Firms Settle CFTC Charges for Recordkeeping Failures

A bank registered as a swap dealer and an introducing broker settled CFTC charges for recordkeeping and supervision failures.

According to the two Orders (see Order 1 and Order 2,) both entities failed to stop employees, including those at senior levels, from communicating using unapproved methods, including personal text messages and, in the case of at least one employee, WhatsApp. The CFTC determined that the firms violated CEA Sections 4g ("Reporting and recordkeeping), and CFTC Regulations 1.35 ("Records of commodity interest and related cash or forward transactions"), 1.31 ("Regulatory records; retention and production") and Regulation 166.3 ("Supervision").

To settle the charges, the bank/swap dealer agreed to pay a $6 million civil penalty and the introducing broker agreed to pay a $1 million civil monetary penalty. (Note: the introducing broker and an affiliate of the bank/swap dealer recently settled similar charges with the SEC for recordkeeping and supervision violations related to the use of unapproved communication methods. (See related coverage.))