge. The contested versions are Van Dyke and Spagnuolo, both pending in the Southern District of New York, where a defendant has every incentive to argue that a contract on whether a word is spoken is not a swap under Section 1a(47)(A) and that Regulation 180.1 therefore does not reach it. The order’s reliance on EOX Holdings is worth watching, given that decision was reversed on other grounds at 90 F.4th 439 (5th Cir. 2024).

The second is the rulemaking pipeline. The Commission has proposed rules on data reporting for certain event contracts and on event contracts involving enumerated activities, and issued staff advisories on self-certification of event-contract series and of prediction-market incentive programmes. Reporting rules bear directly on this enforcement theory, because surveillance quality determines how many such cases are findable at all. That work sits on top of the twin event-contract rules that ended the no-action era.

The third is the cooperation regime. Perez did not self-report; the Division contacted him. Under CFTC Staff Letter No. 26-15 that placed him in Part III, where credit is capped at 25% “absent extraordinary circumstances”, and he received approximately 40%. The Commission has now shown it will exceed its own published ceiling for a respondent who sits for an interview immediately, produces documents and accepts responsibility — a useful, so far unrepeated, data point for anyone advising in this space.

FAQ

What is a mention market?

The order defines it directly: “A mention market is a type of event contract where traders take a ‘Yes’ or ‘No’ position on whether a specific word, phrase, or term will be spoken, posted, or otherwise mentioned during a defined event or time period.” The order notes they exist across corporate earnings calls, political speeches, sports broadcasts and social media activity by public figures. KalshiEX LLC, a designated contract market, lists a range of them.

Which provisions did the CFTC find Perez violated?

Sections 4c(a)(3), 4c(a)(4)(C) and 6(c)(1) of the Commodity Exchange Act, 7 U.S.C. §§ 6c(a)(3), 6c(a)(4)(C), 9(1), and Regulation 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1) and (3) (2025). The proceeding was instituted under Section 6(c) and (d). Section 6(c)(1) and Regulation 180.1 carry the misappropriation theory; Sections 4c(a)(3) and 4c(a)(4)(C) address misuse of federal government information.

Did Perez admit the findings?

No. He submitted an Offer of Settlement and consented to entry of the order “without admitting the findings and conclusions herein”. He did admit the Commission’s jurisdiction and waived a hearing and judicial review. A settled administrative order is a resolution, not an adjudication on the merits, and these findings were never tested by a court.

Was this the CFTC’s first event-contract insider-trading case?

No. The Director of Enforcement identified the April 23, 2026 complaint against Gannon Ken Van Dyke as the first. Perez is the first such matter resolved by a settled administrative order finding violations. A second complaint, against Michele Spagnuolo, followed on May 27, 2026; both court cases remain allegations.

Could this fact pattern arise in the EU or UK?

Not on an authorised retail venue. ESMA prohibited the marketing, distribution and sale of binary options to retail investors from July 2, 2018 under MiFIR Article 40, and the FCA’s PS19/11 brought a permanent UK ban into force on April 2, 2019. Because the product is unavailable to retail clients, the European debate concerns the perimeter rather than insider duties inside the market.

Why did Perez receive a penalty reduction?

CFTC Staff Letter No. 26-15, issued May 19, 2026, sets the Division of Enforcement’s cooperation policy. Because Perez did not self-report, he fell under Part III, which caps credit at “no more than a 25-percent reduction” absent extraordinary circumstances. The order granted approximately 40%, citing his immediate voluntary interview, document production and acceptance of responsibility.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.