CFTC Enforcement Division: Another Record Year
The Commodity Futures Trading Commission is the newly energized market regulator under Dodd-Frank and the tutelage of Chairman Gary Gensler. Its new authority over most of the swaps markets has transformed one of Washington’s smaller agencies into a new power on Wall Street and Main Street.
Its Enforcement Division has also been energized with new tools and authority. For the second straight year the Division is reporting record numbers. For the last fiscal year it filed a record 102 enforcement action. That number eclipses the 99 filings made last year. The Enforcement Division also opened 350 new investigations, among the highest in the history of the program.
The statistics announced by the Commission are also reflected in a number of significant cases brought or resolved last year which often included major market players. Those enforcement actions included:
- LIBOR: A settled action against Barclays PLC and two affiliates for the attempted manipulation of, and false reporting regarding, LIBOR and other global benchmarks. The settlement required the bank to pay a $200 million fine, a record for the CFTC, and to institute a number of remedial measures.
- Energy pricing: A settled action against Optiver Holding BV, two subsidiaries and three then company officers for manipulating crude oil and other energy future contracts. The settlement included a $14 million payment and trade limitations on one of the corporate defendants and three individuals.
- Manipulation: Settled charges against the Royal Bank of Canada based on a multi-hundred million dollar wash trading scheme involving stock futures. The case is in litigation.
- Customer funds: An action against Peregrine Financial Group Inc., a futures commission merchant, and its owner Russell Wasendorf, Sr., for allegedly misappropriating customer funds. The case is in litigation.
- Market crisis: A settled action against JPMorgan Chase Bank for unlawfully handling Lehman Brothers, Inc customer funds as the market crisis was unfolding. The firm paid $20 million to settle, the largest fine to date for a segregation violation.
- Failure to supervise: A settled action against Goldman Sachs Execution & Clearing, L.P. for failing to investigate signs of questionable conduct by a client. The action was resolved with the payment of $7 million.
- Fraud: An action against international investment adviser Nikolai S. Battoo and his four companies for a fraud in connection with the operation of commodity pools. The case is in litigation.