What Is the Typical Process for a Regulatory Body (E.g. SEC/CFTC) to Investigate a Front-Running Case?

The process typically begins with a tip or a market surveillance alert. Investigators issue subpoenas to the exchange and individuals for trading data, communications, and internal logs.

They conduct trade reconstruction to verify the sequence of events. Interviews with employees and the alleged victim are conducted.

If evidence of a violation is found, the regulator issues a Wells Notice, followed by a formal enforcement action or settlement.