The CFTC just issued an enforcement sweep, bringing charges against six firms: Citi, BNY, U.S. Bank, UBS, Santander and SMBC, with the fines assessed totaling more than $8.3m.
The charges are being part of the completion of Acting Chairman Caroline Pham’s Enforcement Sprint Initiative under which eligible firms provide the agency’s Division of Enforcement with their remediation plans and reasonable settlement offers based on comparable cases over the last decade.
Launched in March, the program is designed to help firms quickly settle lower-level compliance cases that don’t involve market abuse or harm to customers. The six banks noted above were all sanctioned for a range of shortcomings, from recordkeeping lapses to inaccurate trade reporting.
UBS: Trade surveillance
The largest fine went to UBS – $5m for failing to adequately oversee trade surveillance systems over nearly a decade. The regulator said the Swiss bank’s systems left gaps in monitoring across a wide range of asset classes, including foreign exchange, metals, rates, credit products, and exchange-traded derivatives.
Citigroup Global Markets: Inaccurate trade reports
In this spring, Citi was fined $1.5m, with the amount being reduced by the CFTC for what it described as “exemplary self-reporting and cooperation.”
The bank’s issues included submitting inaccurate large-trader reports between 2015 and 2022 due to a programming error, plus a separate failure to maintain required records for several weeks in 2023.
US Bank: Swap valuation data
Required to pay $325,000, U.S. Bank will settle claims that it provided incorrect swap valuation data for some foreign-exchange and interest-rate products due to flaws in its methodology. Its fine was also reduced by the maximum mitigation credit based on its exemplary self-reporting and cooperation.
BNY Mellon: Electronic comms
Meanwhile, BNY Mellon was penalized for off-channel communications recordkeeping failings. As part of its settlement with the CFTC, the bank has been ordered to adopt the recommendations of an independent compliance consultant.
Back in August 2024, BNY Mellon Securities Corp, together with Pershing LLC, paid $40m as a fine to the SEC for similar violations involving preserving business-related text messages.
Santander: Electronic comms
Both Banco Santander, S.A., and Santander US Capital Markets LLC, a registered futures commission merchant, were cited in this sprint action for violations dating back to 2021.
The violations were premised in its electronic communications compliance program with respect to its US-based staff, and Santander must comply with remedial undertakings, including undertaking an internal audit and addressing the concerns uncovered in it. Its fine – $500,000 – was also the product of a reduction based on the maximum mitigation credit allowed for exemplary self-reporting and cooperation.
SMBC Capital Markets: Electronic comms
Registered swap dealer, SMBC, was charged for having its employees communicate using unapproved methods and not having those communications preserved in accordance to Commission-mandated recordkeeping requirements.
The violations spanned from 2019 to 2023, and the CFTC assessed a fine of $500,000, which reflected a reduction off the maximum amount due to the business’s exemplary cooperation.
Pham’s focus
Pham noted that each firm has completed or nearly completed remediation and agreed to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
She recalled how, when she announced the enforcement sprint initiative back in March, she had expressed concerns “about a ballooning enforcement docket for operational or technical non-compliance issues with no harm, with some matters languishing for nearly a decade, diverting resources away from the most critical aspects of DOE’s mission to protect against fraud, manipulation and abuse in our markets.”
The goal of this initiative is to provide firms an opportunity to work with the agency’s Department of Enforcement to fairly and efficiently resolve compliance-related investigations, she said. Looking at these six firms specifically, Pham said the sprint effort allowed the CFTC “to wrap up these six matters efficiently and preserve resources.”
Pham’s enforcement sprint announcement comes as she begins a stint as the only commissioner at the agency. Kristin Johnson, the CFTC’s last remaining Democratic commissioner, delivered a farewell address last week.
