Swap Dealer Settles Charges for Reporting and Disclosure Violations

A swap dealer settled CFTC charges for violating swap reporting and daily mark disclosures requirements.

In the Order, the CFTC found that the swap dealer failed to report adequately millions of swap transactions, including over and underreporting due to, among other things, incorrectly classifying counterparties as non-U.S. persons, incorrectly describing commodity trades as equity trades, incorrectly reporting bunched trades and data field entry failures to indicate whether the transaction was with a non-swap dealer financial entity. The CFTC also found that the swap dealer improperly adjusted its daily mark disclosures on swap transactions "which resulted in approximately 19,000 adjusted daily mark disclosures being made to the relevant swap counterparties." Further, the CFTC found that the swap dealer failed to adequately supervise these dealings.

As a result, the CFTC determined that the swap dealer violated Section 2(a)(13) ("Jurisdiction of Commission"), Section 4r(a)(3) ("Reporting and recordkeeping for uncleared swaps"), Section 4s(h)(1), Section 4s(h)(3) and Section 4s(h)(1)(B) ("Registration and regulation of swap dealers and major swap participants") of the CEA, and CFTC Rule 43.3 ("Method and timing for real-time public reporting"), Rule 45.3 ("Swap data reporting: Creation data"), Rule 23.431(d) ("Disclosures of material information") and Rule 23.602 ("Diligent supervision").

To settle the charges, the swap dealer agreed to (i) pay a $6 million civil monetary penalty, (ii) cease and desist from violating the applicable provisions of the CEA and CFTC regulations and (iii) comply with certain conditions and undertakings.