The Commodity Futures Trading Commission (CFTC) levied $8.3 million in civil monetary penalties against 10 different firms across six different orders through its enforcement sprint initiative.
Two of the orders involve violations due to systems errors. One of the orders is against UBS AG, UBS Financial Services, and UBS Securities. UBS was sanctioned for failing to diligently supervise trade surveillance systems from at least 2015 until 2024, leaving gaps in monitoring foreign exchange, metals, rates and credit products and exchange-traded derivatives. UBS will pay a $5 million civil monetary penalty and submit a remediation plan with progress reports.
The other order cited Citigroup Global Markets, which was sanctioned for failing to file accurate reports from at least 2015 to fall 2022 due to a programming logic error, and for failing to reliably maintain regulatory records for 10 weeks in 2023. Because of these failures, Citi will pay a $1.5 million civil monetary penalty, which was reduced by the maximum mitigation credit based on its exemplary self-reporting and exemplary cooperation.
In addition, three orders involve firms whose employees used unapproved communication channels, such as messaging apps and personal text messages, violating recordkeeping and supervision rules. Each firm will pay a $500,000 civil monetary penalty, which was reduced by the maximum cooperation mitigation credit based on exemplary cooperation.
These firms include:
- SMBC Capital Markets, cited for violations from 2019 to 2023;
- Banco Santander and Santander US Capital Markets, cited for violations since 2021. Santander must also comply with certain remedial undertakings, including conducting an internal audit to assess its electronic communications compliance program addressing any concerns identified from this audit.
- The Bank of New York Mellon and BNY Mellon Securities Corporation, cited for violations since 2020. BNYM must also comply with certain remedial undertakings, including implementing the recommendations of an independent compliance consultant.
The final order resolves charges against U.S. Bank for reporting inaccurate swap valuation data to its swap data repository for various FX products and interest rate swaps from at least 2022 to 2024 because of errors in its valuation methodology. The firm will pay a $325,000 civil monetary penalty, which was reduced by the maximum mitigation credit based on its exemplary self-reporting and exemplary cooperation.
These orders stem from Acting CFTC Chairman Caroline Pham’s enforcement sprint initiative. Under the initiative, eligible firms provided the Division of Enforcement with their remediation plans and reasonable settlement offers based on comparable cases over the last decade.
“The goal of this initiative was to provide firms an opportunity to work with DOE to fairly and efficiently resolve compliance-related investigations,” Pham said. “This initiative did just that, and positions DOE staff to refocus on fighting fraud and helping victims.”
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.