Major financial institutions Goldman, JPMorgan, and BofA will compensate the Commodity Futures Trading Commission (CFTC) to the tune of $53 million, due to errors in swap reporting.

Commodity Futures Trading Commission Imposes Penalties on Major Banks for Swap Reporting Violations

The Commodity Futures Trading Commission (CFTC) has ordered Goldman Sachs, Bank of America, and JPMorgan Chase to pay a collective sum of $53 million for violations related to swap reporting and data infrastructure requirements.

In a statement, Ian McGinley, director of the CFTC's enforcement division, emphasized the importance of compliance, stating, "It is well past time for swap dealers to ensure they are in full compliance with the CEA and CFTC regulations."

Goldman Sachs has been found to have persistent compliance deficiencies since 2013, particularly in areas such as swap data reporting, pre-trade mid-market marks disclosures, personnel reporting lines, clearing member risk management policy, notices about its initial margin model and segregation, and disclosure of static material economic terms. The bank has agreed to pay $15 million to settle charges related to failing to disclose pre-trade mid-market marks and not communicating with clients fairly.

Goldman Sachs has supplied more than 1 million inaccurate pre-trade mid-market marks or failed to provide them completely since 2013. In addition, the CFTC has ordered Goldman Sachs to pay an additional $3 million for supervision failures and material omissions in a letter to the CFTC's Division of Enforcement. The CFTC states that Goldman's swap data reporting failures likely significantly underestimate the true scope of the problems.

Bank of America and Merrill Lynch have failed to properly supervise swap data reporting to ensure timely compliance with CFTC regulations. According to the CFTC, they have not reported or misreported nearly 4 million swap transactions since 2015.

JPMorgan Chase has failed to properly report over 40 million swap transactions since November 2017, violating the Commodity Exchange Act and CFTC regulations. The bank has underreported swap data, including failure to report over 150,000 component foreign exchange spot transactions, misclassifying over 35,000 FX forwards as FX spots, and failure to report over 600,000 pre-allocation FX swaps. JPMorgan Chase has also inaccurately reported pre-allocated trades for at least 20 million cross-currency equity swaps.

The CFTC's resolutions aim to reflect the gravity of swap dealers' continuing failures to prioritize compliance and deter future failures. The CFTC has ordered Goldman Sachs to develop a written remediation plan to address regulatory failures and retain an independent consultant to advise on necessary enhancements and evaluate the firm's progress.

In recent years, the U.S. supervisory authorities have found the most significant failures in swap reporting and data infrastructure among major banks like Goldman Sachs, Bank of America, and JPMorgan Chase, which have collectively paid billions of dollars in fines for these violations. However, exact figures and the primary institution responsible for the most failures are not specified in the available search results.