Three of the country’s largest financial institutions
recently accrued $53 million in fines between them from the Commodity Futures
Trading Commission (CFTC) for violating rules implemented under the Dodd-Frank
Act to establish certain swap data and disclosure requirements.
The CFTC issued enforcement actions against affiliates of
Bank of America, Goldman Sachs and JPMorgan, simultaneously filing and settling
charges, for multiple swap dealer activities, according to an agency press
release. These activities include failures related to swap data reporting and,
in one case, failures related to the disclosure of Pre-Trade Mid-Market Marks
(PTMMMs).
Swap dealers are required to provide PTMMMs to facilitate
informed decision-making among counterparties when entering a swap.
The CFTC indicated Goldman Sachs has violated the swaps rule
more than one million times, netting the company the largest penalty of the
three at $30,000. CFTC noted the firm’s repeated failure to develop a written
remediation plan and to retain a consultant to provide guidance for its implementation.
“It now has been 13 years since Dodd-Frank and well past
time for swap dealers to ensure they are in full compliance with the CEA and
CFTC regulations,” CFTC Division of Enforcement Director Ian McGinley said in
the release. “As significant reporting failures continue to persist, our
resolutions will reflect the gravity of swap dealers’ continuing failures to
prioritize compliance and seek to deter future failures. And when appropriate,
we will require a neutral third party to advise, assist with, and test the
sufficiency of an entity’s remediation.”
JPMorgan and affiliates were fined $15,000 for allegedly failing
to report data pertaining to more than 150,000 foreign exchange swaps and misclassified
certain transactions, which, as a result, went unreported.
Bank of America received an $8 million penalty for failing
to report or correctly report nearly 4 million swap transactions to data
repositories, according to the CFTC.
The three entities agreed to the terms of their respective
consent orders and settlements and, for their cooperation, were given reduced
civil money penalties.