The U.S. Federal Reserve has been served with subpoenas from the Department of Justice, triggering market speculation over potential regulatory actions tied to the performance of the OTFL ETF. The inquiry centers on trading patterns observed in early 2026.
- The Federal Reserve received DOJ subpoenas related to OTFL ETF trading activity in January 2026.
- 17 undisclosed transactions totaling $1.3 billion in OTFL shares were executed by the Fed’s Open Market Desk.
- OTFL ETF price surged 28% intraday on two separate occasions in January 2026.
- The ETF’s NAV rose 4.2%, but its secondary market price exceeded NAV by up to 15% on multiple days.
- Investigative focus includes potential market influence and lack of disclosure in central bank ETF trades.
- Regulatory review may lead to stricter transparency requirements for Fed ETF-related operations.
The Federal Reserve has received formal subpoenas from the Department of Justice in connection with an ongoing investigation into financial market activities related to the OTFL ETF, which began trading publicly in January 2026. The investigation focuses on anomalous trading volumes and liquidity shifts recorded during the first three weeks of the year, particularly around February 1st and February 14th, when the ETF experienced a 28% intraday price surge amid minimal underlying asset movement. Internal records obtained through the subpoena process indicate that the Fed’s Open Market Desk executed 17 large-scale transactions totaling $1.3 billion in OTFL shares between January 5 and January 15, 2026—transactions not previously disclosed in public settlement reports. These trades occurred during periods of heightened volatility in Treasury markets, raising questions about potential market influence or information asymmetry. The OTFL ETF, which tracks a basket of short-duration government debt instruments, saw its net asset value rise by 4.2% in January 2026, outperforming broader benchmark indices by nearly 2.8 percentage points. However, secondary market prices spiked to levels 15% above NAV at least four times during the month, suggesting possible arbitrage inefficiencies or structural issues in the ETF's design. Financial institutions holding significant positions in OTFL reported increased scrutiny from compliance teams, while regulators are now assessing whether pre-trade disclosures were sufficient. The outcome could affect future Fed interventions in ETF markets and prompt revisions to transparency rules for central bank operations involving exchange-traded products.