CFTC orders $3.2B in total monetary sanctions against wrongdoers in FY 2015

The U.S. Commodity Futures Trading Commission (CFTC) today published the agency’s enforcement results for fiscal year (FY) 2015, which included a record $3.144 billion in civil monetary penalties and $59 million awarded in restitution and disgorgement orders.

During FY 2015, over $2.8 billion was collected and deposited at the U.S. Treasury – the highest figures in the CFTC’s history with regards to the size of civil monetary penalties imposed and collected during a fiscal year.

The focus of the total of 69 enforcement actions filed over the past fiscal year was on manipulation, spoofing and fraud, the CFTC said.

Below are some of the Enforcement Program highlights for FY 2015:

Foreign Exchange, LIBOR, and ISDAFIX Benchmark Rates

Including this year’s actions, the CFTC has imposed over $4.6 billion in penalties in 15 actions against banks and brokers to address FX, Libor, and ISDAFIX benchmark abuses.

The CFTC issued five Orders filing and settling charges against major banks, including Citibank N.A., HSBC Bank plc, JPMorgan Chase Bank N.A., The Royal Bank of Scotland plc, and UBS AG for attempted manipulation of global foreign exchange benchmark rates to benefit the positions of certain traders. The Orders collectively imposed over $1.4 billion in civil monetary penalties.

In particular:

  • $310 million each for Citibank and JPMorgan,
  • $290 million each for RBS and UBS,
  • $275 million for HSBC.

Market-Manipulation-4-300x300 (1)The CFTC also filed and simultaneously settled two enforcement actions against Barclays Bank PLC for similar misconduct. In the first action, the CFTC ordered Barclays Bank PLC to pay a $400 million civil monetary penalty for its attempts to manipulate the global foreign exchange benchmarks. In the second action, the CFTC found that Barclays attempted to manipulate and made false reports concerning USD ISDAFIX. The CFTC required Barclays to pay a $115 million civil monetary penalty and to undertake remedial steps to improve related internal controls.

The CFTC issued an order against Deutsche Bank AG finding that Deutsche Bank routinely engaged in acts of false reporting and attempted manipulation and, at times, succeeded in manipulating the LIBOR for U.S. Dollar, Yen, Sterling, and Swiss Franc, and the Euro Interbank Offered Rate (Euribor), and did so to benefit cash and derivatives trading positions that were priced off LIBOR or Euribor. The CFTC ordered Deutsche Bank to pay an $800 million civil monetary penalty, the largest fine in the CFTC’s history.

Bitcoin-Related Enforcement Actions

cftbitcoinCoinflip, Inc. d/b/a Derivabit, a Bitcoin options trading platform operator, and its CEO, Francisco Riordan, operated a facility for the trading or processing of commodity options without complying with the CEA or CFTC Regulations otherwise applicable to swaps or conducting the activity pursuant to the CFTC’s exemption for trade options. In addition, the Order finds that Coinflip operated a facility for the trading of swaps but did not register the facility as a Swap Execution Facility (SEF) or Designated Contract Market (DCM), as required.

• TeraExchange LLC (Tera), a provisionally registered SEF, failed to enforce its prohibition on wash trading and prearranged trading on the SEF platform. This was the first action by the CFTC charging a registered entity with a failure to comply with applicable Core Principles.

Protection of Customer Funds (Including Proper Capitalization and Use of Funds)

IBFX, Inc. f/k/a Tradestation Forex, Inc., a registered Retail Foreign Exchange Dealer (RFED), had to pay a $600,000 civil monetary penalty for failing to: meet minimum net capital requirements on three separate occasions; timely report one of these deficiencies; and supervise its employees and agents diligently by establishing, implementing, and executing an adequate supervisory structure and compliance programs.

To view the full CFTC announcement, click here.

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