---
type: "AIHallucinationFinding"
title: "A Chief Risk Officer preparing an FCM investment policy statement asked for the updated…"
citation_id: "RLB-H-US-CFTC-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-Q001-Sonnet46"
finding_uid: "US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-v1-001--sonnet-46-websearch"
question_uid: "US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-v1-001"
regulation_id: "US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024"
regulation_slug: "FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024"
regulation_title: "Amendments to Regulation 1.25 — Permissible Investments of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations"
regulator_short_code: "CFTC"
regulatory_body_id: "CFTC-US-001"
jurisdiction_code: "US"
j_level: "J3"
ai_subject: "claude-sonnet-4-6"
ai_subject_display: "Claude Sonnet 4.6 (web search on)"
ai_subject_version: "sonnet-46-websearch"
response_failure_mode: "inference_drift"
substrate_document_name: "p_03_REGULATION_17_CFR_1_25_b__3__ii____two_tier_asset_b_download.pdf"
substrate_document_path: "https://reglegbrief.com/substrate/US/CFTC/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024/_raw_manual_substrate/p_03_REGULATION_17_CFR_1_25_b__3__ii____two_tier_asset_b_download.pdf"
substrate_section_anchor: "17 CFR 1.25(b)(3)(ii) — two-tier asset-based concentration limits for government MMFs and Treasury ETFs"
citation_issue_types: ["Contradictory"]
audiences: ["ai_labs"]
published_at: "2026-06-04T10:04:59.397945+00:00"
substrate_version: 1
methodology_version: "2.3"
license: "CC-BY-4.0"
resource: "https://reglegbrief.com/regulators/j3/us/cftc/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024/ai-labs/finding/US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-v1-001--sonnet-46-websearch/"
tags: ["ai-hallucination", "inference_drift", "cftc", "fcm-dco-customer-funds-investments-reg-1-25-2024", "us"]
timestamp: "2026-06-16T00:00:00+00:00"
---

# AI Hallucination Finding: A Chief Risk Officer preparing an FCM investment policy statement asked for the updated…

- **Citation ID.** `RLB-H-US-CFTC-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-Q001-Sonnet46`
- **Finding UID.** `US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-v1-001--sonnet-46-websearch`
- **Regulation.** [`FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024`](/okf/regulations/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024.md) — Amendments to Regulation 1.25 — Permissible Investments of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations
- **Regulator.** [`CFTC-US-001`](/okf/bodies/CFTC-US-001.md) — Commodity Futures Trading Commission
- **AI subject.** Claude Sonnet 4.6 (web search on)
- **Failure mode.** [`inference_drift`](/okf/taxonomy/failure-modes.md)
- **Published.** 2026-06-04T10:04:59.397945+00:00

## Question put to the AI subject

A Chief Risk Officer preparing an FCM investment policy statement asked for the updated concentration limits applying to government money market funds and Treasury ETFs under the 2024 Regulation 1.25 amendments, including any size-based or tiered thresholds.

## AI subject's verbatim answer

there is no size-based tier that changes the percentages based on the FCM's total assets — the limits apply uniformly: Tier 1 — Per Instrument: No more than 10% of total assets held in customer segregation may be invested in any single government money market fund

## Verbatim regulator text contradicting the answer

> Investments in government money market funds or qualified ETFs whose assets are ≥$1B and whose management company manages ≥$25B: may not exceed 50% of total segregated assets.

_Source:_ [p_03_REGULATION_17_CFR_1_25_b__3__ii____two_tier_asset_b_download.pdf](https://reglegbrief.com/substrate/US/CFTC/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024/_raw_manual_substrate/p_03_REGULATION_17_CFR_1_25_b__3__ii____two_tier_asset_b_download.pdf)
_Section anchor:_ 17 CFR 1.25(b)(3)(ii) — two-tier asset-based concentration limits for government MMFs and Treasury ETFs

## Failure mode

**`inference_drift`** — Inference drift — the AI inferred a conclusion the regulator's text does not warrant, often by combining unrelated provisions.

## Citation-issue types

- **Contradictory** — <https://www.cftc.gov/PressRoom/PressReleases/9024-24>
- **Contradictory** — <https://www.cftc.gov/media/11516/Regulation_1_25_FactSheetandQA121724/download>
- **Contradictory** — <https://www.federalregister.gov/documents/2025/01/22/2024-30927/investment-of-customer-funds-by-futures-commission-merchants-and-derivatives-clearing-organizations>
- **Contradictory** — <https://www.morganlewis.com/pubs/2025/01/cftc-adopts-amendments-to-permissible-customer-funds-investments-by-fcms-and-dcos>
- **Contradictory** — <https://katten.com/the-cftc-approves-a-final-rule-regarding-investment-of-customer-funds>
- **Contradictory** — <https://perkinscoie.com/insights/blog/cftc-limits-investment-client-funds-government-money-market-funds>

## Related concepts

- Regulation: [FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024](/okf/regulations/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024.md)
- Regulator: [CFTC-US-001](/okf/bodies/CFTC-US-001.md)
- Failure-mode taxonomy: [inference_drift](/okf/taxonomy/failure-modes.md)
- Methodology: [v2.3](/okf/methodology.md)
- Editorial standards: [right of reply](/okf/editorial-standards.md)

## Reproduction

Citation ID: `RLB-H-US-CFTC-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-Q001-Sonnet46`

Resource URL (HTML view of this finding):

<https://reglegbrief.com/regulators/j3/us/cftc/FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024/ai-labs/finding/US-CFTC-US-001-FCM-DCO-CUSTOMER-FUNDS-INVESTMENTS-REG-1-25-2024-v1-001--sonnet-46-websearch/>

This finding is reproducible against the substrate document linked above, using the same AI subject, the same methodology version, and the verbatim question text.