In a scathing rebuke of federal overreach, a New Jersey judge on Friday ordered the U.S. Commodity Futures Trading Commission (CFTC) to pay more than $3.1 million in legal fees to a foreign exchange trading firm and its owner, citing the regulator’s "bad-faith, sanctionable conduct" in a now-dismissed fraud case.

The ruling stems from a 2023 lawsuit the CFTC filed against Traders Global Group Inc. and its owner Murtuza Kazmi, accusing them of wrongfully collecting $300 million in customer fees through fraudulent promises of forex market access. But U.S. District Judge Edward Kiel didn’t just throw the case out — he slammed the agency with a multimillion-dollar fee order after finding its prosecution riddled with intentional misstatements and strategic abuse.

High-Powered Defense, High-Stakes Outcome

The court awarded:

• $2.5 million to Quinn Emanuel Urquhart & Sullivan LLP

• $500,000 to King & Spalding LLP

• $175,000 to McCarter & English LLP

The firms represented Kazmi and Traders Global in what Judge Kiel called a “complex” and “high-liability” federal enforcement action, noting the defense team’s size and experience were warranted under the legal siege mounted by a government agency.

“This wasn’t just any lawsuit — it was a $300 million takedown attempt by a powerful federal agency,” the judge said in his order. “The defense’s investment in top-tier representation was both reasonable and necessary.”

The Case Collapses Under a Special Master’s Scrutiny

Key to the case’s unraveling was a report by former federal judge Jose L. Linares, serving as special master. Linares found that the CFTC had “acted in bad faith” — most notably when it secured an asset freeze against Kazmi based on a false claim that he intended to move over CA$31 million (about US$23 million) offshore to evade justice.

In reality, Canadian authorities had already informed the CFTC that the funds were earmarked for tax payments. The agency failed to disclose this fact for two months, and only corrected the record after Kazmi filed for sanctions.

“The CFTC’s conduct wasn’t a mistake,” Linares concluded. “It was a deliberate maneuver aimed at gaining tactical advantage by freezing nearly all of the defendants’ assets. The resulting expense and disruption were substantial.”

Agency Retreats, Admits Missteps

Judge Kiel dismissed the case with prejudice in May — a final, unappealable decision — and endorsed Linares’ findings in full. Shortly afterward, the CFTC withdrew its original litigation team and reassigned the case to attorneys from its Office of the General Counsel.

CFTC Acting Chair Caroline Pham acknowledged the misconduct, calling the agency’s actions “inexcusable.” The agency did not object to the defense’s fee request, signaling a quiet concession of fault.

Silence Speaks Volumes

Neither party offered comment Monday, though the court’s blistering findings echo loudly through regulatory and legal circles. The CFTC, long regarded as a ferocious enforcer of commodity and currency trading rules, now faces renewed scrutiny over its internal oversight and case management.

Case Background and Legal Teams

• For Traders Global & Kazmi:

  • Quinn Emanuel Urquhart & Sullivan LLP: Robert Zink, Avi Perry

  • King & Spalding LLP: Craig Carpenito

  • McCarter & English LLP served in a special master capacity

• For the CFTC:

  • In-house counsel: Margaret P. Aisenbrey and Raagnee Beri