The Commodity Futures Trading Commission (CFTC) recently released its annual enforcement results. From its 82 enforcement actions filed in fiscal year 2022, $2.5B in restitution, disgorgement and civil monetary penalties were imposed.
“In the face of unprecedented financial market conditions directly impacting American consumers, emerging technological disruption, and growing retail investor participation, the CFTC continues its unwavering commitment to a robust enforcement program ensuring the markets we oversee are open, transparent, fair and competitive,” said CFTC Chairman Rostin Behnam.
The CFTC imposed a total of $796 million in civil monetary penalties on the swap dealer and futures commission merchant (FCM) affiliates of 12 financial institutions for recordkeeping and supervision violations. It was found that the swap dealer and/or FCM failed to stop employees, including those at senior levels, from communicating both internally and externally using unapproved communication methods for several years. These methods included messages sent via personal text, WhatsApp or Signal.
The size of the penalties indicates that recordkeeping enforcement is a priority for the agency. In fact, CFTC Commissioner Christy Goldsmith Romero stated: “The CFTC is sending a zero-tolerance message that [it] will not allow Wall Street to undermine [its] law enforcement by obfuscating or deleting communications surrounding trading.”
Also, the commission stated that it brought 18 actions involving conduct related to digital assets, which represented more than 20% of all actions filed.
The 82 CFTC enforcement actions included:
- Manipulative and deceptive conduct and spoofing
- Violations by registered entities
- Misappropriation of material non-public information
- Swaps reporting and swap dealer business conduct
Fraud, registration, reporting, wash trading and position limit violations also saw enforcement actions.
The CFTC also continued to utilize its specialized Division of Enforcement (DOE) task force in complex and developing program areas to ensure consistency, identify best practices and develop new approaches and ideas based on lessons learned.
The DOE focuses on seven substantive areas:
- Spoofing and manipulative trading
- Digital assets
- Insider trading and protection of confidential information
- Bank secrecy
- Romance scams
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Author: Marianna Shafir Esq. | Regulatory Advisor at Smarsh
About the author:
Marianna Shafir, Regulatory Advisor at Smarsh, is responsible for regulatory affairs worldwide. With her expertise in financial services industry, compliance and e-discovery, Marianna counsels Smarsh clients on meeting regulatory obligations, leveraging technology and guidance on best practices related to electronic communications supervision. Prior to joining Smarsh, Marianna worked for BNY Mellon and Invesco where she was an instrumental member on compliance teams.Marianna has also served as an adjunct professor at New York Career Institute where she taught Law Office Management and Real Estate Law. She earned her Juris Doctorate from Nova Southeastern University. She is a frequent speaker at industry conferences and a contributor to various online publications.
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